Kombucha Now $2 Billion

US

Kombucha is already the fastest growing segment of the beverage market in North America with accelerating sales in Asia Pacific regions. Reports predict a 15-25% compounded annual global growth rate.

While the wide difference in these estimates indicates uncertainty rather than reliability, they point to the likely size of sales a few years from now. Kombucha revenues were edging towards the $1 billion mark in 2016. They will hit $2 billion by 2000 and, assuming the lowest predicted growth rate of 15% a year, $7 billion by 2017.

That may well be an underestimate in that kombucha is changing rapidly, in terms of flavors, production and distribution.

Flavors: the core of kombucha is fermentation of green or black tea with yeast or bacteria, typically adding sugar. This produces a probiotic food with a sour taste and sweet overtones. Probiotics contribute to gut health and are the base of kombucha’s reputation as a wellness drink and as part of the organic and natural foods market. The core appeal is to relatively affluent health-conscious younger people in developed markets.

Most of today’s sales have been for plain kombucha, with only an estimated 25% share for flavored varieties. That is changing rapidly and the range of flavors is matching the general trends in tea innovation: herbs, spice, and fruits. Starbucks entered the market in 2018, with six flavors. GT launched coffee, watermelon and basil flavors. Poland’s Brothers and Sisters targeted local preferences in introducing ginger and sencha. Canada’s Rise is similarly focusing on establishing new mainstream flavors to offset the concern among producers about the intrusive alcohol content of kombucha.

Production:  The industry has been localized and low tech. Many enthusiasts make their own home brews using a starter SCOBY (Symbiotic Colony of Bacteria and Yeast.) Most do not end up in a hospital with bacteria-related illnesses and even deadly toxic allergic-reactions widely reported as kombucha dangers. Most.

Industry production is safe but there are many ongoing and accelerating consolidations and use of technology to improve fermentation and bottling. Major players are emerging, many unfamiliar to potential customers and current tea drinkers. Brands are establishing their distinct market identity.

Distribution: Branding is core to kombucha distribution. Its main customer contact is through health food stores and groceries, including national supermarkets. It does not yet typically appear on restaurant and bar menus. Packaging is mostly glass bottles, 70% of sales, with cans a focus of innovation.  Kombucha competes with many other beverages: health, ready to drink, energy, organics, etc. It is not generally part of specialty tea consumer interest or distribution. Tie-ins with such chains as Whole Foods and Walmart are emerging as key to what may be the dominant point of sale: the supermarket shelf.

Historically, its primary markets have been the US and Europe. These constitute half of global sales. The APAC region is seeing a growth surge, driven by affluent younger consumers’ search for flavors, wellness benefits, and variety.