Whether you’re a national brand or a dorm room startup, if you make kombucha, there’s nothing like February in Long Beach, California.
This weekend, at the Long Beach Convention Center, Kombucha Brewers International (KBI) will host kombucha brands and manufacturers from around the world for the fifth annual KombuchaKon conference. As one of the beverage industry’s most explosive (and often most misunderstood ) growth categories, there’s no shortage of issues and topics of discussion to unpack over the course of two days— in between sampling brews from the world’s largest kombucha tasting bar, naturally.
BevNET spoke with KBI president Hannah Crum about the maturation of the trade group, its legislative campaign to alter the way kombucha is taxed, and how this year’s KombuchaKon will be about defining kombucha culture.
Legislation Battle Continues
While debate over a consensus definition for kombucha as a category continues in earnest (more on that later), KBI members have been mostly unified in their support for passage of the Keeping our Manufacturers from Being Unfairly Taxed while Championing Health (KOMBUCHA) Act. The legislation, introduced last February by Sen. Ron Wyden (D-Ore.), would increase the applicable alcohol-by-volume limit for kombucha from 0.5 percent to 1.25 percent, an achievement that Crum stated would have global implications for the industry.
“It’s going to be a huge, important step for all kombucha around the world when we get this law passed,” she said, emphasizing that the law would only change the way kombucha is taxed rather than the definition of an alcoholic beverage. “It’s an important distinction that people get confused on. We aren’t changing that definition, we’re just getting the tax relief we need because people can’t get drunk from drinking our product— it’s not intoxicating.”
Despite support from KBI membership, however, the KOMBUCHA Act has not yet managed to find a way through Congress. After it was introduced last year, the bill, which is co-sponsored in the Senate by Sen. Cory Gardner (R-Colo.) and in the House by Rep. Jared Polis (D-Colo.) and Rep. Scott Tipton (R-Colo.), was moved to the Committee on Finance where it currently remains.
Crum remained optimistic though, praising a “tremendous increase in bipartisan support” for the measure that she predicts will push legislators to vote on its passage in Q1 of this year. KBI organized a on-site lobbying push in Washington, D.C. last December shortly before the vote on the Tax Cuts and Jobs Act. The KOMBUCHA Act was included in that vote, but was defeated on a technical issue.
Underscoring the importance of legislative action for kombucha manufacturers, this year’s KombuchaKon keynote speaker is Bob Pease, CEO and president of the Association for Small & Independent Craft Brewers. Pease has worked extensively on regulatory issues and is a registered lobbyist.
“I’d say keeping an open and active dialogue with regulators is key to maintaining transparency and a successful government relations program,” he wrote in an email to BevNET. He noted the Brewers Association has had success working with federal regulators on both reducing burdensome rules and strengthening consumer protections that foster product integrity across the category. “The Kombucha industry’s continuing growth and emergence into the mainstream marketplace makes it all the more important that stakeholders are engaged in helping regulators and lawmakers understand how current regulations are working, or not working, for businesses.”
Far from the halls of Congress, an equally important discussion for the kombucha industry will take place this weekend at the Long Beach Convention Center. KBI members face the tricky task of creating a standard of identity for the kombucha category that establishes certain parameters while leaving the door open for further innovation, but Crum is adamant that tackling the challenge is a critical and necessary step to keep the industry moving forward.
“We’ve been talking about the definition of kombucha for a long time, so now is the perfect time,” she said. “
Though kombucha is traditionally prepared as a fermented tea, the category’s growth has given rise to alternative fermented brews made with coffee, yerba mate, coconut water and other ingredients, as well as pasteurized, full-alcohol, and shelf-stable varieties. Crum noted that definitions for beer and wine have evolved over time, and the kombucha industry should similarly allow for those natural evolutions to develop, within some limits.
“We want to allow the products that come into the marketplace to help identify what the category is, and we don’t want to limit creativity,” she explained, noting that official guidelines for kombucha will be issued after discussing the issue with members. “What that does is not only communicate to producers, but allows consumers to start making these more sophisticated choices about what kind of kombucha they want to consume.”
In addition to soliciting feedback from kombucha producers, KBI’s push for a category standard for identity will also involve examining the beverage on a scientific level. Last September the group launched a SCOBY DNA sequencing study last year in conjunction with Oregon State University to develop a stronger understanding of how microorganisms influence alcohol content, flavor, and other factors. Over 100 samples were collected for the study.
Keisha-Rose Harrison, a PhD candidate of Fermentation Science at Oregon State, will present the results of the study, which are due to be published later this year, at KombuchaKon this weekend.
Growing the Base
Against the backdrop of an exploding category slated to keep expanding by double digits annually, KBI is still a relatively grassroots organization. And while the group continues to professionalize, including the creation of a general manager position, the spirit of mutual support and a shared community that has been fostered over the last five years at KombuchaKon remains one of its strongest assets.
Over the past year, KBI membership has grown by over 50 percent, according to Crum. Perhaps even more significantly, members reflect a broad spectrum of geographic regions, brewing styles and business models. As the pool has expanded, KBI has found itself a sounding board for the myriad of issues affecting the brands from around the world.
“We’ve started KBI Europe, KBI Canada. These are basically regions that have numerous players and we want to make sure they have a point of contact, a connection with the community so we can hear their concerns,” said Crum.
She noted a recent case in Prince Edward Island, Canada, in which a liquor license inspector issued a letter warning a restaurant serving kombucha that it was selling unauthorized alcohol. The local government later withdrew the warning letter. The brand producing the kombucha in question, Heart Beet Organics, reached out to KBI for advice and received talking points for discussing the issue.
“Our approach at KBI is that this is an educational process,” Crum said. “People don’t understand our product because they’ve never had to deal with it before. Let’s take a collaborative approach, let’s reach out and find where our common ground is and that way we can figure out a solution together.”
On the other end of the spectrum are brands dealing with another challenge: making decisions about private equity funding. Last year’s show came shortly after PepsiCo acquired KeVita for a rumored $200 million, while other category stars such as Revive, Humm, Health-Ade and, most recently, Brew Dr. Kombucha have all seen investors inject new financial resources into the brand in exchange for a stake. At KombuchaKon, Crum said presenters like Humm Kombucha’s Jamie Danek, Brew Dr.’s Matt Thomas and Sean Lovett of Revive will give a brewer’s perspective of the costs and benefits of taking outside investment.
Even as KBI membership grows and investment into the category flows, Crum still takes inspiration from the passion and camaraderie that has fueled KombuchaKon since it started.
“For us, seeing brands through the year and how they mature, how flavors change, how packaging and labels change, it’s like looking at baby pictures [over time],” she said. “We will grow together and we will know each other for the rest of our lives if we’re all involved in this category. These are your competitors, but also your friends.”