Kombucha velocities are slowing down across all channels, though format and function-based innovations are presenting opportunities for growth, according to a market analysis by Chicago-based research firm SPINS.
The “State of Kombucha” report, first shared in September at the industry conference KombuchaKon 2020, notes that overall growth in the U.S. kombucha market in multi-outlet (MULO), natural and enhanced stores continued to grow this past year, rising 2.6%. However, within those channels, MULO was up 5.9% to $543.3 million in sales, while the natural channel was down 6.5% to $151.6 million.
“We’re seeing really strong growth in distribution across the landscape in MULO, which is really exciting and encouraging for this space,” said Perteet Spencer, VP of Strategic Solutions at SPINS in an interview with BevNET.
Meanwhile, contraction in the natural channel is partly a result of the “ton of innovation and experimentation” happening in a set already burgeoning with a wide range of offerings.
“There’s several segments within that refrigerated beverage set, so I think that puts a squeeze on all of the brands in that space and forces those brands to continue to keep their propositions fresh and innovative,” she said.
Those innovations have taken the form of new flavors and formats. Shelf-stable kombucha and kombucha-adjacent products have “high potential to bring in new consumers” and help brands establish a foothold outside the competitive cooler set. Within those sets, Spencer noted that strong growth for multi-serve bottles is a positive sign that kombucha is becoming “a part of that staple portfolio of beverage occasions” for consumers.
In terms of flavors, MULO and natural retailers are also moving in different directions. According to SPINS, there is limited overlap in the top 10 flavors (in dollar growth) across both channels, with the exception of mixed fruit and mint.
“It’s not uncommon in a lot of categories that as they evolve from a better-for-you substitute, that the next layer of evolution becomes more function-forward benefits,” she said. “We kind of knocked out high quality, really awesome tasting products, but consumers are now looking for a little bit more in this space. Coming into those spaces like immunity and energy is an exciting way that those brands can kind of continue to meet the evolving needs of those consumers.”