BeatBox is raising capital via a convertible note with a valuation cap of $190 million. BeatBox’s valuation – while very high – is reflective of its traction and incredible progress since its last raise. With $18 million in 2021 revenue, its 10.5x revenue-to-valuation multiple is high but not absurd. Overall, BeatBox’s valuation is relatively fair, especially when compared to the valuations of current competitors.

BeatBox operates primarily in the US boxed wine market. In 2020, more than $1.7 billion was spent on boxed wine products in the US. In fact, sales of boxed wines jumped 18% from 2019 to 2020 The global wine market is expected to grow at an annual rate of 4.3% until 2028, which is average for beverage companies operating within the consumer goods and services space. High regulations tied to the purchase and consumption of alcoholic beverages and a slow growth factor make BeatBox’s target market slightly less attractive. However, money spent on low-calorie boxed cocktails will likely increase given industry health trends and COVID-19 adjusting at-home drinking habits. If BeatBox’s boxed wines and cocktails remain flavorful and low in calories, it is likely that US consumers will become more loyal customers of BeatBox in the future. 

Overall, BeatBox’s addressable market is large but slow-growing, and the company has a variety of opportunities to further differentiate itself. While this is not a winner-take-all market, BeatBox could succeed in the boxed wine market through its branding, partnerships, and traction in the future.

BeatBox’s first co-founder and CEO Justin Fenchel is well versed in business, economics, and entrepreneurship through his education at Pomona College and the Red McCombs School of Business at the University of Texas at Austin. He began his career in finance with Bank of America before pivoting into entrepreneurship. His first venture, Flying Penguin, supported and advised brands at different stages. His education and entrepreneurial experience have helped to make BeatBox a popular boxed wine brand. 

Second co-founder and COO Aimy Steadman joins the team with a diverse background in marketing, management, communications, and entrepreneurship. She holds a Bachelor of Science and a master’s in business administration from the University of Texas at Austin. Steadman is well-versed in venture capital activities through her experience as the past partner at Congress Avenue Ventures, a strategic advisor to Springdale Ventures, and an active board member to various organizations. Her first venture, XL Web Services, offered custom marketing services for small businesses. Her background in venture capital has surely aided BeatBox in securing the necessary funding for its rapid growth and expansion efforts. 

Finally, third co-founder and CMO Brian Schultz is an experienced digital media mogul. Schultz holds a Bachelor of Arts from University of the Pacific, where he studied marketing. He founded his first company, Flying Penguin Mobile, in 2007 with the goal of taking popular youth brands into the mobile space. He went on to join the entertainment network Kabillion and Mind Candy. His extensive experience can easily be seen in BeatBox’s engaging and effective digital marketing campaigns. 

Collectively, BeatBox’s founders boast complementary skills and experiences, which will aid in the success of BeatBox. All founders, however, lack nuanced knowledge and experience in the wine or alcohol industry. To combat this potential risk, the BeatBox team hired industry veterans and individuals with more industry experience in operations. This was a prudent decision, highlighting the founders’ thoughtful management and problem-solving skills. Overall, BeatBox’s well-rounded team looks capable of leading the company to success.

The market for boxed wine and ready-to-drink cocktails is crowded, and it can be difficult to determine qualities that distinguish one brand from another. Competitors include Truly, Bonterra, Bud Light, BuzzBallz, High Noon, and Union Wine Co., to name a few. These competitors vary slightly in price and ingredients, but all offer similar products to BeatBox. BeatBox seems to distinguish itself through its customer base, community-building efforts, and flavor offerings. 

BeatBox is focused on attracting millennial and Generation Z consumers. The company’s flavor profile mirrors this customer base’s taste preferences, with options including fruit punch, pink lemonade, peach punch, tropical, and blue raspberry. Bright colors in packaging and displays make BeatBox hard to miss, and it can become a conversation starter for consumers at a party, music festival, or during a laid-back hangout. Its resealable design helps customers drink responsibly and keep the party mobile, unlike  many can and bottle designs. BeatBox has also focused on building its social media footprint in order to inspire community loyalty. The company works with multiple influencers in order to reach millions of potential customers.

Despite BeatBox’s focused target customer and strong marketing efforts, there is little that truly differentiates its product from the competition. The company’s focus on marketing and branding indicates that the team is aware of this challenge. While wine and ready-to-go cocktails are not a winner-take-all market, BeatBox will still need to overcome legacy brands in order to secure a niche for itself. Differentiation is the company’s weak point.

BeatBox previously raised more than $15.5 million to fuel its growth and expansion efforts. Since its last raise, BeatBox has enjoyed moderate product development progress alongside significant team, customer, revenue, and valuation growth. The company has outperformed past milestones and shows no sign of slowing down. 

