Nicotine pouches might be the best new consumer category in decades: cheap to make, high margin, and sticky once someone gets hooked, the same traits that made Philip Morris a 16.5% a year compounder for close to a century. George Baxter of Saberpoint Capital has owned Turning Point Brands since his fund's first days, and he thinks the market is missing how well TPB is positioned as the third player behind ZYN and Velo, with FRE and the Tucker Carlson backed Alp now almost half of revenue.
We get into whether pouch users are really brand loyal or will hop around like energy drink buyers (my straw man, using Haypp and Europe), why C-stores want a third brand on the back bar, how the new PMTA rules shut the door on VC-backed upstarts, and the cost gap from making every can in India and air freighting it here. I push back on the part that worries most people: EBITDA is falling while TPB spends on slotting fees, UFC and influencers, Alp is a 50/50 JV with a celebrity, and the longtime CEO just left with a finance guy stepping in. We finish on valuation, from $35 to $45 a share for the legacy Zig-Zag and Stoker's business to George's path to a $1,000 stock by 2030.
This episode is sponsored by Trata. Trata has a lot of TPB transcripts, including two done in the past month, and you can read both for free here:
Trata is two buysiders who both know a stock well talking through the risks and opportunities they see, not just trading price targets. When I'm looking at a new company, one of the first things my AI does is go see what people are saying about it on Trata.
Chapters:
(00:00) Intro: George Baxter and Turning Point Brands
(00:29) Sponsor: Trata
(01:43) Welcome, and 11 years of following TPB
(02:35) TPB's history: Zig-Zag, Stoker's, vapor and Standard General
(06:26) The pouch launch: FRE and the Alp JV with Tucker Carlson
(07:57) Why nicotine pouches look like the new tobacco
(13:00) Brand loyal like cigarettes, or fickle like energy drinks?
(18:45) Why US pouch users buy at the C-store, not online
(22:57) How many brands can a C-store actually carry?
(26:25) ZYN, Velo, and where TPB fits
(28:11) Regulatory capture, Velo Plus, and ZYN losing share
(32:53) PMTA changes shut the door on the VC-backed brands
(36:36) Why C-stores want a third player on the back bar
(39:36) Financials: falling EBITDA, TKO deal and slotting fees
(41:14) Made in India and air freighted: the $1.40 can
(44:11) The PMTA path to US manufacturing and slotting fees rolling off
(51:31) Valuation: what the legacy business is worth
(53:43) FRE's marketing and the energy drink playbook
(55:02) Alp, Tucker Carlson, and building a brand
(59:56) Alp JV economics and the celebrity risk
(1:04:17) Alp and FRE are the same product
(1:05:17) CEO exit, insider ownership and the ATM
(1:06:48) Will TPB buy more of Alp?
(1:09:17) David Glazek takes over
(1:13:43) The 2030 math: a $1,000 stock?
(1:16:20) George's bias disclaimer and his book
(1:18:25) Wrap
George Baxter / Saberpoint Capital
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