WellWell is raising a Crowd SAFE at a $10 million valuation with 20% discount. This price is somewhat steep given WellWell’s 2019 revenue of $450,000. The valuation is likely driven by the quantity of capital that WellWell has already raised, totaling $4.5 million from investors like Sweat Equities and CircleUp. Republic investors aren’t receiving a prime price for WellWell given the company’s existing investment, so WellWell’s price rating is middle of the road.

The plant-based beverages market was valued at $11.16 billion in 2017, with a projected CAGR of 12% through 2023. Demand for plant-based beverages is increasing due to heightened interest in plant-based/vegan diets, plus consumers’ desire for low-calorie drinks with high nutritional value. The market is growing at a steady pace, but is still quite small. By contrast, the global market for soda is over $406 billion. While high-nutrient, plant-based drinks are popular among high-income consumers shopping at Whole Foods, they have a long way to go before hitting the mainstream. Therefore, WellWell’s market score is relatively low.

WellWell was founded by a group of New York food and restaurant entrepreneurs. CEO Sagan Schultz holds a BS, MD, and MBA from New York University. He spent six years as a sommelier at Terroir Wine Bar in Manhattan while completing his medical training. Additional founding team members include Larry Praeger, Michael Chernow, and Collin Hughes. Praeger is the CEO of a national natural foods company. Chernow is a restaurateur, entrepreneur, and TV host, and Collin Hughes is a NYC photographer with an impressive client list. 

Altogether, this team has significant experience in food marketing and entrepreneurship. However, it seems that only Schultz, the CEO, is involved in day-to-day operations of the business. While his training as a medical doctor certainly lends credibility to WellWell’s health claims, he does not have prior experience managing a startup. This fact reduces WellWell’s team score somewhat, though the rating is still relatively high given the full team’s expertise in food and wellness.

A lack of differentiation is WellWell’s biggest risk. While the company states that its products are significantly more healthy and functional than competitive drinks, the average consumer may not be able to perceive the difference between similarly-packaged smoothies and juices with similar ingredient lists. Frankly, the Whole Foods beverage aisle is becoming increasingly crowded. Many brands are vying for attention from a relatively limited segment of consumers, and WellWell might not be able to stand out. Therefore, WellWell’s differentiation rating is its lowest across all five metrics. 

WellWell posted significant growth between 2018 and 2019. The company generated just under $200,000 in 2018, which jumped to just under $450,000 the next year. WellWell hasn’t shared 2020 financials, but 2020 revenues of roughly $1 million can be extrapolated from a total lifetime sales figure of $1.76 million. While revenue performance is strong, prospective investors should note that WellWell’s cost of goods sold is quite high relative to revenue — COGS was $770,000 on $450,000 in revenue last year. 

Nonetheless, WellWell has posted impressive revenue growth for the last three years. In addition, company leadership mentioned in the discussion section of the Republic raise page that WellWell hit profitability in Q4 2020, which would indicate that previous COGS issues are resolving. Therefore, WellWell’s performance rating is its strongest.

The healthy beverage space is extremely crowded, and some brands will undoubtedly fold under competitive pressure. WellWell is not particularly differentiated among functional or plant-based beverages, so the company does not yet have a strong case as an emerging winner in this somewhat niche space. The company’s historical issues with high COGS could be a particular disadvantage as healthy beverage brands engage in competitive price wars. In short, it is not yet clear that WellWell has the operational track record and brand value to win as a leading beverage brand.

WellWell faces strong competition in the healthy beverage space. This degree of competition is certainly a risk to the business — but also indicates that the niche is buzzy and growing. Younger Americans are leading the charge toward more natural, plant-based diets, and the space will only continue to expand. WellWell has the opportunity to position itself as a long-term market leader in functional beverages. 

WellWell has a good chance to achieve this success because it was founded by a group of entrepreneurially-minded New Yorkers — including a restauranteur with significant social following, a medical doctor, and the CEO of an established natural foods brand. The company has also received investment from a leading CPG firm, CircleUp, and celebrity investors AJ and Gary Vaynerchuk. This team has successfully built a brand with almost $2 million in lifetime sales, enthusiastic customer reviews, and nationwide distribution in leading retailers like Walmart and Whole Foods. A successful track record like this one is a strong signal that WellWell has the potential to grow and exit to a larger CPG or beverage brand, which would be a win for investors.

The market for plant-based, functional beverages is small when compared to soda and energy drink markets. However, it is also expanding rapidly with significant opportunity for a brand to carve out customer loyalty among health-conscious consumers. WellWell is on its way to doing just that: with nationwide distribution among wholesalers and a budding direct-to-consumer channel (relying heavily on subscription revenue), there are several pathways to continued expansion for the company. 

WellWell’s 2020 financials haven’t been released yet, and the business has clearly struggled to keep the cost of goods sold low in recent years. However, profitability is apparently around the corner, and the company is advised by leading CPG investors. WellWell’s track record indicates that customers love the product, retailers are willing to stock it on shelves, and WellWell is capable of posting significant year-over-year growth. Therefore, WellWell has been rated a Deal to Watch. 

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