Mothers and Their Children: Kombucha Brands Hop on Pop, Seltzers

Long before “functional beverage” was a category unto itself, drinking raw and unpasteurized kombucha – often with some bit of floating “mother” still lingering in the bottle – was the natural gut health drink of choice.

The story of that category is one of growth and evolution, of scaling from independent natural grocery stores into global grocery chains and mass market retail. Along the way there have been iterations and improvements in taste, packaging and presentation to turn this traditional ferment into a multimillion dollar business.

Thanks to decades of consumer education, microbiomes and probiotics have become household terms. So how come kombucha hasn’t been more widely recognized as the ultimate sugary soda killer for a generation of more informed and discerning consumers?

It may be that the probiotics for which kombucha cleared the way have become the launching pad for a more popular set of gut health products, a group highlighted by shelf-stable low-calorie sodas like Olipop, poppi or Culture Pop – that have begun to claw at kombucha’s hold on the functional beverage set.

“Some of the success of kombucha was also its own downfall,” said Erwin Henriquez, senior research analyst at Euromonitor International. “It opened all of these consumers to this functionality. But then they realized,’I don’t like the taste of this specific product. So where else can I find this functionality?’”

According to Euromonitor, the kombucha category peaked during the start of the pandemic and volumes have declined since. In 2020, the off-trade volume of the Carbonated RTD Tea and Kombucha category was over 28 million gallons; it decreased to more than 26 million gallons in 2021 and about 25 million last year.

These conditions have led many kombucha makers towards a decision that years ago was less feasible, but which now feels almost inevitable: to introduce shelf-stable drinks.

Meanwhile, kombucha makers, including some of the biggest brands, like Health Ade and Humm, have tried to match the new CSD brands with soda-like varieties of their own. Thus far, category leader GT’s Living Foods, perhaps due to its status as the brand that largely created the kombucha phenomenon.

But for nearly every other kombucha brand that has emerged to fight for share behind GTs,, things have been different. In the past 18 months, kombucha makers like Rowdy Mermaid, Better Booch, and Bear’s Fruit have all vaulted into the mix with their own ambient gut-boosting beverages, joining a product landscape that includes the likes of kombucha and non-kombucha brands like Daytrip, Doctor D’s, Mayawell, wildwonder, Blake’s Hard Cider, Vina and De La Calle, to name just a few.

Asheville, North Carolina-based Buchi exemplifies how modern kombucha brands can exist on both sides of the refrigerated divide. Along with a glass bottled kombucha that the founders introduced nearly 15 years ago, its current platform of probiotic drinks now includes two sodas (Wild Pop and Kefir Soda) and an energy drink (Living Energy).

In 2018, Buchi merged with Washington D.C. brand Capital Kombucha and, in the process, developed a private label business for fermented beverages. The holding company, FedUp Foods, is finding a market for making private label kombucha, tepache, functional energy drinks, kefir and prebiotic sodas along with Buchi’s product lines.

“We didn’t look to (other fermented, functional beverages) as an ancillary product or an alternative to kombucha,” said Zane Adams, FedUp Foods’ co-founder and EVP of strategy and development.. “We just really felt that kombucha was a rocket ship to get it into orbit and we needed a lot of other means to continue its journey. We needed a lot of other kinds of items that create momentum.”

In the past, the name kombucha held an appeal for health-minded consumers but as the landscape for functional beverages has changed, so has the branding and some of the product mix to meet consumers’ needs.

“For brands, it’s important to remember, consumers are not looking for kombucha, they’re looking for gut health,” Henriquez said.

Since October, another well-established kombucha brand, Brew Dr, has begun market testing in the Pacific Northwest a new tea-based, “low-sugar probiotic refresher” called SipJoy. Though still cold-chain distributed, CEO Dan Stangler is optimistic that the four-SKU line (Lime, Orange, Grapefruit and Tea + Lemonade) will open the brand up to more consumers drawn to gut-healthy, mildly sweetened beverages.

“We’re very focused on the core offering of being inspired by tea, really excited about delivering probiotics beverages in a really clean and organic way and, as we looked at our offerings, we see Sipjoy as being very close to that core,” he said.

The Seltzer Effect On Kombucha

Kombucha Townfounder and CEO Chris McCoy, who has been making the stuff for about 12 years, has also been experimenting with ways to extend the borders around the core kombucha category.

KombuchaTown’s Live Seltzer, introduced in 2020, is a flavored sparkling water containing zero sugar and using kombucha cultures to give it the gut health benefits of probiotics.

Easier to produce, with a lower unit cost, the product also fills an opportunity in retail that raw kombucha can’t; it’s shelf-stable and thus can be put in multiple locations in-store from end caps to case stacks increasing visibility in places where people shop for sparkling water or other soft drinks.

For McCoy another big advantage of Live Seltzer is that it can “play in a bigger pond.” McCoy decided to remove the term “kombucha’’ from the label, opening the product to potentially spinning it off from KombuchaTown and maybe even selling it to a large beverage company.

This could be an important strategic move because throughout the lifespan of the kombucha category, very few large drink makers have seemed eager to enter the cold-chain, fermented drink space. Only Kevita, thus far, has sold to PepsiCo – a transaction that closed in 2016.

Kombucha “can be a great, profitable business, you can pay your investors dividends, you can be a really good business, but it’s going to be extremely difficult to find an exit,” said Ken Sadowsky, senior beverage advisor at Verlinvest.

Perhaps that’s why brands are using kombucha as the core, but diversifying into other formats and formulations.

Aqua Vitea has also taken the seltzer approach releasing four SKUs of its shelf-stable Aqua Seltzer positioning as a functional alternative to the various flavored sparkling water brands on the market.

“We’re not necessarily going after that exact same consumer that Olipop is going after but we’re going after that same idea of there being some space over here [in sparkling water],” Aqua Vitea founder Jeff Weaber said. “It still makes sense to the consumer and it’s not confusing.”

The pivot is not always smooth though. Working in different parts of the store and launching new marketing campaigns around different products can prove challenging.

Since launching in 2020, Florida-based Mother Kombucha’s Aqua Bucha, a kombucha-infused sparkling water, has done well in natural and organic channel stores but struggled to find footing in conventional.

Functional sparkling waters “don’t have much of a category to sit in,” co-founder and CEO Tonya Donati told BevNET Magazine. “People don’t go to the water aisle for any type of discovery. The struggle for us is putting it where people that would actually like it but don’t like kombucha will take it off the shelf.”