Can Kombucha Make A Comeback? Money Is Still Flowing… In Some Spaces.

0:10Hello friends and thanks for tuning in to taste radio the number one podcast for anyone building a business in food or beverage. I'm Ray Lateef, the editor and producer of Taste Radio, and with my co-host for this episode, John Craven, Jackie Brugliera, and Mike Schneider, who always gets a kick out of my intros. It's just so much energy. Some days you have more energy than others, and this is like a nine out of ten. Nine out of ten. Yeah. Okay. Usually you bring a seven and a half or an eight. Okay. What did you say, Jackie? Yeah. No, I was feeling the energy on that one. I was giggling, too.

0:44I just enjoyed it. That's all. We're about to get in a boat. Well, the folks here in the Newton office are about to get in a boat later this afternoon for our annual team outing. Yeah. Thanks, John. We're getting on a boat in San Diego next week, too. Yeah, next week. Oh, wow. Yeah, I'm going to both. Okay, I guess that makes sense. Will there be auto-tuning on either? Yeah, you're also going to be on stage being interviewed next weekend in San Diego. I don't think there's an actual stage. No? No. I was told it's just a tent or something. Okay. I don't know, whatever. It's an outdoor space at Nova Brazil Brewing in Mission Valley in San Diego with Naturally San Diego.

1:19Yeah, if you're in San Diego, come join us in Naturally San Diego. I don't know where the sign-up link is, but you can probably find it somewhere. Let's clarify all this. Are you going to be in the Encinitas tab, or what is it? No, Jackie, you are a part organizer of all this. Yeah, she knows what's going on here. I can give the deets. Okay, yeah. I think it's a little confusing. We need a date. We need a location. I'm going to write this down, too, so I don't miss it. Okay, so this is for Craven. So next Wednesday, be there. Everyone else, stop listening. Next Wednesday, which is the 17th of July.

1:51July 17th, we will be at Novo Brazil Brewing in Mission Valley in San Diego. And we will be there from 5 to 7.30 p.m. There is registration, which is required, but you just have to go to bevnet.com slash calendar. And there is a link there. There will be sampling. There will be a one-on-one convo with Craven about the founding of BevNet and what he's seen over the years. I think not all of it. Not just talking about BevNet. He will also be talking about the evolution of food and beverage and kind of what he's seen over the last 20 plus years. Who's going to be doing the interview or conducting the interview?

2:25Apparently Adam Hurdle. Maybe you've heard of him? Chill dude, Adam Hurdle. Adam Hurdle of Rudy's Bakery, makers of organic gluten-free breads, as well as some really delicious breakfast sandwiches and do they what do they call the the peanut butter and jelly they call them a sam and he's also naturally san diego board member and and so probably the chillest dude in the industry he's an unofficial member of bevnet i mean not an employee if there's a bevnet community he's he's an unofficial member of the bevnet team but it's going to be good i'm like kartik yes exactly very excited to get out there to san diego awesome community out there so gonna go home print out my map quest directions yeah trying to say something right can relate to so well i gotta say and no disrespect to the other naturally chapters but naturally san diego's chapter is a kick-ass organization my goodness they really bring it every time they get together you can read all about them if you search for them on altavista right right uh i just you know look them up in the yellow i was having such a good day i was so excited i I was a nine out of 10 on my intro.

3:37And now look, I just kicked around. Right, bring it back up. Come on, you're still a nine. Okay. We're going on a boat. Okay, well, I'm excited about the news that dropped earlier today. Thank you, thank you. You know that. This was news that was broken by brewbound.com. Athletic Brewing Company, the well-known maker of non-alcoholic beer, the leading maker of non-alcoholic beer in the United States, closed on a$50 million equity financing round led by private equity firm General Atlantic. The round was closed at a valuation, was raised at a valuation of$800 million, according to the Wall Street Journal.

4:18Lots more details about this story on brewbound.com. They're gonna be using some of this money to build out their second San Diego-based production facility and expand international sales of its non-alcoholic beer, according to BrewBound.com. All this money that Athletic Brewing Company has raised totals about$225 million, according to BrewBound. You know, I'm actually a little surprised given their growth and how aware people are of the brand and how excited people are about the brand that Athletic hasn't been sold or acquired yet. John Craven? What do you stand on that? Well, I suppose there's always a chance that they could have been sold, but I mean, it still just feels really early for the brand at the same time.

