It’s all SYSTMs go for Humm Kombucha.
Yesterday, California-based CPG company SYSTM Foods announced it had acquired Humm Kombucha for an undisclosed sum. The deal now places the nearly 15-year-old brand under the command of SYSTM’s executive team, which also operates two other functional beverage acquisitions – REBBL and Chameleon Organic Coffee.
Speaking to BevNET, SYSTM Foods CEO Andy Fathollahi said the existing Humm executive team has left the company following the closing of the deal last month and the SYSTM team will now work to find synergies between its three portfolio brands in order to grow and scale them simultaneously.
Through SYSTM Foods, Fathollahi will act as CEO of Humm, taking over for prior Humm CEO Matt Witherell. Other executives at the company include CFO Jeff Conner, CMO Mike Quinones and SVP of global sales Josh McDade.
While Humm’s operations change hands to SYSTM, Fathollahi said that the brand’s co-founders Jamie Danek and Michelle Mitchell will remain involved with the business in order to help retain the “original spirit and original culture” of the brand.
“I’m a founder,” said Fathollahi. “I’m not your traditional hired CEO that comes in with private equity and does a task. So I believe the founders have a lot to add, and I think that Michelle and Jamie are great folks, and we’d like to make sure their original vision is executed with some discipline, with some financial rigor and the proper team to really capitalize on that original mission of Humm.”
SYSTM Foods was founded in 2022 as a joint venture between Fathollahi’s SYSTM Brands and CPG investment firm GroundForce Capital. According to Fathollahi, the company became interested in acquiring Humm after meeting the brand’s executive team at last year’s Natural Products Expo West trade show and recognizing its opportunity to provide SYSTM with a competitive brand in the gut health beverages space.
“When you think about what kombucha is, to us it’s gut health … and that’s the category we’re playing in,” he said. “So kombucha, if it’s treated as an ingredient like apple cider vinegar or chicory, it’s just a gut health component, and I think consumers are looking for low-sugar gut health options, and that’s where we see Humm performing and growing.”
Founded in 2009, Humm has frequently been on the forefront of innovation in the kombucha category. In 2019, it was among the first wave of kombucha brands to add a canned line alongside glass bottle offerings, and in 2020 the company introduced a Zero Sugar variety.
In 2021, the brand introduced its take on the gut health soda trend by launching a line of probiotic sodas and seltzers.
Fathollahi said SYSTM will now be looking at Humm’s product portfolio and is likely to rationalize SKUs and “clean up some of the assortment.” While he said it is still early and the future of Humm’s portfolio is still “TBD,” he appeared bullish on the gut health soda trend that brands like Olipop and Poppi have helped to establish in mainstream channels.
“The consumer likes a delicious product, and the reality is that some consumers have decided they don’t like kombucha because of that strong flavor profile. I love it, personally, I think it’s great, but it’s not for everyone, and the really delicious product that is out there in that low-sugar gut health space has performed incredibly well.”
Market data firm Circana reported that in MULO and convenience retailers, Humm’s refrigerated kombuchas dollar sales rose 18.5% to $23.4 million in the 52-weeks ending October 8, 2023. That data does not include ecommerce sales or reflect all product lines sold by the brand.
Humm, which is currently sold in about 12,500 retail doors nationwide and counts about 80,000 total points of distribution, has had a strong presence in the conventional and club retail channels, Fathollahi said, but has been limited in natural. Conversely, REBBL and Chameleon are both deep in natural, but have limited presence in conventional accounts. SYSTM now aims to sell the three brands together, when possible, to increase sales and distribution and drive incremental growth.
As part of the deal, SYSTM has also acquired Humm’s Bend, Oregon, production facility. Fathollahi said the company intends for the plant to remain dedicated to producing Humm and there’s no immediate plans to open up lines for SYSTM’s other brands. The plant has also provided some limited co-packing capacity for other companies, which he said the company will “be looking at as an option.”
“In this world, we’ve got to slice and dice the categories that we live in: plant-based, delicious, functional protein, organic cold brew, and low- and no-sugar kombucha,” Fathollahi said “So we’ve got some good scale now, and we’ll see some synergies, we’ll see some operational efficiencies, and they’ll all live under the SYSTM Foods umbrella.”