Turning Point Brands has acquired certain cigar assets of Unitabac. The acquisition comprises a portfolio of cigarillo products and related intellectual property, including cigarillo non-tip (NT) homogenized tobacco leaf (HTL), rolled leaf and natural leaf cigarillo products. The terms of the transaction were not disclosed.
The acquired brands compete in three core segments: Trivo, Hype and Hi-Fi within the cigarillo NT HTL segment; Cloud9 within the natural leaf cigarillo segment; and Badlands within the rolled leaf segment. These cigars are all “grandfathered products” or subject of substantial equivalence reports in place with the U.S. Food and Drug Administration.
“We are incredibly excited to welcome the Unitabac cigar brands to the Turning Point Brands family,” said Larry Wexler, CEO of Turning Point Brands, in a statement. “Industry analysts have highlighted that the multibillion-dollar cigarillo market growth is being fueled, in part, by the rapidly expanding movement toward cannabis legalization.
“Gaining access to Unitabac’s product portfolio provides us with necessary assets to build a more competitive platform to participate in this large and growing market. Our intention is to leverage both the Zig-Zag tobacco brand strength and the extensive reach of our retail distribution platform to further penetrate the cigar category by introducing new line extensions under the Zig-Zag tobacco brand and expanding the reach of the Unitabac cigar products.”
“Turning Point Brands’ deep knowledge of the evolving consumer experience, coupled with the company’s sales and marketing leadership, make the team an ideal partner for Unitabac,” said Rush Patel, founder of Unitabac. “With Turning Point Brands’ competitive advantages, grounded in superior marketing and distribution reach, I am confident our portfolio of products and brands developed over the past decade will continue to flourish under its forward-looking stewardship.”
Turning Point Brands reported net sales of $122.6 million in the second quarter of 2021, up 16.8 percent over that reported in the 2020 second quarter. Gross profit increased 25.1 percent to $60 million and net income increased 49.2 percent to $15.4 million
“Our second quarter performance continued to demonstrate Turning Point’s positive growth momentum, led by our core market segments. Zig-Zag had an exceptional quarter with over 70 percent growth, driven principally by our strategic initiatives and aided by a favorable comparison against a Covid-related disruption in MYO cigar wraps the previous year. Stoker’s also delivered a solid quarter fueled by double-digit growth in our MST business,” said Wexler in a press note.