The rise in health-minded products has paved the way for several new beverage introductions, but few have benefited as much as kombucha. A fermented and slightly effervescent tea-based drink, kombucha has been around for centuries but has only recently grown to popularity among American consumers. The addition of alcohol-enhanced kombuchas has helped expand the category’s reach and attract a new wave of drinkers, creating a robust emerging beverage subcategory.
“Kombucha, as a whole, is one of the fastest-growing grocery segments in the past decade,” says Margaret Link, director of marketing for Boochcraft, a hard kombucha with five core flavors and a roster of seasonal offshoots. “The hard kombucha segment is in its infancy from a volume perspective, but we’re outpacing the craft beer category based on retail dollars generated. Kombucha has enthusiastic consumers across the country, but there’s still so much opportunity to introduce the public to its unique benefits.”
The drink has roots in China, Russia, and Eastern Europe and is commonly made by fermenting sugared tea with a symbiotic culture of bacteria and yeast—SCOBY for short—creating a probiotic concoction that’s often enhanced with spices, fruits, or herbal additives. People believe kombucha has a wide range of health benefits, from relieving arthritis and diabetes to treating chronic illnesses, although little scientific evidence exists to support these claims. Kombucha has suffered negative publicity, however, from people who’ve brewed it at home without regulating its bacteria growth, which has led to adverse health reactions. Still, the rise in commercial kombucha products over the last two decades has paved the way for a new health drink category, and the more recent addition of hard kombuchas has only furthered the segment’s consumer appeal.
Retail stores drive kombucha sales, though some bars and restaurants do offer the drink on their menus. Increasingly, on-premise locations are adding kombucha on draft or in cans in addition to mixing it into cocktails. Overall, the kombucha category has grown from $1 million in sales in 2014 to $1.8 billion in sales in 2019, with the total number of brands increasing by about 30% a year annually for the last several years, according to the trade group Kombucha Brewers International. For hard kombucha specifically, sales grew from $1.7 million in 2017 to more than $12 million in 2019.
Brand Building
Boochcraft’s Link says the brand was the first hard kombucha in the U.S. when it launched in 2016. Boochcraft is now available in eight states—Arizona, California, Colorado, Hawaii, Nevada, Oregon, Texas, and Washington. Boochcraft’s lineup includes five core 7% abv variants: Apple-Jasmine, Ginger-Lime, Grapefruit-Hibiscus, Lemon-Maple, and Orange-Pomegranate, as well as seasonal flavors Turmeric-Tangerine-Ginger, Spiced Pear, and Watermelon-Chili ($14 a 4-pack of 12-ounce cans; $8-$10 a 22-ounce bottle). The products are generally merchandised at beverage alcohol stores in the beer aisle, often alongside cider or seltzer.
“The West Coast was the birthplace of kombucha, so it’s no surprise that California constitutes more than 80% of the hard kombucha category,” Link says, adding that San Diego—where Boochcraft was born—is a leader in market penetration. “The San Diego metro area has shown us glimpses of what’s possible in terms of market penetration, and we’re seeing the same patterns emerge across most of the western U.S., in major metro areas as well as smaller cities. Kombucha attracts people who are looking to make healthier choices without sacrificing flavor or ingredients. Kombucha consumers generally care about sustainability, how their products are made, and the values their brands stand on.”
Link points to regional specialty grocers that focus on wellness products as prime retail spots for kombucha, including Nugget Market and Bristol Farms, both based in California. But she says larger players like Whole Foods and Sprouts Farmers Market are also embracing the category, and adds that even national grocers like Safeway, Kroger, and H-E-B are making shelf space for kombucha. “While the non-alcoholic kombucha category has surpassed $1 billion in U.S. sales annually and continues to grow, we look forward to leading the hard kombucha category to $250 million-$300 million in the next five years,” Link says.
Stephen Finn, vice president of strategy and communication for Wild Tonic hard kombucha, says his brand is expanding quickly into channels beyond natural food stores and supermarkets, including the convenience, drug, and food service channels. Wild Tonic is considered a jun kombucha, meaning that it’s fermented with honey as well as tea and SCOBY, creating a lighter flavor profile with fewer vinegar notes than traditional kombuchas. The Wild Tonic portfolio includes three abv levels—5.6% abv, 7.6% abv, and non-alcoholic—that together span 18 flavors. The 5.6% abv range offers Mango-Ginger, Blackberry-Mint, Blueberry-Basil, Raspberry-Goji-Rose, Tropical Turmeric, and Hoppy Buzz variants, plus a couple of seasonal labels ($5 a 12-ounce can; $8 a 16-ounce bottle). Meanwhile, the 7.6% abv range includes Wild Love, which has hints of blackberry and lavender; Dancing Naked, which evokes flavors of Zinfandel; Mind Spank, which offers elements of coffee, chocolate, and maple; and Backwoods Bliss, which boasts notes of toasted toffee, caramel, maple, and vanilla ($20 a 750-ml.). Sold in more than 40 states, Finn says the brand sees particular success in Arizona and California, as well as cities like Seattle, Portland, Denver, Austin, and Miami.
“Wild Tonic is in high growth mode right now as our awareness develops and distribution expands across the country,” Finn says. “Awareness of kombucha has been strong on the coasts and in major metro areas. It’s becoming more mainstream, but there’s definitely a core consumer who buys kombucha for daily consumption. That consumer is health-conscious and tends to be well-educated and have a higher income, as well as purchase other organic and natural products.”
Finn adds that Wild Tonic foresees major growth opportunities for both its alcohol-free and hard kombuchas, but expects more growth from the labels with alcohol. “We expect volume will continue to grow and that our business will at least double every two years for the foreseeable future,” he says.
