However, significant potential to cut away from the pack still exists in the conventional, convenience store and even mass retail channels for manufacturers that can deliver the health benefits of kombucha, but with a smoother texture and flavor profiles that are more appealing to the mainstream consumers, added Bill Moses, CEO and co-founder of KeVita.
He explained the natural channel is “definitely saturated” with the kombucha category leader GT’s Kombucha capturing 99% ACV, followed by KeVita, which comes in No. 2 with 98% ACV in the channel, ahead of dozens of smaller regional brands that are highly fragmenting the category and limiting shelf space for multiple facings.
But that doesn’t mean kombucha sales will stagnate, he added. Quite the opposite, in fact.
Sales of KeVita in the natural channel surged 6,682% to $996,060 in the 12 weeks ending Jan. 24 compared to the same time the prior year, according to SPINS data. This is much faster than most competitors, including GT’s Kombucha, sales of which climbed 5.7% to $11,489,907 in the same period, according to SPINS data provided by KeVita.
While this growth in the natural channel far outpaces that of both brands in the conventional and mass channels, for now, Moses sees plenty of potential for kombucha in these outlets given the ACV is substantially lower at about 60% for GT’s Kombucha and 54.5% for KeVita in the conventional market, he said.
In addition, he said, “convenience stores are really untouched by kombucha, and of course, when you look at the mass market with Target and Walmart, I’d say they have the same velocity” but with thousands more stores and space for additional SKUs on the shelf.
“I think the real future growth of kombucha will come from those distribution points, and I think that the consumer receptivity is there now,” especially if manufacturers can help mainstream shoppers overcome some of the more distinctive qualities of kombucha, he said.
Overcoming taste & texture perceptions
To take full advantage of the opportunity in these spaces, manufacturers need to offer a smoother texture and on-trend flavors that appeal to mainstream shoppers, Moses said.
He explained that while natural channel shoppers like, or at least tolerate, the slightly gelatinous mother, or “floaties,” found in many kombucha beverages, the inconsistent texture is off-putting to many newcomers to the category. So, too, can be the sharp vinegary sting without more familiar flavors to help mask its bite.
KeVita is setting itself apart from competitors, and setting itself up for success with mainstream shoppers, by addressing both of these challenges head on and launching new products under its Master Brew Kombucha and Sparkling Probiotic Tonic lines.
At Natural Products Expo West in March, KeVita introduced three new flavors under its Master Brew Kombucha, including Citrus, which Moses says has had the best response so far, Mango Habanero, which is tapping into consumer demand for more spice, and Dragonfruit Lemongrass, which isn’t as well known among mainstream shoppers but which Moses hopes will entice people to try it with its exotic name.
The firm also showcased its new Meyer Lemon Cleansing Tonic, which Moses expects to be “a breakaway hit” given American’s love for lemon and its association with providing refreshment and cleansing properties.
In addition to its innovative flavors, KeVita sets its kombuchas and tonics apart from competitors by filtering out the yeast and the “floaties” to create a more welcoming product to newcomers to the category, Moses said. Plus, he added, removing them helps stabilize the product so that the firm can provider more consistently standardized sugar content and confidently declare its beverages to be alcohol free.
Emphasizing & standardizing functional benefits
In addition, KeVita sets itself apart from the competition and appeals to both natural and mainstream shoppers by emphasizing the functional benefits of the brand.
For example, labeling and promotions for the beverages highlight how the kombuchas are naturally energizing with about 80 mg of organic caffeine, Moses said.
He added they also have about five times the organic acid of competitors. Consumers increasingly understand the value of and seek out probiotics, but, Moses said, KeVita also is helping to educate mainstream consumers about the benefits on the bottle, website and in promotional materials.
“We are trying to take the myth out of kombucha and replace it with science,” which will reassure loyal natural channel shoppers as well as help the category cross over to mainstream shoppers, he said.
Finally, to keep up with the anticipated demand for kombucha and KeVita’s other beverage lines, the manufacturer recently invested in a $6.1 million bottling facility in Oxnard, Calif., – a move that underscores its confidence in the category growth and potential across retail channels. The facility opened in late 2015 and is fully-automated with Krones technology that can produce up to 350 bottles per minute and 7.9 million cases annually. In addition, it is certified organic, kosher and non-GMO.