Pit Liquor

Pit Liquor

Growth Stage

Natural, toxin-free whiskey deodorant. Quench Your Stench. Liquid Courage.

Natural, toxin-free whiskey deodorant. Quench Your Stench. Liquid Courage.

Overview

Raised to Date: Raised: $553,598

Total Commitments ($USD)

Platform

Wefunder

Start Date

12/27/2020

Close Date

03/31/2021

Min. Goal
$75,000
Max. Goal
$750,000
Min. Investment

$200

Security Type

SAFE

Series

Pre-Seed

SEC Filing Type

RegCF    Open SEC Filing

Valuation Cap

$5,800,000

Discount

10%

Rolling Commitments ($USD)

Status
Funded
Reporting Date

04/29/2021

Days Remaining
Funded
% of Min. Goal
Funded
% of Max. Goal
Funded
Likelihood of Max
Funded
Avg. Daily Raise

$5,889

# of Investors

660

Momentum
Funded
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Year Founded

2020

Industry

Beauty & Personal Care

Tech Sector

Non-Tech

Distribution Model

B2B/B2C

Margin

High

Capital Intensity

High

Location

Fort Collins, Colorado

Business Type

Life Style

Pit Liquor, with a valuation cap of $5.8 million, is raising funds on Wefunder. The company makes deodorant from whiskey and vodka. The natural deodorants of Pit Liquor do not cause rashes, reactions, or pain, and help to fight the stink with their revolutionary formulas. Erica L Feucht and Jason Feucht founded Pit Liquor and have raised over $720,000 since the inception. The current crowdfunding round has a minimum goal of $75,000 and a maximum goal of $750,000, and the funds will be used for the purchase of inventory, manufacturing equipment, patents, marketing, and new employees. Pit Liquor has partnered with wholesalers, including Nordstrom, Faire, and more, and reported a three-times year-over-year revenue growth since 2017.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$287,521

$84,654

COGS

$136,147

$50,817

Tax

$0

$0

 

 

Net Income

$-110,202

$-50,712

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$5,074

$14,726

Accounts Receivable

$0

$0

Total Assets

$12,896

$16,044

Short-Term Debt

$66,589

$20,915

Long-Term Debt

$163,709

$40,412

Total Liabilities

$230,298

$61,327

Financials as of: 12/27/2020
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Pit Liquor 05/30/2022 Wefunder $7,501,478 $147,002 Equity - Preferred Funded RegCF
Pit Liquor 03/31/2021 Wefunder $5,800,000 $553,598 SAFE Funded RegCF
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Synopsis

The information age has ushered in a new era of skepticism about the impact of man-made products on our environment and our bodies. Rising interest in sustainable or organic products has affected nearly every sphere of consumer products — including the cosmetics industry. Consumer demand for natural cosmetics has skyrocketed and caused an upheaval in product development and regulation among major beauty brands. 

This newfound interest in natural beauty and health products even extends to our armpits. Traditional deodorants, many of which contain aluminum, are suspected by some consumers to cause breast cancer and other serious illnesses. It’s important to note that the National Cancer Institute has not found any conclusive evidence linking deodorants or antiperspirants to cancer, yet the widely-spread myth lives on. 

It’s no surprise, then, that the global organic deodorant market is expected to grow at a CAGR of 14.1% through 2025. The issue? Rumor has it that natural deodorants simply do not work. A quick Google search yields countless stories of rashes and unbearable body odor that resulted from a switch to natural deodorant. Clearly, consumers are in need of a natural option that satisfies their preference for chemical-free cosmetics while still fulfilling the purpose of deodorant. 

Enter Pit Liquor, produced by Distilled Bath and Body. In appearance alone, Pit Liquor is obviously different than most natural deodorant products. Pit Liquor is a liquid spray deodorant, packaged in an elegant glass bottle with an indie-looking label. Moreover, Pit Liquor is made out of truly natural ingredients, substances like whiskey, vodka, fennel, and grapefruit that have been ingested by humans for centuries. Pit Liquor is disrupting the natural deodorant industry with products that are genuinely all-natural and actually work. 

Pit Liquor’s current Wefunder raise has been rated a Neutral Deal by the KingsCrowd investment team.

Next Section: Price

Price

Pit Liquor is raising a Crowd SAFE at a $5.8 million valuation cap — $4.25 million for early bird investors — with a 10% discount. This valuation is reasonable given the company’s current $1 million annual recurring revenue (ARR) traction, and Distilled Bath and Body’s broad range of proprietary products, some of which are patent-pending. Therefore, Pit Liquor’s price rating is above average.

Next Section: Market

Market

The market for natural deodorant is expanding rapidly, but it is still very small at this time. It was valued at just $62.9 million in 2018. Even with a projected CAGR of 14.1%, the market is very niche. Moreover, this small market is already dominated by semi-household name brands like Tom’s and Schmidt’s. As the market continues to grow, mainstream deodorant brands like Secret and Degree could also introduce natural alternatives, further squeezing out small players like Pit Liquor. Therefore, Pit Liquor’s market rating is its lowest across all five metrics. 

Next Section: Team

Team

Pit Liquor was founded by a husband-and-wife team with a compelling story. Erica Feucht was pregnant when she began experiencing underarm rashes. Her husband, Jason Feucht, set out to investigate alternative deodorant options. Concerned by the potential impact of the ingredients in most brands, he conducted thorough research to identify the most effective, all-natural alternative. He initially identified hand sanitizer as a viable option, but developed an even more natural product based in liquor (whiskey, gin, etc.). 

