Drink Monday is raising capital via preferred equity at a pre-money valuation of $24.5 million. With $3.4 million in revenue for 2021, the company yields a revenue-to-valuation multiple of about 7x. This multiple is a bit on the higher end when compared to the industry and also higher than Drink Monday’s direct competitors. The average multiple for non-alcoholic beverages is 4x. And Lyre’s, another company producing non-alcoholic spirits, recently had a multiple of 5.4x. While Drink Monday’s revenue-to-valuation multiple is a bit above average, the company’s valuation is very favorable when compared to other growth stage startups raising capital online. Furthermore, Drink Monday has seen strong growth, which may help to bolster its revenue multiple in the near future. Overall, its $24.5 million valuation is a decent deal for investors planning to invest in this round.

The no- and low-alcohol market was valued at $10 billion globally in 2021. North America holds 35% of the market shares in the non-alcoholic beverage industry, which puts it at $3.5 billion. In the US alone, the industry is forecast to grow by an impressive 28% between 2021 and 2025. The market size is small when compared to the alcoholic beverage industry, which stood at $262 billion in the US in 2021. However, the alcoholic beverage market has an annual growth rate of only 7.5%. 

The non-alcoholic beverage industry has high potential for future growth. The market is driven by consumers looking for alternatives to alcohol and making more conscious decisions about drinking habits. For example, 37% of people buy no- and low-alcohol drinks to avoid the consequences of drinking alcohol. In the U.S, 23% of non-alcoholic beverage drinkers avoid alcohol completely. Altogether, Drink Monday’s current market opportunity is significantly smaller than that of alcoholic beverage companies, but it is primed to expand rapidly in the near future. As a startup targeting an emerging market, Drink Monday is well-positioned to grow with the non-alcoholic beverage market.

Drink Monday’s team consists mostly of its many founders. 

Chris Boyd is the first co-founder and CEO of the company. Although he does not have experience in the beverage or consumer packaged goods (CPG) industry, he has an entrepreneurial background in consulting. He has also served as a manager for pharmaceutical companies, which gives him high managerial skills and helps him act as an effective leader as the CEO of Drink Monday. Although Boyd’s consultation company, Character Consulting LLC, is still operating, he is not very involved. Most of his focus is directed toward Drink Monday.

Second founder Ben Acott is an advisor to the company and is involved in eCommerce and growth. Although he is not fully dedicated to the company, his entrepreneurial background serves as an important guide for Drink Monday. He was the founder of CRU CPG eCommerce, which offers consultation to CPG companies in the wine, beer, and CPG sectors. His experience working with alcoholic beverage companies can help Drink Monday navigate the industry and understand how to meet consumers demands. Acott has also founded a digital marketing company that achieved an exit in 2011, which increases Drink Monday’s likelihood of a future exit.

Advisor and third co-founder Tonya Wearner brings 18 years of experience in eCommerce sales and management. She was able to double the margin for Kelty Pack when she worked there as the vice president of sales and licensing. Her skills will help Drink Monday manage its cost of goods sold and increase profitability in the future. Like Acott, she is not working full-time at Drink Monday.

Fourth co-founder and Chief Creative Marcelo Kertesz brings in more than 20 years in creative design and entrepreneurship. His experience can help the branding of Drink Monday and make it an established brand in the non-alcoholic market.

Advisors and co-founders Bradley Seipp and Ryan Mulvany both were co-founders of Quiverr. Quiverr provides help to Amazon’s Platinum third-party marketplace sellers and helps CPG brands sell on Amazon. The company has achieved $1 billion in Amazon sales. Quiverr was acquired in 2017 by Advantage Solutions. This experience proves Seipp’s and Mulvany’s high managerial and executive skills while further increasing the odds of Drink Monday’s future success.

Garrett Potter is a non-founding team member who serves as the CFO and COO of the company. Throughout his career, he has helped companies scale, achieve exits, and raise capital. His experience can help Drink Monday grow and expand and potentially achieve an exit, which is good for investors.