In 2021, BeatBox’s revenue grew by more than 160% to $18 million. BeatBox has more than doubled its revenue every year for the past three years. This strong growth is a positive indicator for BeatBox’s future in the boxed wine and cocktail sector. BeatBox is projecting $38 million in revenue in 2022. With this past financial traction and growth, it plans to hit $100 million in revenue by 2024. BeatBox recently achieved profitability in 2021 and boasts product margins of 60%. These profit margins are extremely high compared to other products within the consumer goods and product sector. 

BeatBox grew its retail distribution efforts by 102% in 2021. Its products are now sold in more than 23,000 stores across the US. The company gained attention from being featured on Shark Tank. It has a strong social media presence and has partnered with well-known influencers to promote its brand, including Doing Things Media and Party Shirt. BeatBox’s explosive growth and high gross margins indicate that its current business model is effective and can be scaled as product demand grows.

Overall, BeatBox’s risk level is low. BeatBox has some market risk due to the competitive nature of the boxed wine industry. The company may struggle to stand out among established and trusted brands. Additionally, there is high market approval required in the alcohol beverage industry, but BeatBox has navigated these regulations seamlessly.  

In 2021, there was a small legal squabble regarding trademark infringement with Molson Coors and BeatBox, previously known as Future Proof before its rebranding. Future Proof had sued Molson Coors in 2020, accusing the brewer of stealing its product name for Future Proof’s then new hard seltzer brand Vizzy. Future Proof asked that the court prohibit Molson Coors from using the Vizzy name for its product. It is reported that both parties came to an amicable settlement, but there is little information on the details. Overall, this lawsuit should not raise concerns for investors but rather highlight the competitive nature of the industry.

Since BeatBox’s last round (when the company was called Future Proof), it has made significant progress and met key development  milestones. The company continued to engage customers through online social media marketing, growing its Instagram followers to more than 128,000 people and tracking more than 32 million impressions in 2021. BeatBox’s cross-channel social media engagement from January 2021 to January 2022 falls just below well-established brands Bud Light and Natural Light. Partnerships with TikTok and Instagram influencers has made BeatBox products reach virality. BeatBox’s brand awareness is at an all-time high. 

BeatBox’s retail distribution grew by more than 102%, and it intends to double distribution again for the third year in a row. The company’s revenue has soared from $5.5 million in 2020 to $18 million in 2021. As a result, BeatBox achieved profitability and can now work toward paying off long-term and short-term debts. The company’s previous valuation was $60 million, which has more than tripled. However, considering its substantial revenue, traction within the market, and strong customer adoption this increase seems justified. As a result of its tremendous progress, BeatBox continues to be a Deal to Watch.

BeatBox’s biggest concerns are competition and leadership. BeatBox operates in a crowded, slowly-growing market where legacy brands dominate. Name recognition is often vital for product adoption and ensuring brand loyalty. As a relatively new company, BeatBox could struggle to convert customers if its marketing and branding techniques fall short. To avoid being one of many, BeatBox will need to further differentiate itself moving forward and continue acquiring more of the market share. 

BeatBox also lacks industry experience across the founding team. Fortunately, to address limited experience concerns, BeatBox hired industry veterans and individuals with more industry experience in operations. These new team members have been influential in helping BeatBox scale.

BeatBox is exceeding past goals for financial growth, creating loyal customers, exploring new marketing opportunities, and diversifying its offerings. The company’s revenue has grown significantly to $18 million, and it is now profitable. BeatBox has gained media attention through deliberate partnerships with influencers connected to its core audience. The company has grown its distribution channels and scaled impressively despite possible changes in consumer drinking habits as many consumers are moving away from wine. 

The competition in this industry is fierce, but it is not a winner-take-all industry. BeatBox has developed tasty and low-calorie party drink options in eye-catching, resealable, and eco-friendly packaging, allowing customers to feel good about their beverage choices. BeatBox’s customer base is strong and becoming more loyal. Additionally, the boxed wine and ready-to-drink cocktail space has many niches for BeatBox to expand into with its growing customer base. The company has begun this expansion with additional product offerings, new sales techniques, and powerful social media efforts. The company’s drink flavors makes it more competitive and appealing to new customers looking for tasty alcoholic beverage options that are low in calories.

BeatBox is an alcoholic beverage company offering delicious and convenient ready-to-drink cocktails and single-serve wines. Although the founding team has little industry experience, additional team members have enough experience to support them. There are many competitors who offer similar products with similar prices, and the company’s revenue-to-valuation multiple is a bit high.

However, BeatBox seems to be unstoppable. BeatBox has significantly grown its revenue, distribution, marketing efforts, and product line over the past year – despite the pandemic and supply chain issues. It has achieved true product-market fit and is beginning to become a key player in the boxed wine and cocktail space. BeatBox achieved profitability in 2021, and the company projects reaching $100 million in revenue by 2024. Sustained social media and marketing efforts have paid off for the company as it boasts engagement numbers similar to established legacy brands. Overall, BeatBox offers a solid investment opportunity for investors interested in the wine and cocktail space. For these reasons, BeatBox is a Deal to Watch.

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

Analysis written by Carolyn Price, February 4, 2022.