5:09So, you know, it's always tough for any brand to figure out when the right time is, you know, how much further can they take it on their own? And clearly I think, you know, reading what they're doing with the capital, it's pretty clear that they feel very bullish that there's more room to run continuing on their own path. So really excited for them. You know, awesome people, awesome products. You know, love that it's something that was, I guess, white space of sorts that, as we've talked about before, was almost dismissed as like not a thing. And now it clearly is a thing. So, you know, kudos to them for being the ones out there blazing that trail and, you know, plenty of other companies following suit and trying to follow in their footsteps now.

5:54So awesome stuff. It's pretty cool to see him put up a Dr. Evil number,$800 million. That's the valuation. And according to the Wall Street Journal, this round was closed at that$800 million valuation, which doubled the value or is double the value of the last round of their financing. It's cool to see, as you alluded to before, people really picking up on athletic. I remember having conversations last summer about athletic brewing and people knowing what it was. But this summer, as I've been having conversations, not only do they know what it is, they've tried it, they want it, and it's on a lot of the menus at places that I've been going.

6:33So it's been really good to see this level of expansion. And I think with just the demand for it and them being, I think you could call them an anchor of the non-alk beer category. Or the anchor? Or the anchor, sure. The anchor for the non-alk beer category. There's a lot of room for growth. So sure, they could have been acquired at this point and probably have had offers. But you've got to just believe that Bill Shufeld sees a path to something much bigger, grander, and perhaps just wants to continue to run the business. I mean, they also started in 2017. So, you know, it's interesting when a company kind of blows up that fast, too.

7:14I'm sure they've still got some energy left in the tank to keep going longer. One of the interesting things about them is the product is, you know, they haven't really gone crazy in terms of SKUs. They've tried a few different, you know, varieties. You've seen them sort of dip their toe into sour and they've got a couple of IPAs and gold and things like that. And yes, they've got their line of hoppy waters as well, but they haven't gone too crazy in terms of innovation. It's been mostly like, let's find ways to produce and let's find ways to distribute and let's find ways to get it into the hands of everyone.

7:48Did you read the story, Mike? Because that's exactly what Bill said. He said, we don't feel ourselves being tempted to stretch for innovation to replace things that are working. Something to be said about that. Either I know business or I read the story. I mean, Bill's always been that way, though. The minute that he walked into BevNet Live and was asking a lot of questions about how to run the business, and he just always seemed to be very much a pragmatic business person who had a great idea, knew it was a great idea, and takes in all the info and just does the right things with it. To your point, Mike, they are everywhere.

8:26They're on every menu. They're on every online retailer. They're in every store. So they don't need to innovate as much because they have their core products that everyone knows. And I think that people are comfortable with those and they they're direct, you know, one to ones as far as, you know, an IPA or a light beer. So people have something that they're very comfortable with that hits, you know, the mainstream beer market. And I think the next sort of part of this is velocity. I mean, the product is widely available and it's not to say their velocity is bad for, you know, this new turf that they're creating, but I think there's still a lot of room for that to continue to grow.

9:07And, you know, for people to just give it a try who aren't even necessarily like not drinking, right? Right. More faces in more places gives more people the opportunity to do that too. I thought you were about to do a Verizon commercial there for a sec, but Well, very exciting stuff for Athletic. Congratulations to Bill, John, and the team. You know, Bill revealed a bit about Athletic's potential future in an episode of Taste Radio. I sat down with Bill and John Walker, who is the co-founder of Athletic last fall, and you can hear that episode. It's titled, How Athletic Brewing is Building a Brand While Leading a Revolution.

9:47If you haven't listened to it, please do. It's been a while since we did a buy or sell. I feel like it's time to do a buy or sell. I feel like we need a jingle for buy or sell, something like that. Like price is right. Exactly. All right, let's be clear on what this is. Okay, so if you don't think you buy into this topic, you're selling, right? If you are buying the topic, you're buying. Okay, so it's very clear here. We've had confusion in the past. There's no confusion anymore. Okay, this first buy or sell, this first topic was inspired by Jackie telling us that she shops at Walmart.com on a relatively frequent basis.

