Kombucha, other probiotic drinks making inroads in Wine Country
When you think about the fermented beverages that are an integral part of Sonoma County’s identity and its economy, what comes to mind are alcoholic drinks like wine, beer and cider.
As consumers move away from sugary sodas and look for healthier options, Sonoma County artisan producers of fermented drinks like kombucha and kefir are taking off. And the once-niche market is expected to soar nationwide now that behemoths Coca-Cola and Pepsi have joined the ranks.
The most familiar is kombucha, a beverage that has been brewed for centuries and has experienced a revival in the last decade among urban hipsters and do-it-yourself foodies.
The drink is simple to make: combine sweetened tea with a symbiotic culture of bacteria and yeast, which is more commonly known by its acronym, SCOBY. Leave it alone for about a week and then bottle the beverage, adding fruit or other ingredients.
But its growth is more than a food fad. Big business has taken note: the kombucha market in the United States grew by an estimated 41 percent last year to $534 million in wholesale value, according to Beverage Marketing Corp., a New York research and advisory firm.
That trend is reflected in the growth of Revive Kombucha, a Petaluma company that started selling its products at the Santa Rosa farmers market seven years ago and now distributes them to retailers in 48 states. Last year, sales increased 80 percent, owner Sean Lovett said, and the company is continuing to expand. Trader Joe’s recently picked up two of its products.
“Kombucha has been a growing category for a while. I would say in the last six to nine months, we’ve seen a major change in retail adoption,” said Lovett. “It’s crossing into the mainstream.”
Other local beverage producers are growing as well, with different recipes and drink names. But all the beverages contain probiotics, the live, “good” bacteria and yeast that aid in digestion. There also is a group of dairy probiotic drinks, and includes producers such as Clover Sonoma of Petaluma.
“They (consumers) are going to spend their dollars on something that will give them a healthy effect,” said Tom Boyd, owner of The Kefiry in Sebastopol.
Last year, soft drink consumption fell to a 31-year low, on a per capita basis, according to Beverage Digest, a trade publication. Given the trend, both Coca-Cola Co. and PepsiCo Inc. are quickly diversifying their portfolios. Although production of kombucha represents only about 0.3 percent of the overall non-alcoholic drink market, it is projected to grow to a $1.2 billion wholesale market by 2021, Beverage Marketing Corporation reported.
Coca-Cola has invested $7 million in Health-Ade, the second most popular brand behind GT’s Kombucha, which holds more than 80 percent market share, according to Roger Dilworth, a senior analyst for Beverage Marketing Corporation. Last year, PepsiCo bought Oxnard-based KeVita. Local producers said that acquisition was a game changer in the burgeoning industry.
“If they are buying billboards in New York, San Francisco and the L.A. markets, that is raising category awareness,” Lovett said of Pepsi and Coca-Cola. “A rising tide is going to lift all boats.”
Lovett has seen that growth firsthand. As his production has increased, he moved from Windsor to a bigger facility in Petaluma. He also ramped up hiring to a current total of ?40 employees, who are paid at least a living wage of $15 per hour and are eligible to own an equity stake of the business. He did not reveal production or revenue numbers, citing competition in the industry.
“They know they’ve got some skin in the game. If things continue to go well, there is a reward for them. It also keeps them motivated to stay,” Lovett said of his employees.
At times, Lovett said he came close to going out of business. “Even in this last year, I had to sell cars to make payroll,” he said. “It’s not without challenges.”
But he persisted, and the company is expected to be profitable by the end of 2018, he said. Revive was greatly helped in the marketplace by the fact that it doesn’t have the traditional vinegary taste of kombucha, but offers more generally palatable flavors such as ginger lime and hibiscus fruit.
“One of the reasons it has done well is because it tastes well,” said Ted Robb, a partner in InHouse Ventures, a Healdsburg investment firm that owns Taylor Maid Farms in Sebastopol, producer of organic coffee and tea drinks.
Lovett said the product’s versatility is another advantage. It can be consumed in a variety of circumstances - from the morning as a coffee replacement to caffeine-free versions later at night. Revive has kegerators in workplaces such as Google and Adobe Systems, where its kombucha is popular with millennial high-tech workers.