Company News
Turning Point Brands Q2 2026: Oral Nicotine Sales Surge 54% as Zig-Zag Remains Stable
Turning Point Brands — the company behind Zig-Zag rolling papers and the Stoker's smokeless portfolio — reported second-quarter 2026 results on August 4, and the numbers tell a clear story about the shifting shape of the tobacco aisle. Consolidated net sales climbed 23% year over year to roughly $143 million. Almost all of that growth came from one place: oral nicotine.
The Split Inside the Business
The company's Stoker's segment, which includes its FRE and ALP nicotine pouch brands alongside chewing tobacco and moist snuff, posted net sales of about $107.6 million, up 54.5% from a year earlier. Management attributed the jump to triple-digit growth in what it calls "modern oral" — the pouch category — driven by new retail distribution and direct-to-consumer sales. This surge is part of a larger trend where earnings season splits big tobacco between those pivoting to smoke-free options and those lagging behind.
The rolling paper side told a different story. The Zig-Zag segment brought in roughly $35 million for the quarter, down about 4% sequentially, with adjusted gross profit of about $20 million, or 57% of segment net sales. That margin held flat quarter over quarter, which matters: the papers business is not collapsing, it is simply growing much more slowly than the pouch business beside it.
"Adjusted EBITDA fell by about half year over year, to around $15 million, because management deliberately spent more on sales teams, marketing sponsorships and in-store merchandising to build the pouch brands."
That is a choice, not an accident — and it is the kind of choice that shows how hard companies are competing for backbar space right now. Adjusted gross profit for the whole company rose 22% to roughly $81 million.
The Guidance is the Real Headline
Turning Point raised its full-year 2026 outlook for modern oral twice over in one release. Gross sales guidance for the category moved to a range of $330 million to $350 million, up from $280 million to $300 million. Net sales guidance moved to $260 million to $270 million, up from $210 million to $225 million.
Raising a forecast by that much mid-year signals the company is seeing sell-through it did not plan for. It also puts a mid-size player squarely in a category dominated by far larger competitors — an environment where shelf space, distribution deals and flavor authorizations decide who wins. This trend mirrors the broader industry shift toward smoke-free alternatives, similar to ZYN nicotine pouches and other major market leaders, especially as Philip Morris opens a $1.2 billion ZYN factory to keep up with demand.
What it Means for Shoppers
Two practical takeaways for anyone who buys these products:
- Rolling papers are stable, not shrinking into nothing. A 57% gross margin on a flat-to-slightly-down quarter is a healthy, mature business. Expect continued availability across the Zig-Zag lineup rather than a wave of discontinuations.
- Pouch competition is intensifying, and that usually helps buyers. More brands fighting for the same cooler space tends to mean more flavor and strength options and more promotional pricing — though it can also mean churn, with newer SKUs appearing and disappearing. Women are the fastest-growing buyers in this segment, further diversifying the market.
The honest caveat: none of this says anything about safety. Nicotine pouches are addictive, and rapid category growth is a business fact, not a health verdict. Public health groups have raised concerns about how quickly oral nicotine has scaled, and those concerns exist independently of any company's earnings report. For instance, a Swedish study finds mouth lesions in a high percentage of users, though the findings come with significant caveats.
The Bottom Line
One company's quarter is a small window, but it is a clear one. The traditional rolling aisle is holding its ground on solid margins while oral nicotine pulls the growth. For a store that sells both, the practical message is to keep the premium tobacco wraps and papers stocked and expect the pouch set to keep churning. Retailers should also keep an eye on cigarillos & small cigars as they remain a staple of the backbar alongside these emerging categories.