Overall, Drink Monday’s team has an unconventional number of founders. Having too many founders can be associated with a lack of leadership. However, besides Boyd, most of them don’t seem to be fully committed to the company. Since the CEO is fully committed, there does appear to be central leadership. Other founders can be pulled in when needed, making up for the lack of other full-time team members.

Overall, all the founders’ skills balance each other out, and many demonstrated strong skills in leading companies to scale and exit. Drink Monday’s team is very strong.

Drink Monday is not the only company offering high-quality non-alcoholic drinks. The growing non-alcoholic beverage industry has attracted several strong competitors. Seedlip, for example, is an England-based company that sells in the US too. It is an established competitor with similar product prices and annual revenue of around  $24 million, showing that people already recognize the brand. And similar to Drink Monday’s reviews on Amazon, Seedlip also has reviews that mostly range between three and four stars. Another direct competitor is Ritual Zero Proof, which is based in the US and has experienced 241% growth during the pandemic.

Drink Monday’s products offer low defensibility. Another company could easily develop their own zero-calorie, sugar-free, gluten-free, vegan, non-alcoholic gin and whiskey. However – like traditional alcohol – this is likely not a winner-take-all market. Since adult non-alcoholic drinks are an emerging market, Drink Monday still has time to establish itself as a leading brand. The next few years will be crucial for Drink Monday’s success, and the company will need to stand out amidst the competition in order to provide a return to investors.

Drink Monday’s revenue increased by 210%, going from $1.6 million in 2020 to $3.4 million in 2021. Since its launch in 2019, the company has generated total revenue of $5 million. This is very strong growth that exceeds the annual growth of the no- and low-alcoholic drinks market (at 28% in the US). The company’s growth also exceeds the growth of many competing companies in the non-alcoholic industry. Drink Monday also had successes in past fundraising campaigns. Its earliest crowdfunding was through a Kickstarter campaign, in which it was backed with more than $20,000. The company has also raised more than $2 million since its foundation in 2019. 

As of 2020, the company has a cash runaway of 14 months. This is a healthy runaway for a startup, as companies usually need six months for business to be sustainable. Drink Monday also has no long-term debt and low short-term debt of $279,600 from Shopify. With revenue of $3.4 million, the company does not look at risk of being unable to pay its debts. Drink Monday also has a gross profit margin – the revenue from sales after subtracting the cost of goods sold – of 49.4%. While that figure is a bit below the beverage industry average of 53%, it is impressive for such a young startup. 

Currently, Drink Monday has a customer retention rate of 20%. Although this is decent, it is below the average rate of the food and beverage industry, which was 32.7% in 2018. However, the company has a healthy cost of customer acquisition rate at the industry average of $22.  Drink Monday has also gained some attention from the media, with mentions in publications including Forbes, Vogue, and The Washington Post. This media coverage could help the company stand out among competitors and draw in more customers.

Drink Monday demonstrates very good financial performance and healthy traction. For a company that has only existed for a little more than two years, Drink Monday has established a strong foothold in the non-alcoholic beverage industry.

Investing in Drink Monday comes with a low risk profile. Most of the risk comes from the team. Although Drink Monday has a very strong executive team and founders, only one works full-time at the company. And although the model of having six founders that work when needed has proven to be effective and more affordable than hiring employees, it might not be as effective when the company scales and needs more commitment. If the founders are not ready to commit full-time later, the company’s progress might be hindered. 

The other risk is the company needing time to scale production. With the non-alcoholic industry booming, Drink Monday needs to keep up with the demand of customers, and products need to be in stock. With its low cash on hand of only $99,763 as of 2020, this might be a bit challenging to achieve.

Drink Monday’s last Republic crowdfunding campaign closed in April 2021. Since then, the company’s valuation increased 3.5x from $7 million to $24.5 million. This increase is good news for previous investors. And for current investors, the investment opportunity might still be lucrative. The valuation-to-revenue multiple went up from 4x to 7x, which might be slightly concerning. However, the revenue also increased by more than 2x from $1.6 million in 2020 to $3.4 million in 2021.

