Little West is raising a Crowd SAFE at a $8 million valuation with 20% discount. This valuation is reasonable given the company’s current stage (almost $2 million in revenue), particularly given the discount. However, this price is not an incredible deal for investors, given the company’s recent struggles due to COVID-19. Therefore, Little West’s price rating is middle-of-the-road.

The global fruit and vegetable juices market is projected to hit $257 billion by 2025 at a CAGR of 6% over the next five years. This market is expanding, but not at an enormous rate. By another measure, interest in juice is growing even more slowly. The juice and smoothie bar market (physical restaurants that sell these types of products) is projected to grow at a rate of just 1.3% in coming years. 

The healthy beverage market is huge — but it is fractured among many varieties of seltzer, juice, kombucha, coffee, milk alternatives, and more. While natural juices have certainly trended more popular in recent years, the market is somewhat niche and growing at only a modest pace. It is also an extremely crowded market, with many brands of juice for consumers to choose from. Therefore, Little West’s market rating is moderately low.

Little West was founded by husband-and-wife team Cassandra and Andrew Walker. Before founding a juice company, Cassandra was a sales manager for fashion brand Joseph Ribkoff. Andrew was an actor and producer. The pair originally founded Clover Juice in 2013 and rebranded the company to Little West in the last two years. Little West’s leadership team also includes Brad Neumann, COO. Neumann does not appear to have a LinkedIn page, so it is difficult to assess his background. 

The Little West team has a strong founding story and is led by a couple with ties to L.A. and potential buyers. However, the team lacks true business expertise or consumer brand savvy. The company’s team score is middle-of-the-road as a result.

Little West believes that its local farm supply chain — that allows the company to press produce into juice within 48 hours of harvest — is a strong differentiator among the juice market. However, that differentiator is likely unimportant to consumers, who perceive all natural juice companies to offer roughly the same taste and nutrient profile in a bottle of juice. Moreover, this farm-to-bottle supply chain may inhibit scale. If the company intends to grow, it may need to drop that differentiator, taking away one of its only (if weak) unique propositions. 

In addition, Little West’s bottles look very similar to other natural juice brands, such as Pressed Juicery. Little West does not seem to be carving out a strong brand niche. Therefore, the company likely cannot benefit from a groundswell of consumer support. Instead, it must vie against larger juice brands on price and distribution to win its place on store shelves. Therefore, Little West’s differentiation score is its weakest. 

Little West was founded as Clover Juice in 2013, and the company has grown steadily over the last seven years. In 2018, Little West generated $895,195 in revenue and posted a roughly $23,000 net loss. The next year, 2019, the company boosted revenue to $1.83 million (more than 100% year-over-year growth), maintaining a relatively small net loss of $68,000. 

Little West was hit hard by the COVID-19 pandemic. The restaurants, hotels, and offices that represent a bulk of the company’s customer base were closed for months. The company generated less than $25,000 in revenue for April 2020, a significant drop from over $200,000 in February. However, Little West battled back and is still on track to pull in over $2 million in revenue for 2020 — a small but impressive gain over 2019 given the circumstances. 

Little West has grown steadily despite COVID setbacks and was running close to profitability in 2018 and 2019. Therefore, the company’s performance score is strong.

Little West’s biggest issue is differentiation. Cold-pressed juice is trendy, but most consumers can’t distinguish between a variety of brands with similar packaging and similar farm-to-bottle processes. Little West’s lack of distinctive branding means that it relies on wholesale relationships with retailers to generate most of its revenue. While this channel has been effective for the company thus far, Little West may ultimately struggle to grow much larger. National competition for placement in stores like Whole Foods is fierce. Store merchandisers may see Little West as a version of Pressed Juicery or another well-known juice brand with higher prices and worse distribution due to Little West’s local farm model. 

Overall, Little West has undeniably carved out a decent-sized roster of retail relationships on the West Coast, and the company clearly boasts a small set of loyal customers. Little West may struggle to scale nationwide, though. As a result, investors may struggle to reap a return at the current valuation — which is fair but not a bargain. 

Little West has grown steadily over its last seven years in business, and the company’s tenacity to fight back from dramatically low revenue in April 2020 is impressive. Indeed, Little West will still post year-over-year revenue growth despite the COVID-19’s significant impact on its customer base, which is a strong signal of good management. Little West’s executive team seems to lack much formal business experience, but the company’s track record in recent months would indicate that they make up for it in grit. 

Little West’s recent partnership with Whole Foods is promising, as is the company’s presence in 400 stores in five states. While Little West juices seem relatively undifferentiated from a consumer perspective, the company seems to have unlocked a winning formula for retail relationships, perhaps due to Cassandra Walker’s background in sales. Given this track record, it’s feasible that Little West continues expanding with Whole Foods and other major accounts to become a nationwide retail juice brand. Plus, at current rates, the company could hit profitability soon.

Little West sells bottled juices that are cold-pressed from farm-fresh produce harvested within 48 hours of bottling. Bottles are sold on corporate campuses like Apple, in retail stores like Whole Foods, and via the Little West website. The company has posted year-over-year revenue growth for the last two years, which is particularly notable in 2020 given COVID’s harsh impact on Little West’s business. 

On the other hand, Little West does not seem to be strongly differentiated in consumers’ eyes from a crowded landscape of juice brands, and national players may be able to out-price Little West given the company’s focus on local farm partnerships. The market for high-end juice remains somewhat niche, so Little West’s expansion potential might be limited. Therefore, Little West has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Katy Dolan.