How Merit Won Over the Grown-Up Glossier Girl

Three years ago, the beauty world had seemingly lost interest in Millennials and set its eye on a shiny new set of spenders: Gen-Z. But serial entrepreneur Katherine Power, who founded fashion editorial website Who What Wear, skincare line Versed and organic wine brand Avaline, felt the world needed at least one more Millennial brand – minus the pink.

“We’ve always gone after this older Millennial … who didn’t feel like they fit into some of the Millennial brands with the pink and the neon,” said Power of Merit Beauty, a clean colour line launched in January 2021.

Her instincts have paid off. Merit, which is sold direct-to-consumer and through Sephora, is profitable and surpassed $100 million in retail sales last year. In 2024, it is projected to reach over $100 million in revenue with its line of products geared toward creating fast and easy “no-makeup makeup” looks. With its quick ascent, the brand has its eye on the future. In February, it appointed former MAC Cosmetics global president Philippe Pinatel as CEO. This year, it also tapped Goldman Sachs to explore exit options.

At a lower price point than other clean or luxury beauty labels — its individual products cost between $20 to $40 — Power is betting that classic, minimalist makeup is a winning concept.

“It’s very different from most of the industry, which tends to go with the consumer who is very avid about beauty and passionate about the category,” said Pinatel, who describes the Merit customer as one with a “pragmatic approach to beauty.”

Millennial Gold

Merit’s January 2021 launch came as the beauty world was obsessing over the decline of Millennial pink and the beauty “girlboss” era. As industry commentators were hailing the end of the curated Instagram aesthetic and rise of Gen-Z brands with colourfully chaotic style, Merit opted for a handful of products like its Flush Balm blush orb and Bronze Balm stick bronzer in understated gold, beige and lucite packaging.

“They cater to working women and sophisticated women. A lot of the beauty brands have gone very Gen-Z,” said Brooke DeVard, a Millennial content creator and host of the podcast Naked Beauty, who has done branded social content for Merit. “[Merit] feels grown-up. It feels pulled together. It feels like, ‘We want the no-makeup makeup look, but we want something that feels a little bit more grown-up than say, Glossier.’”

Power is no stranger to brand building. She founded or co-founded Who What Wear in 2006, lifestyle site Byrdie in 2013, Versed in 2019 and Avaline in 2020 with Cameron Diaz, who has appeared in get-ready-with-me videos on Merit’s YouTube page while drinking wine. Merit, like several of Power’s other brands, found its sweet spot with Millennials and Gen-Xers. Over 50 percent of Merit’s website visitors are between the ages of 25 and 45.

“We were developing Merit during a time of maximalist beauty, trend beauty and artistry beauty. There was this micro generation that wasn’t being addressed within the new brands that were coming out,” said Power.

Even more important than age demographics is psychographic profiles, said Pinatel. According to Power, the brand’s concept resonates with beauty shoppers in several key ways: luxury positioning at a lower price point (its foundation stick is $38, while Westman Atelier’s is $68), an ingredient profile that fits Sephora’s “clean” ingredient lists (developed with the help of Billie Eilish’s esthetician Biba de Sousa) and quick routines for busy professionals. With several products in a solid stick format, Merit emphasises the idea of the “five-minute face” that can be done on the go; Power herself likes to do her makeup in the car.

While priced about 30 percent lower than similar labels in the luxury beauty market, according to Power, the label leans into upscale and fashion-forward positioning. Power’s fashion media experience running Who What Wear has shone through and has helped attract a cult of fashion-world faces to star in campaigns including former Vogue creative director Grace Coddington, ex-J.Crew designer Jenna Lyons and supermodel Helena Christensen.

And despite not being a makeup artist brand like Mario Dedivanovic’s Makeup by Mario or Gucci Westman’s Westman Atelier, Pinatel said that the fact that Merit is a “fashion-adjacent brand” gives it “a very creative aesthetic and very clear direction.” For the Fall/Winter 2023 fashion season, it collaborated on a bag with Proenza Schouler while also being active backstage at the label’s runway show, providing makeup looks on models including Bella Hadid.

Nailing the Fundamentals

As a slew of cosmetics brands such as Makeup by Mario, Glossier and Rare Beauty, as well as fellow clean colour labels Kosas and Westman Atelier, are all reported to be entertaining exit options, Merit’s success has stood out as it achieved profitability in a short period of time.

While e-commerce makes up half its sales, Merit has avoided the DTC-only model of earlier Millennial labels. It launched with Sephora a month after its brand debut in February 2021. To date, its Minimalist Perfecting Complexion Stick is the number one stick foundation at the beauty retailer, according to the label, its Solo Shadow eyeshadow became Sephora’s top-selling eyeshadow at launch and its Flush Balm and Bronze Balm are in the top five in their respective categories.

The popularity of stick products ties into Merit’s attention to fast and easy makeup routines. This has led to prioritising full-face bundles such as its five-piece “Polished Set” for $129. This strategy has meant that no product makes up more than 20 percent of its revenue; the brand’s average order value on its DTC site is over $100.

To extend its growth, the brand’s next moves include introducing more multi-purpose products, as well as a push into international markets. It has three more products coming out this year and plans to expand more deeply into skincare. International expansion has begun with a DTC launch in the UK, with further plans to move into Europe. These efforts are already reflected on Merit’s social media channels, where a large portion of its “quiet luxury” influencers are based in France. While Pinatel has extensive experience running beauty brands in Asia, he said “it’s too early to speak about” a more global footprint.

And as sale rumours continue to follow the brand, Power said firmly, “We are not engaged in a sale process at this time. … I encourage all my brands to make relationships with bankers well ahead of any type of process, because I think it’s important to get to know the market. And Goldman is obviously top in their field.”

For now, brand building appears to be Merit’s focus.

“Our customer is buying the products for their daughter and recommending them to their mother,” said Power. “We really wanted to create something that was multi-generational, that would stand the test of time.”