Kombucha Catches Up on the East Coast

 

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David Warner still wasn’t 100 percent sold on kombucha when he decided to start stocking GT’s at his Boston-area neighborhood grocer, City Feed & Supply, back in 2007.

“You know, I wasn’t sure if it was that interesting of a drink,” Warner says. “But there were some folks requesting it and I knew people were looking for flavorful, low-sugar beverage options.”

Aside from the usual smattering of local brands, kombucha had only been commercially available on the East Coast in a ready-to-drink format for two years at the time, after GT Dave went national with his fermented probiotic beverage brand in 2005. But on the West Coast, kombucha was bubbling in more ways than one, gaining real traction in California’s health and wellness circles for its reported health benefits, which started with gut health and extended as far as claims that the beverage could treat cancer.

Ten years later and kombucha’s a lot more than just your mother’s scoby. It’s a $600 million global beverage category, one that market research firm MicroMarket Monitor projects to grow to $1.8 billion by 2020.

So where’s this growth happening? Is the West Coast still carrying the category? Did the East Coast convert to California’s cult of kombucha? Maybe not all the way, but the disparity between the two seems to be slimming.

“Two years ago, if you were to take the best California stores for kombucha sales and compare that to the best North Carolina or Florida stores, the numbers would be almost five times better,” says Rachel Zarrow, Vice President of Marketing at San Francisco-based Clearly Kombucha. “But this year something is different. The same comparison still skews California but only by a two times factor.”

It’s clear that Clearly Kombucha isn’t alone. Santa Monica-based Health-Ade just brought on beverage industry veteran Ned Desmond, formerly of Nantucket Nectars, as East Coast Director of Sales, a position brought on in response to the brand’s recent entry into Whole Foods’ Mid-Atlantic region and its East Coast growth on the whole.

“The consumer for the category is really changing,” Zarrow says. “It’s not just for yogis and hardcore vegans, it’s becoming more of a mainstream category.”

Chris Reed, founder and CEO of craft soda company Reed’s, saw that opportunity for kombucha beyond the natural channel when his company entered the segment in 2012 with Reed’s Culture Club Kombucha, introducing a “lighter, more palatable” kombucha to consumers outside the product’s traditionally diehard crunchy crowd. Leveraging the company’s existing relationships with over 100 supermarket chains. Reed’s quickly became the number two national brand behind GT’s, albeit still a distant one.

Reed credits the East Coast catching up to kombucha to health conscious consumers with a growing interest in probiotics in addition to the natural regional progression of health foods and beverages.

“The West is going to lead, and then it jumps over to the East Coast,” he says “From there it spreads across the periphery of the country making its way into other big cities and eventually into the rest of the marketplace.”

But there’s still a sizeable lag. While not a kombucha, the growth rate of probiotic product Goodbelly offers an interesting parallel: its growth rate mirrors that of GT’s, up 50 percent over the last 52 weeks according to SPINS data, but according to CEO Alan Murray, the brand is still growing 50 percent faster on the West Coast than the East. Numbers aside, the regional imbalances that remain are still apparent at industry trade shows: many fewer kombucha brands show up for East Coast natural product or fancy foods shows than they do the West. The largest brands remain headquartered on the West Coast as well.

As for GT Dave, the kombucha category’s kingpin says that times have changed, likening the category’s success to that of coconut water and fresh-pressed juice. Dave also says he believes that the food and beverage trends once associated so strongly with the Golden State now know no geographic restrictions.

“Ten years ago it made sense to launch a kombucha brand on the West Coast because the West was the first to be exposed to kombucha early on,” he says. “But today’s consumers are more aware than they’ve ever been before regardless of which coast they reside on. There’s opportunity for kombucha in many areas you might not expect, and it’s all linked to the ever-evolving awareness and consciousness of the consumer.”

Editor’s note: An earlier version of this story reported that Health-Ade is based in San Diego. It is not. The company’s headquarters are in Santa Monica. We regret the error.