Kombucha Brands Broaden Sails to Catch Sales (with Brand News)

KOMBUCHA MAKERS GO PLATFORM TO SPUR GROWTH

By Brad Avery

Just a few years ago, kombucha had broken out into the mainstream as one of the top categories in the emerging better-foryou beverage trend. But recent years have seen its growth slow, even as consumers during the pandemic raced to buy healthy food and beverage products en masse.

Matthew Barry, senior consultant for beverages at Euromonitor International, told BevNET that although other functional beverage categories saw extensive growth in 2020, when pandemic-panicked consumers sought out drinks with immunity-boosting or relaxation-based benefits, kombucha only saw mild, stable growth.

But the slowdown in the category predates the pandemic, with the market assimilating an influx of new functional beverages that seem to take aim at the characteristics kombucha embodies: gut health-friendly “pops” providing an alternative better-for-you soft drink, yerba mate drinks fueling the expansion of plant-based energy, and probiotic and juice shots meeting the need for immunity and wellness.

While many kombucha brands attempted last year to underline the connection between gut health and overall health that helped generate increased sales for innumerable functional brands, Barry said that consumers still aren’t making the connection between balanced digestion and immunity that brands want them to see.

“That’s been one of the key problems, it just hasn’t really resonated with consumers’ functional demands the way that I think it would have needed to,” Barry said. “I think the challenge is just that there’s a lot of other functional stuff on the market these days. Kombucha once had a particular place as being the healthiest soft drink on the market, and it did have the potential to be sort of the gold standard for functional, healthy beverage. But now there’s just so much out there, it’s hard to seem new and exciting.”

Recognizing the increased competition on shelf, some kombucha leaders have even begun looking at the category from a broader perspective. Health-Ade co-founder Daina Trout told BevNET in August that she believed seeing kombucha as its own category could be a mistake, suggesting that it belongs to a much more expansive functional health and wellness food and beverage space.

However, GT’s Living Foods founder and CEO GT Dave told BevNET via email that as retailers rework the shelf set amid increased competition, he believes that better differentiating kombucha from outside products will help decrease confusion and that “the key for category stability and long-term growth is the delineation of raw kombucha from heat treated, or pasteurized offerings and other shelf stable ‘function beverages.’”

Barry compared the plateau to the trajectory of coconut water, which saw huge expansion in its early days as a new healthy beverage option, but has since levelled out. However, like coconut water, kombucha could drive growth in a similar way: by emphasizing its use as a base ingredient for differentiated products, much like how coconut water has been used as the base for sports and hydration products. Among top brands that already appears to be happening: this year saw the debut of energy drinks from Humm and Brew Dr. while Health-Ade tacked on kombucha-based mixers.

However, Barry suggested there may be an identity crisis occurring for the core of the category, as brands send mixed messages around the key question of ‘What is Kombucha?’ Is it a gut health product? An immunity product? Or is it the overall best healthy drink you can have?

“I think it’s trying to do the third one a lot,” he said. “And that’s the challenge, because there’s so much new stuff out there making similar claims. I think they’re just struggling with that a little bit.”

NEW FRONTIERS IN CONVENIENCE AND CLUB

Even as the category stalls, many of the leading brands in the space have continued to see sales rise. That’s in part the result of innovation and brand growth into previously untapped channels. Newly installed Brew Dr. CEO Dan Stangler, remains optimistic about the future of the category, especially as retail spaces like convenience and club come online. The hope is to move past the category’s low household penetration of about 16%.

Stangler, who assumed the CEO role in July, said Brew Dr. is currently working to expand its presence in the convenience, club and ecommerce channels, with an emphasis on new innovations in both product and packaging formats to meet the specifi c needs of consumers in those spaces.

Earlier this year, the Oregon-based company relaunched its yerba mate energy line, Uplift, in cans, adding fl avors in the hopes of opening up c-store accounts and appealing to graband-go consumers. Stangler noted that so far that strategy is working, but the product is also performing well in conventional grocery, citing strong sales in stores like West Coast chain WinCo. Beyond energy, the brand has also emphasized seasonal fl avor launches for its core kombucha line in grocery and natural, embracing multipacks for Costco stores as well.