10:26Okay. So Jackie, buy or sell. Buying groceries online is preferable to buying groceries in store. I would buy. I would say that an increasing percentage of people are buying groceries online. It's just way easier for people that are busy. And I feel like there's like a, I feel like everyone's busy these days and they keep themselves busy. So they want to just go through their app and click on some things and get it delivered. And then some platforms are just making it incredibly easy that you can't really say no to that. Like Walmart plus, you can get it to your doorstep in an hour. And you're going to have three out of eight bruised peaches.

11:06So, so, so, so shaking his head the entire time Jackie was speaking, but it's not just Walmart, you know, you have thrive market. You have also, you could just pick up the groceries and just order them previously. There's lots of options now. All right, Mike, state your piece here. No, I agree with Jackie. I just think it's kind of, it's hard for me to trust others to my produce. So I'll still go to the grocery store to buy my produce, but I don't want to go. You don't want to go? I don't want to go as much as I used to. Okay. I mean, we could go back to the old days of there being like a produce shop and a butcher shop so like the things you need to pick out but no one could tell me that they need to go actually pick out their packaged goods like are you examining the expiration date john doesn't care about that but i mean that could be better managed if people didn't go into stores you know and then the store could just manage inventory like normally you know because there isn't that guy like you that's going to go in and just reach you know knock the shelf down and get the wall off the back have you gone shopping with me because it gets you you just nailed exactly i picture that and you being the guy who like goes up to the deli counter and you're like can i just try a slice of that prosciutto just really thinly sliced oh my goodness no then the salami and the roast beef no and then the guy's like all right cool like what do you want to buy and you're like nothing see ya no lunch is like i see a wine tasting in aisle two no no i think to that point though, like you can get your staples with online grocery and like ordering, and then you can have maybe a specialty store where you want to like peruse and try some things and find some new products.

12:46So I feel like that might be more of an opportunity for in-store shopping. That's kind of what I'm saying. So for me, I think it's preferable to shop in store still. And I say that because of the buffet. No, I say that because I've done online shopping and I've, I continue to do online shopping. I probably online shop 20 % of the time and going to grocery stores 80 % of the time. But inevitably, there's always a problem with that 20%. There's like at least one thing that's off, whether it be, I don't know, some salmon I ordered or the Mike's points, you know, some bruised fruit. And I'm just like, you know what, if I just plan my day better and I don't know, come back from the office and made my way to Trader Joe's, which is on the way home from the office, you know, I could have just done this a little bit easier.

13:32I think there's just like a level of expectation and like risk reward. Like I'm willing to have a bruised peach if I have the convenience of getting my groceries delivered. Okay. Okay. Fair enough. Bruised fruit would be a good name for our band, Jackie. I like that. Okay. So I think we're three out of four buy and one out of four sell here. I'm just saying, I think right now for me, it's preferable for me to go in stores. I'm just saying. That's fair. Personal preference. Yes, exactly. All right. buy or sell john craven fish sticks is that a real question yes it's a real question like what with no context yeah just fish sticks i don't consume fish sticks okay so you're a sell guy sure your kids your kids eat fish sticks no why not uh well one's a vegetarian and because i don't have fish sticks i can't eat them that would you would would you buy them at any given point no But why?

14:28Why? Okay. Why would you buy fish sticks? I don't know. Because they're healthier than a hot dog.

14:36What do you think John the Craven's refrigerator is full of? Well, no, I'm thinking he's like, well, you know, he's presenting this, you know, eating hot dogs and fish sticks. I just don't believe you're consuming that stuff at your house. I feel like some people would compare a fish stick to a hot dog, though. Like it's the hot dog of the sea. Yeah, that's what I'm saying. Like, you know what? On a kid's menu, a lot of kids' menus, they have. Oh, fish fingers. Yeah. Fish fingers, grilled cheese, hot dogs, chicken tenders, a bowl of like plain pasta for the kids who can't stand anything but plain pasta, you know?

15:04Sure. It's true. Why are we talking about fish sticks? Because I think it's one of those things. What happened in your life that we were talking about? Well, here's. OK. OK. Put all our cards on the table here. I think fish sticks, if there's a category of fish sticks, it's something where there's some white space there. You know, it could be improved upon. Ultra processed fish food. There's a whole bunch of fish stick brands and products out there that, as we know, are just, I'm going to call it what it is, just crap. And so I think one of the reasons people don't eat fish sticks and don't even look for fish sticks anymore is because they know it's just still the same crap that they've been eating for 50 years.

