In 2017, Nalpac — one of the most long-running adult toy distributors in the U.S. — made a major announcement: the Michigan-based company had been acquired by Craig Capital, LLC, a private equity firm owned by brothers Steve and Andrew Craig. And under their ownership, Nalpac has moved to a new facility in Ferndale, Mich. (a Detroit suburb) while continuing to distribute top brands and a wide range of pleasure products.
“Since taking ownership last year, we have spent time learning about the industry from both our loyal customers and vendors,” Steve Craig told XBIZ. “During the past year, we moved to our new facility, where we constructed a new office space and product showcase in the hip neighborhood of Ferndale. After the move, we focused our efforts on streamlining operations to better serve our customer base by introducing new technology and methodologies in our warehouse to implement our 99 percent same-day/next-day ship policy. To ensure we provide our customers with the best online information and shopping experience, we upgraded our network and hardware with over $1,000,000 in new equipment.”
We saw this as an opportunity to become part of a rapidly growing market that improves the lives of end users, making them happier and healthier people.
Steve continued, “This hardware supports our customer portal — where retailers may place orders using file uploads, retrieve real-time tracking, review invoices and download marketing materials — and Nalpac.com, where retailers may order products and review real-time product availability. Our investment ensures virtually zero downtime and the ability to roll out new platforms designed to better assist retailers in years to come. Finally, we upgraded our in-house marketing team — who have brought great attention to our innovative social media platforms — and (our) blog site, where retailers can learn about new products and current trends in the market.”
Nalpac has been in business since 1971, when it was founded by Ralph Caplan (the name Nalpac is Caplan spelled backwards). At first, Nalpac distributed smoking paraphernalia. But the company shifted its focus to adult products after deciding that they were safer from a legal standpoint.
Under its new owners, Nalpac has not experienced a lot of personnel changes. In fact, much of Nalpac’s pre-Craig Capital team is still in place — including employees who have been with the company for decades.
“After taking ownership, we retained most of the team,” Steve explained. “We greatly value our entire team, who have helped us through our transition. Glenn LeBoeuf, who has been with Nalpac for 15 years, continues to be our director of operations, focused on sales and vendors. Don Zerilli is still our senior buyer and has been with the company for 15 years. Mark Sulewski is the senior sales representative and has been with the company for 22 years. We also welcomed back Amy Lazzara, who formerly worked for the company several years ago, to improve all of our marketing and digital presence.”
The fact that the Craig brothers have different skills and talents, according to Steve, has been a definite advantage at Nalpac.
“While Andy and I are brothers, we are very different people — which allows us to work well as a team,” Steve stressed. “Each day, we come to work focused on improving Nalpac to ensure we best support our customers. We are privileged to have a great team, which permits me to focus on growth initiatives, M&A, legal and financial matters — whereas Andy focuses his efforts on implementing a continual improvement process and cost reduction strategies. Andy has worked with our purchasing and warehouse teams to streamline operations, achieving a 93% fill rate and 99 percent same-day/next-day shipping. Today, Nalpac is far better equipped to serve our growing customer base.”
Steve added, “This first year has been an education. We are grateful to our manufacturers and customers and humbled by their continued support. We want to reassure both manufacturers and customers that we aren’t going anywhere. We have both started to become more involved with product selection and buying, and we are looking forward to the future.”
Steve and Andrew Craig acquired Nalpac at a time when sex toys were becoming increasingly prominent in brick-and-mortar adult retail stores, which have all become more couples-friendly.
LeBoeuf observed, “Our sales representatives have become quite adept at assisting our customers to transition their areas to become more profitable with a broader array of pleasure products. We’ve had surprising success with pushing the envelope with some categories that our customers weren’t sure would sell in their stores. It’s interesting to see what people will buy but not ask the store staff for if they don’t see it.”
Craig Capital, according to Steve, saw enormous potential in the sex toys market when it decided to acquire Nalpac.
“We saw this as an opportunity to become part of a rapidly growing market that improves the lives of end users, making them happier and healthier people,” Steve asserted. “This industry is evolving, which provides ample growth and acquisition opportunities. This is a fast-paced and quickly evolving market which requires innovation and adaptation for a multitude of reasons, including demand, technology advancements and competition.”
Steve noted that when Craig Capital purchased Nalpac, it viewed the company’s location in Michigan as a definite plus and had no desire to relocate to another part of the U.S.
“Craig Capital is a Midwest-based company who is focused on the region,” Steve noted. “Nalpac’s Ferndale location, a suburb of Detroit, gave the company a strategic advantage over competitors, with quick shipping times to not only the Midwest, but both the East and West Coasts, with lower operating costs and an ample, tech-driven workforce.”
Steve added, “In 2017, the former owner of Nalpac was being forced to move out of the building they had occupied for several decades. We selected a more desirable neighborhood that was safer and conveniently located for most of our staff. We now operate out of a facility in trendy Ferndale that has modern features and finishes with an open office floor plan for a more collaborative work environment and close to 200,000 square feet of warehousing for expansion. We are actively recruiting and growing our sales and marketing teams while expanding our catalog of offerings to retailers.”
Nalpac recently released its wholesale catalog for the summer of 2018, and the well-known brands featured include, among others, Adam & Eve, System JO, Wicked Sensual Care, Hott Products, Topco, Blush Novelties and OxBalls. The catalog is divided into categories that range from bridal lingerie and pasties to gay pride, sex machines and animal-tail butt plugs.
“We are grateful (our vendors and customers) bestowed faith and confidence in us that allowed our great success during the past year,” Steve emphasized. “The market has changed greatly in the past decade and (is) challenging, but thanks to our customers’ support and team’s hard work, we have been able to reposition the company for continued growth.”
LeBoeuf explained that while a change in ownership can be challenging for a company, he is optimistic about the direction that Nalpac is taking under the Craig brothers.
“Despite a somewhat rocky start due to circumstances beyond our control, we are happy that we’ve retained our great relationships with most of our manufacturing partners,” LeBoeuf asserted. “We are extremely grateful to our customers who have continued to send us as much business as they could during the transition. Now that the dust has settled, we believe that our team can build stronger relationships than ever before.”