Going forward, Stangler pointed to evolving use occasions for kombucha helping drive unique channel sales, and suggested it’s up to brands to tailor their innovations wisely. Over the past several years, he noted that shoppers have adopted kombucha for a range of dayparts, including the classic better-for-you soda alternative (as the category has so frequently been positioned), nonalcoholic indulgence, social tonic, “a fancy coffee” and functional gut health drink.

“All of this is really starting to make its way into the mainstream and that’s what’s creating the opportunity in c-store, where it’s more on-the-go and impulsive,” Stangler said. “And then in club, where there’s going to be a bigger pack size and a little bit bigger commitment [from the consumer], we have found that variety is really important.”

Broadening brand platforms through new innovations also goes well beyond Brew Dr. Since last year Health-Ade not only rebranded its core line with more mainstream friendly packaging, but also debuted its kombucha-based cocktail mixers, a functional Health-Ade Plus line and its healthy anytime Pop line. Humm Kombucha has emphasized shelf-stable expansions to increase placements in store and has debuted zero sugar options, a Whole30 Approved line, and most recently introduced an energy drink. Smaller brands have also expanded their portfolios beyond kombucha to fuel growth; Rowdy Mermaid is appealing towards wellness-minded consumers with its Adaptonic line, Tribucha has also entered the functional “pop” set, and recently-acquired Big Easy Bucha has moved into juice shots and tepache.

“I think the benefi ts of things like low- or no-sugar, the packaging formats with an increase in multipack offerings -- that’s all been a really high growth business for us,” Stangler said. “Even being thoughtful about the occasions and how we’re showing up in different channels to tell that story, it’s part of the reason we’re starting to connect with new consumers again.”

GT Dave agreed that channel expansion is signifi cant to kombucha’s ability to move ahead, but noted that despite some overall slowdown in the category it is still growing at a 19.5% compound annual growth rate, and is projected to reach $7 billion by 2027.

“As the retail landscape continues to evolve in a post-pandemic world, consumer behavior and shopping habits will dictate the path forward,” Dave said. “We’re taking an Omnichannel approach focused on providing a seamless consumer experience regardless of where the customers choose to shop. Whether one shops online from a mobile device, laptop or in a brick-and-mortar store, we want our brand and the kombucha category at the forefront of the consumer experience with strong distribution and availability.”

There is also another channel where kombucha is making an impact: liquor. Barry noted the rise of hard kombucha has come as alcohol consumers are branching out beyond hard seltzer and seeking more better-for-you options. The growth of that segment has also driven investor interest; in November, JuneShine closed a $24 million Series B funding round with nationwide expansion as a key goal for the brand. However, like non-alcoholic kombucha companies, JuneShine said it is looking towards other categories as a means of expanding its platform and aims to focus on being an overall “better-foryou alcohol brand, not product” with plans to launch nonkombucha lines in the near future. EMERGING IN THE CHANGING SET

So with growth on some fronts, is the kombucha boom really getting quieter?

“I would say that this is not so much shrinking as much as it is a massive refocusing,” said Jamba Dunn, CEO of Colorado-based kombucha brand Rowdy Mermaid.

Founded in 2012, Rowdy Mermaid is an emerging national player in the kombucha set, with sales up double digits year-over-year as of October, according to IRI. The brand in large part has grown by setting itself apart from category leaders through a focus on expanded functionality and sustainability (its drinks are packaged in cans and each fl avor contains a variety of ingredients, including antioxidants and adaptogens, to boost overall health).

With many top brands still growing, Dunn said he believes the category slowdown today isn’t a complete stall, rather it’s indicative of a shakeout among smaller companies and a shift away from artisanal and local products. He noted that there’s been a reduction in the number of small kombucha brands reporting data to SPINS and suggested regional brands appear to be “falling off.”

“That seems to say to me that this [idea that] local is synonymous with helpfulness and environmentalism and all of those concerns, that doesn’t have as much currency anymore as it’s the larger companies who are actually in the mix with the supply chain and making big decisions to try to clean up supply chains,” Dunn said. “I’m seeing the currency of ‘local’ sort of falling away for the kombucha category.”

