RISE is moving South.
Bolstered by the completion of a new 40,000 sq. ft. production facility, Canadian kombucha maker RISE is making its long-awaited move to the United States with the launch of four SKUs in New York City, as well as an expansion of its availability throughout Vermont.
While U.S. consumers are getting their first taste of RISE, the company, founded in 2009, has established itself as one of the category’s leading brands in Canada, with a nationwide presence in a variety of retail channels. However, the completion of the company’s new production facility in Montreal was the key to unlocking the U.S. market, according to founder and president Julian Giacomelli.
“Even in Canada, we have been throttling sales expansion for a number of years, as our core innovation has been finalizing and building out facility,” he said. “It took a certain amount of time to size up the right project, get an investor and expand our facility to the point where we could confidently serve the growing Canadian market and also launch in the U.S.”
The “right investor” came in the form of Lyra Growth Partners, the holding company and investment arm of Charles Chang, the Vancouver-based founder of protein supplement maker Vega, which was acquired by WhiteWave for $550 million for 2015. Lyra led the company’s first round of growth equity fundraising in March 2017, allowing the new facility — which Giacomelli estimated cost north of $10 million to complete — to go online in late summer.
Calling it “the state-of-the-art kombucha production facility in North America,” Giacomelli said the new fully automatic Krones bottling line, which still has room to expand five times beyond its current operating capacity, gives RISE between five to seven years before hitting its total potential output. In addition to being able to produce more volume, he said the company uses a proprietary brewing method that does not include pasteurization, heating, or use added probiotics, and that gives the company confidence regarding control over legal alcohol levels.
“We are confident in our process, capacity and logistical operations that we can do this properly,” he said. While Canadian law allows for non-alcoholic beverages to reach up to 1.1 percent alcohol by volume (ACV), as compared to 0.5 percent ACV in the U.S., Giacomelli said that RISE will sell the same products on both sides of the border.
“There has continued to be a lot of talk and some investigations about the leading brands, relating to sugar content, labelling accuracy and to alcohol levels.,” he continued. “We are super excited to be able to come in knowing we have everything in place to be able to show that every batch is compliant and that we also still make the most genuine, unadulterated kombucha.”
The first phase of RISE’s U.S. rollout began over the past several weeks, as the brand has begun introducing four flavors — Ginger, Hibiscus & Rose Hips, Mint & Chlorophyll, and Blueberry & Maple — in 14 oz. glass bottles to 200 accounts in Lower Manhattan and Brooklyn. The bottles will retail for $3.79 to $3.99. Vice president of marketing Ron Szekely explained that launching in New York will allow RISE to establish its identity as a “East Coast, urban kombucha” brand with a slightly different appeal to West Coast brews.
“As much as many other kombucha brands are more of a West Coast beach kind of vibe, RISE has always been more of an East Coast, urban type of a beverage,” he said. “We wanted to go to another East Coast city, and if you think about it, Vancouver is a lot further than New York City. It is the closest big city from Montreal and we believe we have the right kind of brand DNA to succeed in a cosmopolitan, urban market [like New York].”
The company plans to use a combination of its own sales force on the ground and more than one distribution partner, both of which will be seeding the market by serving independent grocers up-and-down the street as well as small retail chains. Meanwhile, the company will be working with United Natural Foods (UNFI), also its partner in Canada, as it eventually seeks to move to mainstream retailers outside of the Five Boroughs. Giacomelli said RISE is actively looking to hire a regional sales director, as well as sales reps, to serve the area, while Szekely also noted that the company is in the final stages of signing up a distributor to help with the next growth phase.
To build consumer awareness, the brand, which is working with marketing firm Gotham Brands for its New York launch, is focused mainly on field marketing, with sampling activations ranging from in-store demos to a presence at events such as Comic-Con New York, the Brooklyn Electronic Music Festival and the Martha Stewart Food & Wine Experience.
In addition, RISE will continue to broaden its presence in Vermont, where the company has been distributing for several years.
Now with the production capacity to back up its ambitions, RISE is aiming to — eventually — become a significant player in the U.S. kombucha market by replicating the success it has seen in mainstream grocery stores in Canada. Giacomelli noted that many kombucha brands strongly self-identify with the natural channel, allowing room for a “more inclusive” brand with fruit-forward flavors to take advantage as it seeks to connect with a broader audience.
“We have ambition but we’re not going to say we have to be the number one brand in a certain period of time,” said Giacomelli. “Our brand name and approach has been more inclusive; I think we’ve found a way to hit the right balance of notes to bring more people into the category without alienating the early adopters. What we learned was how to be a few steps ahead of the conversation by not dwelling on the fact that yogis and vegans love it. We are trying to bring it to other people who want to eat and live better but maybe don’t know how.”