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Kombucha, other probiotic drinks making inroads in Wine Country

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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.

Think again.

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.

In fact, the drinks have become a popular nonalcoholic substitute at local taprooms. For example, the taproom at Community Market in Sebastopol has four types of kvass from Biotic Beverages in Petaluma that compete against local beers and wines. Kvass is a traditional eastern European drink, which Biotic makes from bacteria fermented with organic carrots and beets. Other ingredients such as lemon, lime or salt are added depending on the recipe.

“It’s a way to play in the nightlife scene … but you don’t have to pay for it the next day (with a hangover),” said Jennifer Harris, a consultant who is coordinator of the annual Farm to Fermentation Festival in Petaluma. Harris noted that some use kvass as a mixer with hard cider at Community Market.

Biotic next month will ramp up to place 200 kegs in area restaurants and coffee shops to raise the visibility of the drink, said Adam Johnston, who co-owns the business with his father. It also wants to expand more into Whole Foods Market, where its product is stocked in 10 local stores. “Our bread and butter is Whole Foods,” he said.

The drinks are pricey. Biotic, for instance, sells its beverages for a suggested retail price of $3.99 for a 12-ounce bottle. “The high price point reduces consumption occasions, but that can’t be helped without hurting profit margins,” the analyst Dilworth wrote in an email.

The industry has benefited greatly from the purported health benefits of its product. Studies conducted on animals have shown that kombucha can get rid of “bad” bacteria in the gut, said Jennifer McDaniel, a registered dietitian in St. Louis who is a spokeswoman for the Academy of Nutrition and Dietetics.

“The bad news is we have scant evidence that has been performed on humans on the health evidence of kombucha,” McDaniel said. She added that the antioxidants in certain teas within kombucha could be beneficial to consumers.

Regardless, customers ­— including those who have already visited wineries and brewery taprooms — continue to show up at The Kefiry, where they belly up to the bar to sample the naturally fermented drinks made from kefir grains. The water kefir flavors (there are also milk kefirs) include lemon ginger and root beer, and they have only small amounts of sugar. The product is available at local stores and restaurants such as Handline in Sebastopol.

“We are in the wettest (alcohol) place on earth,” Boyd said of Sonoma County. “We can also be the exact opposite at the same time.”

Boyd has recruited two outside investors into his business, which opened up in 2010, and plans to build regional production facilities in California, and go national in the future. He has five employees and wants to get to 10 workers by the end of the year.

While impressive, the growth also bring challenges. Revive recently ended its bottle exchange program, phasing out its swing-top reusable bottles in favor of recyclable ones.

The exchange program was lauded as a prime example of corporate sustainability with a return rate as much as 75 percent. The exchange process, however, consumed 60 percent of the company’s production time, making it unfeasible for the long run, Lovett said.

“We probably would have been profitable as a company if we had not done bottle exchange,” said Lovett, who noted that some longtime customers could be “frustrated and hurt” by the closing of the program.

The sector expansion also has attracted more amateurs who want to make their own home brew. Beer Belly Fermentation Supply in Windsor has a kombucha starter kit, which includes a SCOBY, for about $50. “My 6-year-old daughter can even do it,” owner Steven Farias said of the simplicity of homemade kombucha.

Overall, Sonoma County is perfectly positioned to be a hub of healthy eating and drinking as these businesses continue to expand, said Ben Stone, executive director of the Sonoma County Economic Development Board.

“We’re right on this verge of a probiotic revolution and what it’s going to mean for human health,” Stone said. “They are helping to set up conditions to live well.”

You can reach Staff Writer Bill Swindell at 707-521-5223.