Even with national aspirations, Dunn said, the company isn’t ready to jump outside of its comfort zone in the natural, specialty and grocery channels. Though it’s not for a lack of opportunities -- the brand has received offers to expand into convenience stores -- he said the brand doesn’t want to get ahead of itself and added “we still treat ourselves like the small brand that we are.”

Instead, the company plans to continue its focus on innovation, particularly through the Adaptonic line and other health and wellness plays, which like the original wave of kombucha can grow up in natural and specialty before ultimately breaking out into mainstream conventional.

Meanwhile, the trailblazing from companies like GT’s, HealthAde, Brew Dr. and Humm into new channels will continue to lay the groundwork for smaller brands to follow, hopefully among eager consumers.

“I love the fact that people are making better decisions,” Dunn said. “I mean, ultimately, personally, that’s what I would love to see in the world, all brands aside. It’s about time, right?”

Brooklyn-based Pilot Kombucha has increased its bottle size to a new 16 oz. format in response to pandemic-related glass bottle shortages. Additionally, the brand signed on with Baldor distribution and recently released its seasonal Apple Chai Kombucha available for a suggested retail price of $5.99 per bottle.

Kombucha sports drink brand Kombuchade has been ramping up its distribution efforts recently, signing an agreement to bring the product to Whole Foods locations across the Midwest. Currently, four of the brand’s SKUs -- Super Berry, Mango Turmeric, Wild Guava and Lavender Lemonade -- are available at Whole Foods locations in Illinois while the company undergoes manufacturing expansion to meet the new demand. Additionally, Kombuchade recently on-boarded with Kroger and is seeking a national distribution partnership.

WILD TONIC Jun Kombucha announced the return of its seasonal flavor Chai Pear. The fall-focused beverage features pear juice flavors with notes of warm cinnamon, honey and slight fennel sweetness. The seasonal flavor is available at Whole Foods and Natural Grocers for between $4.49 to $4.99.

Kombucha maker Rowdy Mermaid has introduced a new flavor -- Hibiscus Pulse -- designed to promote healthy circulation. The antioxidant-rich beverage also features Cassia and Chiptole to support circulatory and overall heart health. In addition to extending its product portfolio, Rowdy Mermaid has expanded its distribution with multiple retailers across the country, including the launch of three flavors at Fresh Direct, expansion to five new Jimbo’s locations, doubling its SKU count at King Soopers and bringing the beverage to 14 Better Health locations in Michigan.

Wild Bay Kombucha, previously Wild Kombucha, has completed its rebrand following another year of over 50% growth. Additionally, the brand has partnered with Dirty Hands Merchandising to expand sales from the Mid-Atlantic region to the entire East Coast. As part of its upcoming Seasonal Artist Series with Sean W. Spellman, Better Booch announced the debut of its limited-edition Ginger Spice flavor. The functional beverage contains ‘subtly spicy’ ginger, turmeric and notes of cinnamon, and is low in sugar and non-alcoholic.

GT’s SYNERGY Raw Kombucha released a Lemon Berry flavor with 9 billion living probiotics, organic acids, active enzymes and aminos to aid digestion and boost immune health. Every bottle contains freshly squeezed lemon and bursts of mixed berries and is raw, authentic, 100% organic, never processed, and fully fermented for 30 days in 5-gallon batches. Additionally, ALIVE Root Beer’s packaging was updated with a refreshed flavor name to communicate the classic flavor profile, and a revitalized label design to reflect the ancient origins and apothecary-style curation of mushrooms for better clarity on its functional benefit.

Brighter Tonic upgraded from 8 oz. cans to a new 12 oz. format this fall for its three flavors: Blood Orange, Lemon Ginger Turmeric and Lemon Lime. The beverage is now available through Imperfect Foods in Southern California, Oregon and Washington. Additionally, all three SKUs of Brighter Tonic are launching at Central Market in Texas and at Foxtrot markets in Chicago and Washington, D.C. next year.

