Last summer, CPG industry veteran Dan Stangler was named CEO of Brew Dr Kombucha, passed the mantle from Matt Thomas, who founded the company in 2003. Now, a little more than a year later, Stangler said the brand’s fundamentals are in order and he’s ready to drive national expansion.
“The theme, for me, is that we’ve been spending the past year on the fundamentals,” Stangler said. That initiative has included expanded production capacity, strengthening relationships with customers and distributors, investing in sustainability programs to achieve carbon neutrality, and ensuring the team is well supported by making the company’s minimum wage the local living wage as defined by MIT.
As numerous companies have scrambled in the past year to shore up their supply chains, one of Stangler’s top priorities upon joining Brew Dr was to make its supply “more proactive and less reactive” by creating new contingency plans for procuring raw materials in case of shortages – forging relationships with new suppliers and even rethinking internal team communication dynamics by promoting collaboration among departments through monthly check-ins and planning meetings.
Earlier this year, Brew Dr also installed new bottling and canning lines at its Oregon production facility, which has provided the necessary inventory to avoid shortages and meet rising demand, Stangler said.
“The likely challenges across every element of the supply chain, it’s going to continue,” he said, prompting the company to begin a search for a full time Chief Supply Chain Officer, which Stangler hopes to fill by the end of the year. So far in 2022, Stangler said Brew Dr has hired 20 new full time employees across all departments.
“It’s exciting to be building and growing, even in a pretty tough, dynamic environment,” he said. “And that’s a testament, I think, to the beverage itself, and the values of the company and how that’s all kind of pulling through in the marketplace.”
According to data firm IRI, sales of Brew Dr’s refrigerated kombuchas are up 3% to about $32.7 million in MULO and convenience stores for the 52-weeks ending August 7. The refrigerated kombucha category as a whole grew 4.9% to $597.2 million in the same period, and Brew Dr is currently the fourth largest player in the space behind GT’s (+5.8%), Health-Ade (+26.8%) and KeVita (-9.8%).
Stangler said that the company intends to focus solely on refrigerated kombuchas, suggesting a lack of interest in the much smaller shelf-stable space; notably, IRI reported 30.4% growth to $12.5 million for non-refrigerated kombuchas in the same period.
Prior to Stangler’s tenure as the chief executive, Brew Dr had been turning towards innovation to expand the brand platform, launching several new functional product lines including yerba mate energy drink line Uplift and a CBD-infused Tranquil kombucha line. Looking ahead, Stangler said innovation – largely helmed by Matt Thomas – continues to play an important role in the company’s strategy with new products and brand initiatives planned for early next year. However, he’s also working to fine tune Brew Dr’s portfolio around the strongest performing lines.
Seasonal LTOs, such as the summer Just Peachy flavor and an upcoming Blood Orange Ginger for the fall, have performed well for the brand and will continue to be an R&D focus, Stangler said. As well, Brew Dr is embracing more complex flavor formulations through its Founder’s Series, developed by Thomas, with SKUs that aim to “push the envelope in terms of the ingredients profile.”
“The strength of Brew Dr is that the fundamentals were solid, it was taking a brand and a business that was strong and just working to take everything to the next level,” Stangler said. “So the biggest thing that we’ve done is taken those innovation spaces and just connected them more directly with consumers so that we understand more about their interest in the ideas, and then the actual delivery of the flavors. That helps take what we’ve done to date and just elevate the interest, which you measure with trial, and then elevate the credibility of it, which we measure with the repeated metrics.”
As for its existing secondary lines, he said he sees “broader opportunity” for Uplift and although the company has yet to “crack the code” on the line it will continue to invest in the product. The CBD-infused Tranquil line, meanwhile, has come under some more scrutiny as Stangler cited regulatory hurdles holding the product back. While he called Tranquil a “nice play in a limited number of markets,” he noted it will not be expanding its presence “any time soon” and he is currently evaluating its future.
But with the core line as its north star, Brew Dr is now heading into Q4 with an imperative to grow distribution and increase household penetration. Stangler cited “incredible acceleration” in retail distribution in the Midwest, Texas, Southeast and Mid-Atlantic regions so far this year and he said the biggest opportunities for growth are in grocery, natural, club and mass channel accounts.
While convenience and drug continue to be smaller channels for kombucha in general, Stangler noted they “represent great growth potential for the future,” but that “there’s some work we need to do” to raise household penetration and consumer awareness before investing in a bigger push in the space.
According to internal data, Stangler said household penetration of kombucha has increased by about two million homes to cover roughly 19% of the U.S. this year. The company, he added, will maintain its current marketing strategy built around earned media, digital ads, social media and in-store activations, but primarily he said “distribution is the best marketing,” making a footprint expansion the priority.
“We’re focused on the core,” he said. “We see lots of potential in the category and for the role that Brew Dr can play, especially in bringing new households to the category. So that’s what you’re going to see from us in terms of the news coming in the future.”