Society Brands, the health and personal care e-commerce brand holding company, has acquired Crunchi, the direct-to-consumer clean makeup and skincare brand that’s built a network of micro-influencer advocates.
The acquisition brings Society Brands’ portfolio to 13 brands, with health and personal care contributing 85% of its more than $160 million in annual sales, and is a prelude to more acquisitions of brands aimed at consumers worried about what they’re putting in, on and around their bodies. Kelly Kreusler and Melanie Petschke, who founded Crunchi in 2016, will continue to lead Crunchi as the brand plugs into its new parent company’s shared services model. Terms of the deal weren’t disclosed.
“Kelly and Melanie are unbelievable entrepreneurs, and they’re also great people. We feel it’s important to not only partner with people that have operational expertise, but also just good down-to-earth people that are easy to build a business relationship with. That is the first thing we always look for,” says Michael Sirpilla, CEO and co-founder of Society Brands. “The second thing is they have built a phenomenal community of advocates, and that’s a very, very unique aspect of their business.”
In a statement, Petschke says, “We’ve spent years carefully crafting a brand that reflects our personal values and commitment to health, sustainability and performance. Partnering with Society Brands allows us to scale that vision without compromising on what matters most to us and our customers.”
Society Brands didn’t specify Crunchi’s revenues, but Sirpilla divulges the company is interested in acquiring brands with sales in the $10 million to $40 million range. Crunchi’s products are priced largely from $20 to $100, and its bestsellers include Goldenlight Multi-Prep Facial Serum, Daylight Advanced Facial Cream, Nightlight Advanced Facial Cream, Sunlight Tinted SPF 30, Sunlight Body SPF, Smart Primer and Beautifully Flawless Foundation.
Called advocates by Crunchi, the brand’s micro-influencer partners host events or pop-ups to boost awareness about and sell Crunchi products. Once sales at a pop-up reach $300, they’re rewarded with CrunchiCash, the brand’s rewards currency. For $300 sales, they get $30 in CrunchiCash. For $1,500 in sales, they get $150 in CrunchiCash.
Clean beauty has become a controversial subject in the beauty industry with detractors criticizing clean beauty brands for fearmongering about specific ingredients, but Crunchi has stuck with it and promises “uncompromised clean beauty.” The brand, which promotes that it formulates its products with safe, organic and EcoCert ingredients, has certifications from EWG, Leaping Bunny and 4ocean Plastic Neutral.
Started in 2020 by Sirpilla, who guided population health management business Proactive Risk Solutions to $150 million within five years, with his brother Justin, former chief development officer at human resources technology company Venture Employer Solutions, and Shawn Dougherty, founder of wireless charging company Volonic and smartphone accessory company Mophie, Society Brands was born at the peak of the Amazon aggregator boom to scoop up Amazon brands across a variety of merchandise categories. Aggregators drew over $16 billion in funding.
“Kelly and Melanie are unbelievable entrepreneurs, and they’re also great people.”
Since then, the aggregator boom turned to bust, with companies like Thrasio, Benitago and Go North wiped out in its wake, but Society Brands pulled through by adjusting its focus. The company narrowed its scope to health and personal care and reduced its dependence on Amazon. While 90% of its sales previously came from Amazon, 25% of its sales come from the giant e-tailer today. Seventy percent of sales come from brands’ DTC websites and 5% from non-Amazon digital marketplaces. Along with Crunchi, among the brands in Society Brands’ portfolio are Primal Life Organics, Vitality Now, EarlyBird, Cleanomic and Clarifion. This year, Society Brands has registered 50% sales growth.
In 2022, the company raised $204 million in debt and equity in its first institutional round led by i80 Group, a private investment firm that specializes in structured credit solutions. At the time, the company announced it was in a “position to grow its portfolio to over $1 billion in revenue in the next few years.” Currently, Society Brands isn’t fundraising, according to Sirpilla. The company recently teamed up with iHeartRadio for its first-ever national marketing campaign.
Canton, Ohio-based Society Brands has roughly 200 people on its team, and team members are generally dedicated to a single brand, although some brands are grouped together with team members supporting them. Sirpilla says Society Brands often has quarterly cross-brand meetings to enable company-wide learnings about best practices. Half of the company’s supply chain is in the United States and half abroad. Sirpilla reports it hasn’t experienced much supplier margin compression, and its U.S. supply chain is “very stable.”
Going forward, Sirpilla expects Society Brands to acquire a brand a quarter on average. The company’s brand targets have shifted from the beginning, when it would acquire brands generating $1 million to $5 million in sales. Now, it’s pursuing brands crossing $10 million to $40 million in sales with double-digit EBITDA margins and solid retention metrics.
“If there’s a way for us to be profitable on the initial AOV over customer acquisition costs, that is great, but we also look at the customer cohort metrics to see how sticky customers are and see if the retention is there,” says Sirpilla. “If the retention is there, you don’t necessarily have to be as profitable on that initial purchase, but we do want to see profitability within three months, six months.”
An IPO is a possibility for Society Brands down the line. Sirpilla says, “Highly acquisitive companies oftentimes make really great publicly traded companies because it’s great news for the public markets to show strong growth, so that’s always been something that’s been on our radar, but you’re always trying to balance that with the macro environment, consumer confidence, timing.”
As Society Brands scouts brands, he continues, “Multiples are on the rise and we see that in a positive light. Even if that means that Society Brands has to pay more for a company, that means that Society Brands’ value is higher…I think that consumer confidence is getting stronger. I think that, as interest rates continue to keep on getting lower, then that’ll help valuations get higher as well.”
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