LA-based KÖE Organic Kombucha recently released two new flavors -- Watermelon and Tropical -- to cater to the growing consumer demand for live probiotics without the vinegar flavor of traditional kombucha. The two new varieties join KÖE’s five other flavors which are all vegan, gluten-free and certified Kosher. KÖE significantly outpaced the category’s benchmark growth with a 102% increase in sales in the grocery channel, and an 82% increase in the convenience channel, according to recent IRI data.

Live’s Raw & Organic Kombucha plans to continue building on the brand’s growth into the new year with a soft conversion to new graphics beginning in Q4 2020. The graphics highlight Live’s cold-brewed product, unique flavors and the taste difference

that result from cold-brewing. Additionally, Live Beverages has launched Probiotic Tea Shots made with a black tea base and containing 2 Billion CFUs of probiotics and functional ingredients including Chamomile, Turmeric, Lemon Balm and Acerola. Live’s probiotic tea shots are all organic, non-GMO, Gluten-free, Vegan and Kosher.

Circle Beverages announced the return of its Passion Fruit Hops Kombucha for Winter 2021. The low sugar, seasonal fl avor is packed with probiotics and made with raw kombucha, passion fruit juice concentrate and hops. Passion Fruit Hops contains 40 calories and 4 grams of sugar per 12 oz. can and is available at local coffee shops and restaurants across the Midwest as well as at Whole Foods and at select Fresh Thyme and Kroger locations.

221 BC introduced a new, three-SKU line of Kefi r Water that has entered retailers including Publix, SEG and Giant Martin. The company is also planning a brand refresh and will launch two new fl avors early next year.

Maine-based kombucha maker Urban Farm Fermentory (UFF) has launched its fall seasonal fl avor, Cranberry. The new fl avor is available at its Portland tasting room and at its bottle shop in Kittery.

NessAlla Kombucha has announced the launch of its canned kombucha line with three new fl avors: Tropical Colada, Grapefruit Eucalyptus Spritz and Blueberry Mint Smash. The female-owned kombucha company produces its beverages in small batches which also come in a range of fl avors bottled in glass at its Wisconsin facility.

After a successful launch online and at retailers in the Northeast, Boston-based probiotic soda brand Culture Pop has expanded distribution at over 350 Whole Foods stores. Made with a combination of organic fruit juice, organic ground spices and herbs and live probiotics, each 12 oz can of Culture Pop contains 40 calories and no refi ned sweeteners, stevia or any other artifi cial sweeteners. Greenbelt Kombucha has tripled its production capacity to begin accepting grocer requests in new regions. The company has fully pivoted to focus on the betterfor-you, non-alcoholic movement and is partnering with the sober living and craft cocktail fans looking to provide a healthier and lighter tonic. Greenbelt is also being featured in the updated Texas Cocktails book that highlights the 100 most important craft cocktails in the state.

Mortal Kombucha is rapidly expanding its footprint across the country, recently adding regions including Southern California, the Pacifi c Northwest, the Northeast, the Mid-Atlantic and the Midwest to its distribution list this year. The beverage can be found at 50 King Soopers stores across Colorado, all Whole Foods stores on the West Coast, and about 1,000 health food stores throughout the U.S.

Atlanta-based Lupa’s Kitchen made a branding adjustment for its kombucha line with coloring that now emphasizes BOOCH ‘even more than before.’ The beverages are available nationwide and at local Savannah, Georgia retailers.

Beliv has acquired probiotics drinks brand Big Easy, marking the fi rst probiotic drink line in its global portfolio of products. In addition to the acquisition, the brand launched Big Easy Tepache, an organic take on the classic Mexican drink, in four fl avors: Mango Mandarin, Strawberry Hibiscus, Prickly Pear Lime and Original Pineapple. The line -- which contains 45 calories, 2 billion probiotic CFUs and 7 grams of fi ber per 12 oz. can -- debuted at Publix in October.

Kombucha Town has planted over 5,000 trees as a part of its Start Engine crowd equity fund raising initiative and perpetuating its mission for environmental restoration. The company also launched a new brewer’s select Hibiscus live seltzer fl avor as a part of the fund raising campaign. Kombucha Town also plans to launch a second round of fundraising in late 2021 and will release a new Hibiscus kombucha.