Drink Monday has also managed to add a new line of non-alcoholic whisky products – a big accomplishment in a gap of less than one year. It is also working toward releasing ready-to-drink beverages. The team has also added Garrett Potter to strengthen operations. His background in helping companies raise capital and achieving exits can help Drink Monday succeed in the future.

Since Drink Monday has made great progress, its increase in valuation is somewhat understandable — if still a bit high. Taking all these reasons together, Drink Monday’s  remains as a Deal to Watch.

Drink Monday’s products are not defensible and are easy to replicate. The company faces a lot of competition from bigger and more established companies that offer wider varieties of drinks at similar or cheaper prices. Furthermore, the non-alcoholic market itself is still in its early stages. Although Drink Monday has established itself as a strong competitor so far, the increase in purchases could be due to how the COVID-19 pandemic changed consumers’ habits. People were more likely to try new experiences, and eCommerce spending increased by 34.2% between 2019 and 2020. The non-alcoholic sector soared during that period. Drink Monday will need to establish sustainable revenue outside these temporary consumer trends.

The company needs to expand aggressively and establish itself as the leading brand – especially in terms of diversifying its offerings – in order to have consistent growth in the future. Drink Monday currently lacks in distribution channels and partnerships with restaurants and bars, which can be a huge revenue channel for the company. 

The low- and non-alcoholic beverage market has been experiencing rapid growth at 28% year-over-year in North America alone. Especially as younger generations such as Millenials and Gen Z are drinking less overall, Drink Monday is in position to answer the need for alternatives to alcoholic drinks. The company’s recent revenue increase of more than 200% from 2020 to 2021 proves that it offers high-quality products customers are willing to pay for. In fact, 78% of non-alcoholic beverage customers also buy alcoholic beverages, which means there is a rise even among people who still are not ready to completely give up alcohol.

Drink Monday could also have exit opportunities in the future. For example, competitor Seedlip was founded in 2014 and was acquired five years later by Diageo, a drink corporation that has mainly been focused on alcohol. This acquisition indicates that even the alcohol industry believes in the potential of the non-alcoholic beverage market. 

Although the team structure of Drink Monday is unusual for startups since there are six founders, this model has proven to be effective for the company so far. One founder is fully active in the company while the others get involved when needed, and thus the company is able to stay nimble while saving on expenses. Between Drink Monday’s last and current round, revenue doubled, and the company has added a new line of beverages. The company has proven that it is able to provide drinks with good taste, price, and availability to consumers even though it was recently founded.

Drink Monday makes non-alcoholic drinks, including gin and whisky. The company operates in a growing yet very competitive market with a few established brands, and a number of competitors offer similar products at similar or cheaper prices. The company is a bit overvalued at a revenue-to-valuation multiple of 7x — a 3x increase since its last Republic campaign. The high growth of non-alcoholic beverages could be short-term if it’s solely attributed to the pandemic, where people were more likely to try new things and start new habits. The Drink Monday team is also concerning because the company has six founders, but only one is fully dedicated.

Nevertheless, Drink Monday’s pros outweigh the cons for investors looking to invest in this round. Drink Monday’s revenue has increased by more than 200%. It has also added a new beverage type and a strong new team member since its previous 2021 raise. Both of these factors can help the company keep increasing its revenue in the future and scale. The non-alcoholic beverage market also has high potential and might keep increasing due to more than the pandemic. A growing number of consumers, especially the younger generation, have been abstaining from drinking due to an increased awareness about health. If this trend continues, Drink Monday will be likely to profit.

Lastly, although Drink Monday has an unconventional founding team, the various co-founders all bring key skills and relevant experience. Multiple co-founders have participated in previous exits, which increases the likelihood that Drink Monday will also reach an exit. With so many positive signs, Drink Monday is a Deal to Watch.

For questions regarding the KingsCrowd analyst report for this company, please reach out to [email protected].

Analysis written by Yasmin Sharbaf on February 11, 2022.