Kombucha: Taking on a Life of Its Own
Kombucha, the fizzy fermented tea that packs a probiotic punch, has been a favorite among wellness enthusiasts for decades. In the ‘90s, GT Dave helped forge a path for a new category to emerge. As popularity grew, more entrepreneurs joined the better-for-you beverage movement, aiming to compete against the soda and energy drink brands that dominated shelves. Pretty soon, the nascent category grew from a small niche to one that giants including Coca-Cola, PepsiCo, Molson Coors and Anheuser-Busch were willing to bet on. Even now, kombucha still has plenty of opportunity ahead of it. Brands are continuing to innovate in the space, hoping to win over new consumers, albeit with a dash of controversy.
The OG Kombucha King
Long before “functional” was trending, GT Dave was brewing up jars of homemade kombucha with the hopes of sharing the healing properties of this ancient Eastern remedy. At the time, the beverage was largely unknown by the general public. Today, GT’s Living Foods is worth nearly $1 billion, remaining the category leader and securing approximately 40% of the market share. And while the brand has always leaned on its traditional values, it hasn’t played it safe when it comes to innovation.
GT’s lineup has evolved from its classic-style brew to serve a variety of use occasions and consumer preferences. In an effort to appeal to new audiences, many brands have adopted the practice of sweetening or flavoring kombucha with fruit juice. With more mainstream flavor profiles, GT’s Synergy line aims to be the bridge for the kombucha-curious. But surely, GT’s wouldn’t leave it up to the consumer to guess what magic lies within the bottle, with names like Mystic Mango, Strawberry Serenity and Gingerberry, how could you not be intrigued?
The brand is also playing in trending and emerging categories, as well as the food space. From higher ABV hard kombucha, mushroom-infused adaptogenic teas and water kefir, to coconut yogurt, coconut kefir and probiotic shots, GT’s has its glass (and plate) full with options that help it compete in nearly every refrigerated probiotic section in the supermarket. Not a bad play to maintain its leading position. But just as GT’s has been hard at work developing new concepts, so have other players. And as competition bubbles up, so has a splash of drama.
The Rise of Booch
As kombucha slowly caught on, more entrepreneurs began experimenting with the fermentation process. It took over a decade for some of GT’s leading competitors to even launch, but the rise in new brands helped kombucha define a space for itself.
From the late ‘90s through the 2000s, a flurry of brands sprang up, looking to offer a differentiated product that could stack up against the kombucha king. Kombucha WonderDrink and Aqua ViTea were some of the first, with Humm, Brew Dr., Kevita, and Clearly following in the years after. It wasn’t until the 2010’s that the category really started to pick up with brands like Revive, Better Booch, Health-Ade, Live, Rowdy Mermaid, Marin, and M Kombucha entering the race. Simultaneously, some entrepreneurs were loving the bite of high ABV kombucha, and were betting that consumers would too. Brands including Kombrewcha, Wild Tonic, Boochcraft, Flying Embers, JuneShine and Luna Bay Booch began championing for a slightly elevated experience.
Meanwhile, beverage giants took note. Health-Ade received an investment from Coca-Cola early on in their journey, securing a much larger sum later on; PepsiCo acquired Kevita, which it previously owned a minority stake in; Anheuser-Busch backed Kombrewcha, eyeing the emerging alcoholic kombucha space; and Molson Coors acquired Clearly, its first purchase of a non-alcoholic brand.
As kombucha became more competitive, and had more dollars behind it, brands had to differentiate to stand out. Over the years, here’s how a few of them have taken this age-old recipe and made it their own:
Familiar flavors: Live Kombucha has focused on crafting good-for-the-gut versions of classic sodas like Cola, Root Beer, and Lemon Lime. Designed to win over the mainstream palate, but with a better-for-you kick, the line is low in sugar and sweetened with stevia.
Functional ingredients: M Kombucha has taken a medicinal approach with its elixirs. Each SKU is created for a specific use case including Immune Support brewed with elderberry, Hydration with added electrolytes and Unwind featuring 20mg of broad spectrum hemp extract.
Locally-inspired: Marin Kombucha, aptly named after Marin County, has its roots nestled between Napa Valley and San Francisco. The company’s oak-aged kombucha is brewed with local ingredients and hits a more refined palate with flavors like Pinot Sage, Original Oak, and Apple Juniper.
Not your average base: On a mission to bring hard kombucha across the country, Luna Bay Booch is brewing its fermented tea with an unconventional twist, their entire line is brewed with yerba mate instead of Camellia sinensis, the traditional tea plant.
From Creative to Controversial
While there may be a variety of ways to brew and flavor kombucha, some brands are kicking up the creativity with approaches that may be a little unorthodox. The competitive banter that’s caused a stir on the internet is guided by varying perspectives on what kombucha is and can be. In 2020, trade association Kombucha Brewers International released its Code of Practice to help support transparency in the rapidly evolving category. The guide provides definitions along with recommended brewing, safety and labeling procedures for various segments. And while it may help provide clarity for consumers, some brewers believe it could alienate those who choose to deviate from the status quo.
Recent developments have certainly blurred lines, but all in the hopes of driving trial in a category that still has just 10-15% household penetration. Many of the new launches are taking a swing at soda, which is seeing decline, by playing with format and delivery. Here’s how they’re stepping up to the plate:
Beyond the fridge: In the last few years, several brands have launched shelf-stable kombucha, allowing them to step outside of the refrigerated aisle and into other areas of the store. The newer format is also more conducive for DTC sales, something that has become increasingly important amid the pandemic. Long-standing brand Revive developed a proprietary process to produce their shelf-stable line, which includes pasteurization and the addition of a particular strain of probiotic that is said to activate in your gut.
Zeroing in: As consumers seek out healthier versions of their favorite products, sugar has been a point of tension for some dietary trends. In response, many brands have launched low sugar offerings to help target this market. Humm Kombucha, a category pioneer, launched the first zero sugar line in February of 2020. The brand employs a longer fermentation period, then adds alternative sweeteners and organic flavoring to achieve the taste profile they desire.
What’s poppin’: What better way to take on soda brands than to launch products that can sit side-by-side with them on-shelf? Health-Ade, a darling brand in the kombucha space, married the two categories with its Booch Pop line. The shelf-stable drinks contain kombucha, tea, juice, calcium, magnesium, and prebiotics from cranberry juice powder. The move also puts the company into the emerging functional soda set, which features brands including Olipop, Culture Pop and Poppi.
BYO-liquid: With the surge of powdered beverages hitting the market, it’s no surprise that Qula has discovered a way to deliver kombucha in the form of a pressed tablet, where consumers bring their own liquid to the party. The brand’s psychedelic branding and less-waste approach is sure to pique the interest of some far out folks.
A Symbiotic Relationship
As consumers continue to seek out better-for-you and functional products, the demand for kombucha will likely grow. But the success of a category is intrinsically tied to its willingness to adapt to the needs of the market. While there will always be a place for the purists to enjoy their beloved traditional brew, so too is there a place for fresh ideas and innovation. Each unique proposition and approach will ultimately resonate with consumers that haven’t been reached before.
So, which trends do you think are here to stay? We’d love to hear from you! Shoot us a note at liftoff@growthbuster.com.