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.

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