How Kombucha Became A $500 Million Opportunity

How Kombucha Became A $500 Million Opportunity


This is kombucha. And so is this. And so is this. Two decades ago, this fizzy fermented
mushroom tea was a niche beverage, largely confined to local
farmer’s markets and organic grocery stores. Fast forward to today
, and sales are exploding. The U.S. market for Kombucha went from
one hundred and $52 million in 2015 to $492 million
dollars in 2019. In fact, some experts predict the
category will grow into a $4.6 billion dollar global
industry by 2024. Here’s how kombucha went from a
farmer’s market favorite to a global phenomenon. This is
Suddenly Obsessed. Kombucha is made with a base of
black, green or oolong tea and added sugar, but this is what gives
kombucha it’s well earned nickname of “mushroom tea.” This is a SCOBY. SCOBY stands for symbiotic culture
of bacteria and yeast. But it’s not actually a mushroom. A SCOBY is a disc of floating fungus
about the size of a pancake that sits in the tea for anywhere between
seven days to nearly a month. As the drink for ferments, the SCOBY
feeds on the sugar that was added to the tea base
as it eats the sugar. The SCOBY releases bacteria along
with naturally occurring alcohol, carbon dioxide and various
types of acids. Kombucha can be sold as a
non-alcoholic product as long as the resulting brews stays under the
federal government’s alcohol content threshold of half a percent. Otherwise, it’s subject
to regulation. After kombucha is done fermenting for
anywhere between one to three weeks. The SCOBY is removed and
used in the next batch. Some brewers use the same SCOBY for
decades and refer to it as a “Mother SCOBY.” The resulting bubbly brew contains a
wealth of bacteria and yeast, which experts say give the
drink its probiotic properties. Those probiotics are linked to a
lot of health benefits immune health, mood, digestive health. So why kombucha has become such
a popular drink is because they’re finding that when things are fermented,
it creates more probiotics in that drink. Now it seems like
Kombucha is having a moment. It’s on store shelves
and in coffee shops. You can even find it
on tap in workplace breakrooms. Celebrities like Kourtney Kardashian, Lady
Gaga and Lindsay Lohan have all been spotted with
a bottle of the brew. But kombucha’s growth isn’t due to
A-list endorsements with a tea’s, supposedly amazing taste. Instead, it can be pinpointed
to something much more wholesome– growing consumer preferences
for healthier alternatives. Shoppers are turning their backs on
sugary soda drinks and are flocking towards tea, coffee and
water alternatives like seltzer. Key players like Coca-Cola and
PepsiCo have invested millions to diversify their portfolios to
include healthier options. In an effort to offset sodas,
flattening sales and kombucha producers are taking advantage of this movement
by marketing themselves as a healthier alternative. That’s led to some questionable
claims, like allegations it can protect against cancer, fight heart
disease, improve digestion and boost your metabolism. But kombucha can be a hard sell. Some brands believe strands of the
SCOBY to float around the bottom of the glass and the fermentation
process gives kombucha its unique flavor profile that is
hard to pin down. It’s a little bit sweet
and a little bit vinegary. It doesn’t taste sweet at all, even
though there’s a little bit of sugar in it. Sometimes your initial reaction
is: Oh God, I think this has gone bad. Kombucha’s origins date
back to more than 2000 years ago in East Asia, where a
physician reportedly brought the tea’s fungus to Japan as a cure
for all sorts of digestive issues. Centuries of trade brought
it to Russia. And by the 20th century found
its way to Eastern Europe. It was in Germany where the tea
adopt the name we now know “kombucha.” Kombucha’s commercial origins
in the U.S., however, can be pinpointed to California when
a 15 year old boy began bottling homemade kombucha in
his kitchen in 1995. That boy was G.T. Dave. And today, his company, GT’s
Living Foods, is the number one bottler and seller of
kombucha in the U.S. based on market share. G.T. Dave, what a kooky guy. But I guess, you know, as you got
to be kooky to brew kombucha and make it your life. You
know, I think it’s awesome. He’s paved the way. He was super
smart to start the category that far in advance. Kombucha was one of
the many bizarre foods that filled G.T.’s childhood. His parents were gifted
a mother SCOBY from the Himalayas, and began fermenting their own
tea in their Bel Air home. And I noticed how it went from
one batch to two batches to five batches to seven batches a week,
which was an indication of their consumption of kombucha, because naturally,
the more you make, the more you need to cultivate
and ferment and grow. He didn’t think much about the
drink supposed health benefits until his mother was diagnosed
with cancer in 1994. The doctors originally handed her
a bleak prognosis, but after further testing, they found she’d
made a miraculous recovery. G.T. was convinced the strange fizzy
fermented tea she had been drinking had something to
do with it. I became curious and certainly
motivated to understand what this bizarre tea was because in my mind