Rapid Growth
Anheuser-Busch InBev bought into the kombucha category in 2016 when it purchased Kombrewcha, which at the time was an alcohol-free brand. Kombrewcha launched in 2013 and added alcohol to its lineup in 2017. Today, Kombrewcha offers four flavors, each at 4.4% abv: Berry Hibiscus, Ginger Lemon, Mango Pineapple, and Blood Orange ($14 a 6-pack of 12-ounce cans in New York City). Blood Orange is available in the brand’s new variety 4-pack. Kombrewcha was born in Brooklyn, New York, and is now available in more than ten states, from New York, New Jersey, Delaware, and Connecticut to Arizona, Hawaii, Montana, and Idaho. Beyond those states, the brand has concentration in cities like Austin, Boston, Philadelphia, Washington, D.C., and Richmond, Virginia. Kombrewcha CEO Garrett Bredenkamp anticipates major growth for the segment this year.
“It’s a really exciting time for hard kombuchas,” Bredenkamp says. “Last year, the industry saw a surge in popularity with alternative alcoholic beverages like hard seltzers, and that momentum and consumer demand continues this year. In the past few years, non-alcoholic kombucha has been one of the fastest-growing beverages in the industry, and as it gains momentum, we’re seeing hard kombucha awareness trend upward too.”
He adds that the brand does well both on- and off-premise, partly because of its lower alcohol content, which makes it a sessionable beverage choice and gives it more flexibility for consumption by itself or for use in cocktails. “It’s a great time to be a part of this booming category,” Bredenkamp says. “The total number of hard kombucha brands on the market increased 240% from 2018 to 2019, and we expect to see that growth continue.”
Non-alcoholic kombuchas are also finding their place in cocktails. Despite seeing most of its success in the off-premise, Health-Ade—one of the top brands in the non-alcoholic kombucha space—is also found at some well-known mixology bars, according to co-founder and chief sales officer Vanessa Dew. “Health-Ade is a delicious mixer for traditional spirits,” Dew says. “Having a presence at bars and in cocktails helps the category. Expanding outside of normal grocery stores and having points of reference in lifestyle junctures where people have shared experiences is a great way to build a brand and a category.”
Offering 16 flavors, from Bubbly Rose and Pomegranate to Passion Fruit-Tangerine and Cayenne Cleanse ($4 a 16-ounce bottle), the brand promotes cocktail suggestions on its blog, such as the Health-Ade Mule, made with its Ginger-Lemon kombucha, vodka, MatchaBar Classic matcha powder, honey, and sparkling water, and the Grapefruit Spritzer, which mixes its Grapefruit kombucha with Tequila, grapefruit juice, soda water, and muddled rosemary. “Kombucha offers a unique zing and spin on the traditional cocktail,” Dew adds.
Branching Out
A key goal for many kombucha advocates is increasing the category’s presence in bars and restaurants. It’s been slow work, but several brands are making headway. In many markets, locally and regionally made kombuchas are finding placement at nearby venues. Portland, Maine’s Urban Farm Fermentory produces cider, beer, mead, and kombucha, and its kombucha labels are in select venues throughout New England. City Tap House Kitchen & Craft in Boston lists the Wolf & Mule cocktail ($12), mixing Urban Farm Fermentory’s 1.5% abv Ginger Root kombucha with house-infused hopped Absolut Elyx vodka and house-made lemongrass syrup, and it also pours the kombucha on draft ($4.50 a 4½ ounce pour; $9 a 14-ounce pour).
Meanwhile, Banger’s Sausage House & Beer Garden in Austin, Texas pours the 3.5% abv Summer Breeze kombucha from Lazy Beach Brewing Co. on tap ($6.50 a 9-ounce pour), and Lone Wolf Tavern in Chicago sells JuneShine Kombucha’s 6% abv Honey-Ginger-Lemon variety in cans ($7 a 16-ounce can). “It’s selling really well,” says Lone Wolf general manager Kristina Magro. “We go through about 50 cans a week. Not many people understand the process of making kombucha but they’re excited and open to trying it for its perceived health benefits. Having it available diversifies our offerings. I think you’ll start to see hard kombucha just as much as you see spiked seltzer and CBD sodas in bars.”
Even so, retail stores are where kombucha is booming. Hazel’s Beverage World in Boulder, Colorado, carries eight kombucha brands. Labels from Kyla hard kombucha and Wild Tonic are the store’s top-sellers (averaging $4 a 16-ounce can; $11 a 6-pack of cans), and beer manager Derek Ridge evaluates new expressions regularly, having recently added Boochcraft and Flying Embers to the store’s roster. “We’re seeing pretty decent growth,” Ridge says. “It’s almost doubled since this time last year, and since Boulder is pretty health-conscious I’m betting sales will stay healthy.”
Kombucha sales are also thriving at BevMo, which boasts 166 stores across California, Arizona, and Washington. Matt Asendorf, assistant beer category manager for the chain, says hard kombucha has shelf space in every unit’s cold box. The company carried four hard kombuchas in 2018 and upped that to 13 hard kombuchas in 2019. BevMo’s top kombucha performer is Boochcraft, which comprises half of all kombucha sales for the company, followed by JuneShine and Flying Embers. Other brands include Kombrewcha, Wild Tonic, Dr Hops, Local Roots, and Unity Vibration ($4-$7 a can; $12-$15 a 6-pack of cans or bottles). Asendorf notes that at BevMo, hard kombucha is performing similarly to non-alcoholic beer.
“Hard kombucha sales continue to grow,” Asendorf says. “There was a 235% increase from 2018 to 2019, and the first two periods of 2020 have more than doubled the sales from the same timeframe in 2019. Hard kombucha hasn’t peaked and continues to find new drinkers. I expect more shelf-stable brands will hit the market. There’s no reason to believe the market is overcrowded with brands or flavors, as sales keep climbing.”