Kombucha producers are considering another route to market as they fight to get raw, unpasteurized, and possibly still-fermenting products back onto store shelves: registering as alcoholic beverages producers with the federal government.
This has created a unique situation for the Alcohol and Tobacco Tax and Trade Bureau: how does it classify these low-alcohol products that defy traditional labels like Beer, Wine and Distilled Spirits?
“It’s the first product of this type I’ve seen in 40 years,” said Arthur Resnick, the director of communications for the TTB, which is in charge of registering alcoholic beverage producers and approving their labels for sale.
In early June, kombucha retailers, producers, and eventually, the TTB itself became aware of the possibility that many of the kombuchas on the market exceeded the 0.5 percent threshold of alcohol content that would allow them to be sold freely as a nonalcoholic beverage. Since then, Resnick acknowledged, the fermented tea has introduced something of a gray area into the web of regulation that has, until now, been fairly straightforward.
Resnick confirmed that his agency has received “dozens of inquiries” from kombucha producers who are trying to determine a path to legally producing kombucha without, for example, running afoul of federal alcohol excise taxes. Beyond the need for a permit to produce those kinds of products, there’s a labeling issue: all new or re-branded alcoholic beverage products that are sold commercially in the U.S. need to have their labels approved by the TTB.
But it’s also added a wrinkle to the race to get back onto store shelves – rather than reduce the alcohol to go around federal regulations, why not go through the regulatory process?
According to Resnick, “there are numerous producers who have contacted us to find out what they need to do.”
While some kombucha producers, like Vibranz and Katalyst, have managed to reformulate below the .5 percent threshold and get back onto the shelves of Whole Foods – the retailer that has helped turn kombucha into a $300 million per year sales phenomenon – others have been inquiring about the process for making and marketing their products without having to change their process, albeit under the scrutiny of both the TTB at the federal level and with alcoholic beverage control agencies at the state level.
Consumer demand appears to be full-throated for full-strength products, and category leader GTs Kombucha recently left a post on its Facebook page that would seem to indicate that it may be considering following the track of regulation rather than reformulation.
“We won't be participating in the watered-down reformulations that are appearing on stores shelves lately,” read the posting, dated Aug. 19. “We only want to make REAL Kombucha – or nothing at all.”
Nevertheless, even as the TTB attempts to define its own regulatory process for producing and labeling kombucha products, another shadow looms: the issue of whether consumers under the age of 21 would be able to purchase those drinks that exceed the .5 percent limit.
The application of a “drinking age” is a decision made by state legislatures but has been tied to the disbursement of federal highway funds for road projects – a construction that resulted in the change of the age of legal consumption from 18 to 21 nearly overnight in the 1980s. Adding to potential regulatory complications are the issues for distributors and retailers, who would face the possibility of having to apply for permits to sell kombuchas that exceed limits mandated by the state.
But before any decisions are made at that level, producers continue to wait on the TTB, which alerted producers to the issue of excess fermentation in late June. Since that time, as it has tried to determine its policy, the agency has conducted more than 100 tests on kombuchas over the summer, according to Resnick. “We’re still working through the issues,” he said. “We’ll have something as soon as we can.”