it didn’t cure my mom, and I’ve never said it cured her,
but it certainly helped her. In fact, he felt his mom’s story
was so powerful, he included it on its packaging. Commercially available
kombucha was pretty much nonexistent in the U.S. before 1999. That was the year Whole
Foods began stocking G.T.’s kombucha. In fact, sales of soft
drinks were astronomical at the time. In 1994, the average American
consumed an estimated 50 gallons worth of soft drinks in one year. That figure would climb to an
average of 54 gallons by 1998. And even today, soft drinks are still
by far the most popular drink in America. Making up a significant
portion of the estimated 80 billion dollar beverage industry
in the U.S. But, Kombucha has posted a near
35 percent increase in dollar sales on average over the
past four years. Consumers are looking more and more
for healthy beverages and foods that make them feel good. And there are very few options out
there that both make you feel good and offer nutritional or functional benefits
and are natural or made naturally and kombucha is one of
those things that hits all those things that consumers
are seeking for. Kombucha was once mostly popular
among hardcore health enthusiasts. But its appeal is spreading
to a broader audience. Some of the largest beverage
companies in the world, including Coca-Cola and PepsiCo, are investing in
kombucha to gain footing in the market. In 2016 PepsiCo acquired
Kevita, which is the second largest kombucha brand in the U.S. for a reported $200 million. Following Kevita and share
of the U.S. kombucha market is Healthy-Ade, which
secured an estimated 20 million dollar investment from
Coca-Cola in 2019. But brands like PepsiCo’s Kevita
have come under scrutiny for manipulating the brewing process by
gently pasteuriz ing the beverage after fermentation, gently pasteurized beverages
are heated for a short period of time, killing bacteria
and giving the product a longer shelf life. So unfortunately,
a lot of these companies, they’re wired to be manufacturers and
they’re wired to assemble their products more than cultivate them. And Kombucha really can
only be cultivated. It can’t be assembled. So when somebody tries to force
kombucha in more of a manufacturing environment, the end result is unfortunately,
a lot of times you end up with a compromise result. But despite how it’s made,
shoppers have struggled to separate kombucha’s clinically proven health
benefits from commonly circulated folklore. The short answer– there’s
not enough scientific evidence to prove those claims. There is research on probiotics and
the microbiome and how those are beneficial for your health. But you can’t necessarily say that
you’ve seen a study that shows that kombucha is going to
boost your overall health. In 2010, G.T. faced a class action lawsuit and
agreed to remove his mother’s cancer journey from his bottles along with
claims of, quote, weight control, anti-aging and healthy skin. Consumers have also voiced
concerned about kombucha’s alcohol content. In 2010, test results at a
Whole Foods in Maine on alcohol levels well above the
half a percent threshold. Some were found to be nearly 2.5 percent higher than what
they should have been. This resulted in the grocer
pulling all unpasteurized versions of kombucha offered shelves until companies
could prove that their products met regulatory standards. Brewers like G.T.’s tweaked their recipes to address the
alcohol issue and were allowed back on to store shelves
where they’ve remained ever since. And if you picked up a kombucha
today, the odds are you’d find a warning label that indicates there could
be trace amounts of alcohol in the tea. Although that amount
can’t be predicted perfectly every time. But industry experts seem to
believe those concerns are a blip in kombucha’s mysterious two
thousand year old past. And while there’s still no concrete
evidence to suggest Kombucha is the fountain of youth, some
promise it to be. It doesn’t look like it’ll be
disappearing from shelves anytime soon.

About the Author: Michael Flood

37 Comments

  1. Brad Leone taught me everything I need to know about Kombucha.

    Who’s better than us, Vin?👍

  2. Tasted it about 22 years ago and the guy that was making it was a hipster type dude who talked it up like is was the cure for cancer and everything else….it just s beer to me.

  3. Lol my friend Shakita turned me on to Kombucha. I just purchased my first one last night lol. Now this pops up on my feed. I like the taste. Especially the Mango.

  4. KOMBUCHA ! viewers – do you think it's worth starting a kombucha company in 2020 even though the market is "saturated" I'm from the UK . Best regards

  5. Very enlightening video and I had no idea that Coke acquired the Health-Aid brand as well as Pepsi acquiring Kevita. Will not continue to support those particular brands.

  6. Natural drink that makes you feel go… Tap water, free, no waste perfect drink. Oh, wait… It is not trendy to be seen out with a glass of tap water, not really insta worthy… Dam!

  7. This amuses me. I remember when eccentric modern hippie folk would brew this at home. Suddenly kombucha is everywhere, and there are at least a dozen major brands.

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