15:35Why don't we call it fish sausage? No, no, no. All right. Just throwing out an idea. Okay. But Jackie, do you - For a product I don't understand. Are you a fish sticks person? Do you like them? Do you hate them? I don't really eat them anymore. I grew up eating like Gorton's, you know, fish sticks. I feel like it's more of like a kid's food and adults don't really look at fish sticks as something that, you know, is quality or that they want to ingest. It was also interesting. I was looking up like the history of the fish stick. It actually picked up steam during World War II because they had these like frozen fish blocks and all of like the meat was going overseas to the soldiers.

16:19So they were like, this is our chance to sell seafood. and they started chopping blocks of frozen fish and then phrased it as innovation. So, you know, during that time, that was innovative. Man, I bet the fish sticks were so much better back then. It was so much better than, because it was just fish. Now they add all kinds of stuff. It's, you know. And you probably deep fried them. Deep fried them. It's probably imitation fish in there somehow. Anyway, Mike's just been sitting there. Mike's like, I'm so confused. Mike's like, why? I'm just going to sell the question. I'll sell the fish sticks and buy something I love, like people people hot sauce or a la vie blue vanilla frosting some fish wife a bucket of ceviche a poke bowl anything haro chai box cola's goodies all right all right okay i get it i i'm sure that i've triggered some folks listening i'm very true you and coffee supply talk about yeah there you go by talking about fish sticks all right if you have a burning opinion on this subject uh just email us at ask at taste radio.com if someone out there makes fish sticks yeah maybe they have a better for you fish stick i'd love to sample i would there you go that's a good point there you're talking about gorton's or something you know which yeah they make chicken nuggets too so i just don't i just want a better fish stick out there i did some tech work for gorton's at one point too so oh yeah i'm kind of over fish sticks what kind of tech work could you possibly be doing for software for them oh okay there you go inventory management baby slinging fish sticks sounds like you were you you had a really fun job yeah optimize the fish just like now oh all right last buy or sell kombucha will make a comeback as we know kombucha sales have plateaued in some cases they're declining i feel like brands that we used to see every day are not being seen every day.

18:14I feel like this kombucha space in stores is shrinking in favor of other kinds of beverages, like Better For You sodas and other kinds of functional beverages. But Mike, as a resident kombucha geek, is that a fair description? I'll take it, yeah. Resident kombucha geek. I had elderberry juniper over the weekend, yeah. Okay. It's good stuff. Do you see kombucha sales rising? Do you see demand? Do you see interest rising? I think there's a problem right now, which is that, as you've said, space is shrinking. I think it's because of when prices went up, kombucha's price really went up. And now you're seeing like$4 kombucha.

18:49And I think people liked the$2.99 to$3.50 price range. And this$4,$5 thing is really going to hurt kombucha. And you're just not seeing as much variety in the growlers and stuff. And I think people do like the variety. Okay. So you're thinking that? I don't see a comeback coming anytime soon. So you're selling on a comeback? I'm selling on the comeback. Okay. And because of the prices in particular. I think people still keep drinking it. I just don't see it as growing. Okay. John, you want to weigh in here? Sure, why not? That's what we're here for, right? I'm on the show right now. Hot takes on something.

19:26I'm on the show. Hot takes. I think it's complicated. I think there will be a comeback for it because, look, I mean, it is a product that's been around a long time and there's clearly some level of interest out there for it. But I think a couple of things kind of converged at the same time that weren't great for this category. And, you know, one of them was definitely the emergence of this better for you, modern carbonated soft drink. And I think, you know, that combined with just COVID and changes in the fundraising environment, I think, made some of the kombucha companies try to shift their product towards that, which I think made the ultimate kind of core kombucha consumer and the actual kombucha product kind of not as good as it used to be.

20:17So I don't know, you know, I can't, on the other hand, blame companies for going after that. The category had kind of plateaued and it wasn't really clear what the next thing was that was going to push it forward. And I don't know I guess it seems like one of those things where you know there's like the timing is everything for like people starting but sometimes timing is everything for companies trying to continue to grow did kombucha miss the boat by not positioning itself as the better freeze soda I mean some of them not not not the way only popped they did poppy and others 100 and then they came in with the booch pops and stuff and it was maybe too late here's the thing how I would explain that.

