With AP5, GT’s Kombucha Goes Over-21

GT’s Synergy Kombucha & Organic Raw Kombucha has begun distribution of their AP5 product line, or “Above .5%,” in Southern California markets. The debut of AP5, the first kombucha to take to shelves under a TTB-approved licensing process, marks a new era for GT’s and will be rolled out across the country in 2011. AP5 joins the Enlightened line, GT’s reformulated offering, which has been available nationwide since the fall. The company’s plans are for the lines to co-exist. The labels of the two lines are similar yet different enough to avoid confusion.

As there is no current classification for kombucha as an alcoholic beverage, nor is there a legal definition of what legally constitutes kombucha, the TTB (Alcohol, Tobacco Tax & Trade Bureau) has said it will be evaluating each company’s brewing method on a case-by-case basis. Consumers will be required to show ID to purchase the new, licensed products, but it is unclear exactly what restrictions will be placed, if any, on where it can be sold within the store – or whether stores will need a special license to sell it. At Locali in Hollywood, CA (which sells beer and wine), the two GT’s lines shared a shelf with another brand’s bottles of kefir in between.

With AP5, brand founder GT Dave says he will be blazing a new trail in a category that has seen tremendous growth since he pushed it into the marketplace 15 years ago.

“When I first started kombucha, there was no kombucha,” Dave said. “Almost nobody had heard about it, especially in the retail world.”

Now, he added, the problems have shifted. Whereas initially buyers weren’t sure what the product was or even what section to place it in their stores, “that (struggle) returns to me now with the positioning of our over-21 product. It’s going to be a lot of education, a lot of conversations” to convince buyers to relinquish their pre-existing perceptions, Dave said.

Since the UNFI-triggered voluntary recall of kombucha in June, many commercial kombucha beverage brewers have struggled with reformulation of the complex and active brewing process of this living beverage, especially after bottling. Even when it is initially produced in compliance with current FDA regulations (less than .5% ABV), kombucha’s unpasteurized nature leaves it exposed to the possibility of violating those regulations if it is incorrectly stored or shipped. Changes in temperature or other unforeseen conditions can quickly push the alcohol levels above the legal limits.

That uncertainty was at the heart of Seth Goldman’s decision to pull Honest Tea’s kombucha line off the market despite the success it had enjoyed. Goldman characterized the product as “too unstable” to keep it in step with regulations during an interview at BevNET Live in December. Goldman said he also wouldn’t agree to make a pasteurized kombucha, offering only “What’s the point?”

While a few other brands have not returned to shelves following the recall, most nationally-distributed brands such as High Country and Vibranz, as well as several smaller companies emerged from the recall ready with their own FDA-compliant product line.

Even though Dave released Enlightened in September, he said he was committed to bringing out AP5 as soon as possible. The will to fight that battle was reinforced by his consumers. While the majority were just happy that GT’s was available again, many fans took to social media to plead their case for the return of the original version. The vociferous dedication and support of GT’s fans motivated Millennium Products to pursue the brewers license and produce the over-21 version, he said.

But there are also dollars at stake: Before the recall, Millennium products’ 2010 sales projected as more than $40 million and the entire kombucha category was projected at $123m for 2010 by Mintel. While those numbers are a drop in the bucket compared to CSDs, it is a category that has enjoyed steady growth for the last several years, and one that saw several larger companies eyeing their own products or else purchases of smaller kombucha makers.

As for Millennium Products, it has increased its distribution and is now available in Canada. When asked if they would be able to expand their reach beyond North America into the global market, Dave remarked, “Absolutely, it’s feasible.  It is something I would love to see happen, but like with everything we do, it would have to feel right; the timing would have to be appropriate because I’m never in the business of chasing dollars.”

Hannah Crum, founder of KombuchaKamp.com, is a writer who contributes to BevNET.