How Arfa is Building the Next Great CPG Company
In early January, CNBC published an article titled “Spending time not working can spark the best business ideas, says top P&G exec.” In the piece, Proctor & Gamble’s president of Global Skin and Personal Care explains strategies he and his team use to enhance creativity. Exercises like getting out of the office for a stroll or reading the latest issue of a gossip magazine can induce a new way of thinking, he says.
P&G surely has unlocked formulas to create breakout CPG brands. The conglomerate counts Crest, Gillette, and 20 other labels with over $1 billion in annual sales under its portfolio.
Cincinnati, OH-based Proctor & Gamble, founded in 1837 as a candle and soap maker, achieved almost $70 billion in sales in 2019. The consumer goods manufacturer is largely credited as the first business to employ branding tactics, customer research methods, and systematic marketing to create products that solves the needs of the most loyal customers. (Read: the background story of Febreze in The Power of Habit)
Almost 200 years after William Proctor and James Gamble opened up shop, arfa is racing to create a modern platform of brands. They’re producing goods that are based on relationships, not revenue.
The art of listening
Drawing off his experience advising consumer brands on their most important financial decisions at Citi and later investing in promising upstarts like Zendesk and Novus with Index Ventures, Henry Davis was looking for the next idea that would disrupt e-commerce.
Davis met Emily Weiss, who at the time was running popular beauty blog Into the Gloss and brainstorming new avenues to serve her readers. Over lunch, the two decided to come together to work on what would become Glossier.
Through launching the beauty brand and helping scale it to a business that was valued at $1.2 billion in March 2019, Davis laid the groundwork for a creating products that serve the true needs of the customer.
In a podcast interview with The Glossy just months before his departure from Glossier, Davis says “…we’ve built systems and processes, and a culture, around wanting to know and understand and engage with the people that ultimately buy our products and help us decide what to make and how to make it.”
Now, the arfa team is taking this framework to a suite of emerging brands with a promise to blend the needs and aspirations of everyday people. Davis and his co-founders felt this type of company was essential to serving the next consumer and that they had compelling experiences to do it: Ariel Wengroff was a Publisher at VICE Media covering the conversations driving today’s world, Bryan Mahorney was Glossier’s CTO and previously started a digital studio acquired by Glossier, and Shabdha Chigurupati had extensive consumer and retail finance experience as well as working with Davis at Glossier.
When asked how his previous experience working with consumer brands influenced his work at arfa, Davis told me “I have spent a lot of time in my career thinking about the future of retail and customer connection. With arfa, we wanted to push the relationship between customers and brands still further, to fundamentally change that relationship, more than has happened so far in D2C.”
A seat at the table
Atlanta, GA; San Antonio, TX; and Gulport, MS seemingly have no connection to each other. But, instead of only interviewing potential customers in the Upper East Side or Venice Beach, the arfa team spent a year interviewing people from all across America to find out their real needs.
Unlike the personal care isle—full of identical products with flashy marketing campaigns—arfa aims hopes to tap the support of the people who will be the ones actually using its products. The Collective will not only have the opportunity play a major role in the development of new lines, they’ll also receive 5% of profits. There are currently hundreds of members, and arfa hosted countless meetups all across the country just to launch its first brand.
Davis and his co-founders views this relationship as an opportunity to redefine commerce, saying “Through our arfa Collective, we’ve established a unique model to restore what’s been lost in the relationship between brands and customers… We also believe that if you are willing to engage emotionally in co-piloting the development of one of our brands, you deserve to benefit financially too.” The arfa team believes this hand-in-hand process is better for everyone—the better that brands understand the actual needs of the customer, the better that products are able to cater to those needs.
“The next generation of product building will be a result of true community and honest conversations about body experiences and discussions of what people really want and need.”
- Henry Davis
Fighting coronavirus with The Collective
Amid the current global crisis, arfa is not standing on the sidelines. Davis told me that prior to the pandemic, the arfa team would be having intimate conversations with The Collective in living rooms all across the country. But now, those have moved to phone calls, video chats, and social media interactions: “Working remotely while launching a company certainly isn’t an ideal situation, but our team has risen to the occasion and gone above and beyond.”
When the American economy shut down in March and healthcare employees worked tirelessly to give medical attention to those in need, arfa’s first brand HIKI gave its inventory to hospital and medical facility workers for free:
No matter what you do in the building, from janitorial work to being a nurse or a mental health practitioner, you deserve to have personal care products that make your day a little more comfortable.
In total, HIKI was able to distribute 20,000 products to workers across the country. The brand, which dubs itself as “Sweat Products For Any Body,” also hopes to spread messages of warmth, social connection, and hope in a time when they’re needed most. Alongside their donations, HIKI offered discounted products to people who shared a positive message on Instagram with #todayimfeeling.
arfa plans to grow their portfolio with brands that “people actually want and need” and compete with long-standing CPG companies like P&G, Unilever, and Johnson & Johnson.