Obvious Wines is raising an equity offering at a $10,999,153 valuation. This price puts the company squarely in the middle of the road among typical deals on crowdfunding platforms. A revenue multiple of just under 8x (based on 2020 revenues of $1.38 million) seems fairly reasonable — particularly given indications that wineries can sell for higher multiples than most types of consumer product businesses. Therefore, Obvious Wine’ price rating is above average. 

Americans buy a lot of wine, but the wine market is only mid-sized relative to other types of food and beverage categories. The US wine market was estimated at $61 billion in 2017. While that’s a decent size, it’s only a tad more than half the size of the US beer market, which is worth closer to $116 billion. 

Growth in the wine market is being driven by the diversification of products in the wine category. These days, the wine aisle includes blends with a wide range of alcohol by volume (ABV), flavors, packaging types, and more. The millennial and Gen Z generations are taking an interest in canned and boxed wines as well as wine-based cocktails. It’s a positive sign that Obvious Wines is playing in a growing market, but overall, US demand for wine is still only average compared to beer and other beverage categories. As a result, Obvious’ market rating is middle-of-the-road.

Obvious Wines was founded by Brice Baillie, a French finance professional who grew up in Champagne and has always had an appreciation for wine. Baillie holds an MBA in management and finance from EDHEC Business School in France and spent the first three years of his career as an Audit Supervisor at PwC. He then moved on to L’Oreal, where he worked for almost eight years in finance roles of increasing responsibility. In addition to his full-time job titles, Baillie is apparently also an investor and advisor in various startups, and he previously co-founded a theatre company in New York. 

The Obvious Wines senior team also includes Russell Stoner and Anne Stark, both sales professionals. Stoner, Obvious’ vice president of sales, has a decade of experience in wine sales. Stark, the company’s sales manager, lends a cross-functional sales and marketing background. She has more than 10 years of experience in marketing, communications, and account management. 

Overall, the Obvious Wines team is well-suited to scale a wine company. While founder Brice Baillie doesn’t have formal experience in the wine industry, he has significant business and finance expertise. His upbringing in a famous wine region of the world likely adds to his overall wine industry exposure, network, and passion. Therefore, Obvious Wines’ team score is higher than average. 

Obvious Wines faces significant competition in the wine industry, and it’s not clear that differentiation on labeling alone is enough to build a strong wine business. Obvious’ offers clean, millennial-friendly labels and a basic portfolio of wines that cater to most consumers’ preferences. However, the company lacks any true “secret sauce” — a proprietary formulation, business model distinction, or other type of advantage that would distinguish it from other wine companies. The alcohol aisle is quite crowded with many other beverages primed for millennial consumption. Clever packaging, bright labels, and an ever-expanding variety of drink options makes it more difficult than ever for a single brand to stand out. There’s no clear reason why Obvious Wines is positioned to snap up a large segment of the wine market, so the company’s differentiation score is its lowest across all five metrics. 

Obvious Wines was founded in 2018, and the company has exhibited decent revenue growth in the years since. In its first year of operations, Obvious Wines generated $240,000 in revenue. That figure jumped to $1.05 million in 2019, a meaningful increase. In 2020, revenue growth was slower. The company still made more money — bringing in $1.38 million — but posted a much lower year-over-year increase compared to 2019. Notably, though, Obvious was very nearly profitable in 2020, with a net loss of only $1,361.

There are other signals that Obvious is primed for success. Most importantly, Obvious has barely scratched the surface of the online, direct-to-consumer channel. The company sold just $200,000 worth of wine online last year with no marketing investment, and consumers love buying wine online. Moreover, Obvious’ average order value from e-commerce sales is $119, with a $343 lifetime value. Those stats indicate that Obvious could efficiently spend on paid advertising to spur customer acquisition. 

Obvious Wines has performed well so far, and there is strong potential for future growth, particularly through the e-commerce channel. Consequently, Obvious Wines’ performance rating is its highest across all five metrics. 

An investment in Obvious Wines is a risky one for several reasons. For one, Obvious is led by a solo founder who doesn’t have previous entrepreneurial experience. It’s too soon to say whether he is equipped to scale the company. The company’s financials also offer some risk. Revenue is still fairly low, and year-over-year growth from 2019 to 2020 isn’t promising (of course, the COVID-19 pandemic likely played a role). In addition, the wine market isn’t gigantic, and Obvious is competing against a huge number of wineries and conglomerates that can out-price Obvious’ products. As with any company in the age-restricted “sin sectors,” Obvious faces legal risk. While the government is unlikely to ban alcohol any time soon, the logistics of online alcohol sales are up for scrutiny from lawmakers and often vary state-to-state. 

Obvious Wines has built a clever brand that prioritizes simple, easy-to-digest info about wine rather than elitist posturing and snobbery. It’s a brand that’s very much in line with the current alcohol market. There are more alcohol choices than ever, many with bright and clever packaging, all trying to appeal to the millennial and Gen Z buyer. It’s for that reason, though, that Obvious doesn’t seem to stand out all that much among the crowded field of alcohol brands. Most millennials are comfortable interpreting basic facts about wine, and there are plenty of casual wine options in cans or boxes that have already infiltrated the market. 

Obvious Wines doesn’t seem to be particularly well-differentiated or competitive in this market, and there aren’t many other signals about the company that strongly indicate future success. While Obvious’ founder is an experienced finance professional, he hasn’t built a consumer beverage brand before.  Although the company’s revenues grew meaningfully between 2018 and 2019, year-over-year growth in 2020 was slower. It seems that Obvious is on the way to building a sustainable, profitable business, but there’s no clear indication that this deal would generate explosive returns for investors.

In three years, Obvious Wines has built a strong brand, distributed bottles to multiple states and online, generated millions of dollars in revenue, and even appeared on Shark Tank. While the company isn’t an overnight success, the ingredients of a successful business are present here: good distribution channels, capital-efficient operations, a founder with top-tier finance experience, etc. 

It’s particularly intriguing that Obvious Wines has barely begun developing a direct-to-consumer e-commerce engine. The company already made $200,000 in sales from direct-to-consumer (DTC) orders last year, all without any marketing spend. These customers were valuable, with more than $100 average order value and a lifetime value in excess of $300. The company is almost profitable. If Obvious devotes a portion of the capital raised in this round toward paid customer acquisition, it could expand its customer base quickly and fuel even more growth in its wholesale distribution channels. There’s real potential here — at a decent price for investors.

Obvious Wines sells bottles of wine with clean, simple labels that remove the “snobbery” and confusion from wine purchasing. Founded by a French wine-lover who grew up in Champagne and later spent a decade in corporate finance, Obvious has established strong distribution relationships in several states and is looking to invest more in its direct-to-consumer channel. Based on initial data from the e-commerce channel, online orders could spur the company toward even faster growth. 

On the other hand, Obvious Wines’ products aren’t all that differentiated from competitors in the wine aisle. While clean, simple labels are helpful, many other wine brands are approaching their packaging the same way. Obvious hasn’t built a strong moat around its business. In addition, year-over year growth was slower in 2020 than it was in 2019. Therefore, Obvious Wines has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to [email protected].