Erica, Pit Liquor’s CEO, has a bachelor’s degree in English and worked for several years as a writer and editor before founding Pit Liquor. Jason, the company’s COO, graduated from the Colorado School of Mines with a B.S. in Economics (minor in Materials Engineering) before holding a range of IT and technical writing positions. 

The Feuchts have grown Pit Liquor impressively over the last three years, evolving from a bootstrapped business out of their kitchen to a growing startup with a $5.8 million valuation. That being said, the co-founders don’t have particular experience in entrepreneurship or scaling consumer brands. Therefore, Pit Liquor’s team rating is middle-of-the-road.

Next Section: Differentiators

Differentiators

Pit Liquor stakes its reputation on its differentiation both from mainstream deodorants and antiperspirants as well as “natural” alternatives. At least from an aesthetic perspective, this differentiation is clear. Pit Liquor is a spray-on deodorant in a bespoke-looking glass bottle, a far cry from the mass-produced plastic sticks that line the shelves at supermarkets. Pit Liquor’s primary ingredient, liquor, is also unusual in the deodorant market, and allows the company to produce catchy marketing materials that are distinct from competitors. 

However, it may be difficult for the average consumer to recognize the real difference between Pit Liquor’s all-natural formula and that of more established competitors. Pit Liquor may in fact be too unusual to be deemed effective by the casually-browsing shopper. Spraying alcohol on your armpits is a strange proposition, and consumers seeking a natural deodorant might prefer not to stray too far from the norm. While the ultimate effectiveness of Pit Liquor’s differentiation is certainly up to debate, KingsCrowd’s differentiation rating for the company is low.

Next Section: Performance

Performance

Pit Liquor’s most impressive figure is the $1 million of annual recurring revenue (ARR) that the company touts throughout its raise page. While this level of stable subscription revenue is certainly a huge asset, the company’s realized revenue through 2019 is a bit less eye-catching. Distilled Bath & Body generated $287,521 in revenue in 2019, but posted a net loss of $110,202. Notably, though, the company did grow significantly between 2018 and 2019. In 2018, revenues were just $84,654, representing more than 200% year-over-year growth. 

Financials for 2020 are not available, but Pit Liquor implies that revenues grew 3x since 2019. Notably, the company’s profit margins are 86%, a strong foundation for future growth (though the company is currently far from net profitability). Overall, Pit Liquor’s financial performance offers mixed signals: impressive year-over-year growth and high profit margins, though net income is strongly negative and 2020 financials can’t be assessed. Therefore, Pit Liquor’s performance rating is its highest — though still middle-of-the-road.

Next Section: Other

Bearish Outlook

Pit Liquor seems to have built a base of loyal customers, and its innovative products and catchy marketing have helped it to carve out a niche among those seeking an alternative to mainstream deodorant. However, this group of consumers is still small. Pit Liquor’s biggest risk is the niche nature of the market it plays in. Even the most all-star products won’t become household names if the potential audience for those products is small. 

Moreover, there is some inconsistency between Pit Liquor’s high unit profit margins of 86% and the company’s overall unprofitability. This trend is particularly concerning given the fact that Pit Liquor is only now beginning to spend on growth marketing, which is historically the source of unprofitability for consumer brands. If the company has lost money with primarily organic marketing thus far, how much does it stand to lose by cranking up paid ads? Pit Liquor seems to have some progress to make on a sustainable business model before investors can confidently expect a return on investment. 

Next Section: Bullish Outlook

Bullish Outlook

While there are some questions about the effectiveness of Pit Liquor’s differentiation (can a product be too different from existing alternatives and thereby turn customers off?), overall the company’s core strength seems to be the innovative nature of its products. With catchy marketing and high profit margins, Pit Liquor could be steps away from a profitable flywheel that positions it for acquisition within the next several years. 

It helps that Pit Liquor is planning ahead for this potential exit, having reportedly begun engaging with an investment bank to lay the groundwork for acquisition relationships. Schmidt’s Naturals is a proven success story to emulate. That company was also started as a home-based natural deodorant brand before being ultimately acquired by Unilever in a nine-figure deal in 2017. Pit Liquor’s founders are positioning the company for exit, which could signal a great opportunity for investors to get in at this reasonable price.

Next Section: Executive Summary

Executive Summary

Pit Liquor offers innovative products well-suited for consumers’ growing interest in all-natural deodorants. The founding teams’ story aligns well with the company’s bespoke brand, and a set of loyal (and subscribing) customers proves that Pit Liquor has found a way to resonate in this niche market. With 3x year-over-year growth and a reasonable valuation, this might be the moment to invest in Pit Liquor as the company prepares for eventual exit. 

However, the market for all-natural deodorant is just that: niche. Even with an impressive projected CAGR, only some tens of thousands of consumers are currently interested in all-natural deodorants. Combine that pessimism about market size with questions about Pit Liquor’s profitability, and investors have some reason to doubt that this investment will be a lucrative one. Therefore, Pit Liquor 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.

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Pit Liquor on Wefunder
Platform: Wefunder
Security Type: SAFE
Valuation: $5,800,000

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