20:59You know, we a lot of times talk about innovation and, you know, giving a consumer something that's not like radical innovation, right? Like it's gotta be somewhat close to things that we already consume. And in the case of kombucha, at the time of, you know, kombucha really taking off, it seemed like an almost incremental innovation on soda. But the reality was that there was a gap there and other products went in that gap and basically reduced even you know the friction further so friction of production well just the friction for the consumer okay so education production so if you're like a i don't know diet coke drinker or you're someone drinking like sugary csts and you want something that's better good for you it's way easier to just go buy like an ollie pop or a poppy or whatever than it is to become a kombucha or a pervy or a dr spade any of those you know and i think it is still out there it's just it's kind of gotten pushed a little further down in terms of like the innovation scale so give it time okay jackie yeah i would agree with both of them i would sell on the comeback i think there's just so many new players in gut health in general.

22:17And I feel like kombucha was at the beginning of consumers understanding gut health. And now like everyone is looking for that function, but there's so many more options and different types of products. That's not necessarily kombucha. Is that true? Or are we moving away from gut health? Because, you know, with like the poppies of the world who have been sued about their gut health claims going, oh, we didn't really need that in the first place. And consumers going, yeah, we don't care about that anyway. Well, look, I want to also clarify here that this is not for anyone listening who has a kombucha business.

22:49Kombucha is not a bad business. Ultimately, what we're talking about is the overall market going from whatever it is. A couple hundred million to billions. And I think not quite yet. So, I mean, I think that's just for brands that are out there and have a regional brand or, you know, a good sort of handle on this category. Great. You know, just keep doing what you're doing. And it's more of a cautionary, like now is probably not the time to put your foot on the gas and like really try to blow it up. Yeah. Unless you're in my neighborhood or my refrigerator. Well, I think the category needs strategic investment.

23:28I think it needs strategic interest. And it's clear that strategics aren't interested in this space as much as they used to be. Well, I mean, those things don't move consumer demand and education, though. I think with strategic money and distribution muscle, it might make a difference. I mean, that's kind of what we tried, though, you know. Right. I know. Exactly. I think there is kind of a almost shift in consumer taste that at some point, you know, it's ever evolving. It just has to get there on its own or, you know, through some other catalyst. And I think trying it behind gut health, like it only got it so far.

24:07So what's the next thing? You know? Well, I think strategics also pull the plug on these things quicker than they probably should have. I mean, if you look at Kavita and Pepsi, right? I mean, Kavita's kombucha. Barely. Does Kavita even sell kombucha anymore? Barely kombucha. Well, no, they had a kombucha. I know. Even that kombucha was barely kombucha. HealthAid, obviously, Coke divested from HealthAid. Pete's with Revive. Revive doesn't even make a kombucha. Are they even around anymore? No. They just completely killed it. it remains to be seen what happens with Hum. I mean, I love that brand.

24:42I really hope that brand stays in the market, but it's clear they're trying to expand their portfolio to other beverage categories as well. And so I think it just seems like strategics aren't willing to be patient with the category, maybe as much as they could be. Again, I think there's just too much noise out there right now. The cost of doing that went up drastically. In the world pre-Ollipop and Poppy, I think there's more room for a consumer to like, you know, receive that. And now there's extreme noise. So I don't think it's the right time for that. And then there's the whole idea of, do we go and play in that space?

25:18Like, do we take this kombucha and do we morph it into something else that can play in that space? I mean, you're seeing that with like Deokai, for instance, with Tapache, which is, again, phenomenal. I love that product. But recently repositioned as? The new Mexican soda. The new Mexican soda. The new Mexican soda. And for soda lovers, that's like really good news because soda geeks know that the Mexican Coke is better. That's the best. So if you have a new, better for you Mexican soda, that's a good message that I'd like to see them test. Now they're going to have to test it en masse. That's the problem.

25:55So that requires a lot of money, again, against a lot of other noise. But if better free soda is the thing and they've got a better free soda and it's better for your Mexican soda, that's not that much harder to understand. Worth testing. I think it's a good positioning. Well, I'll still buy kombucha. Me too. How about we end with that? I'll still buy it too. Yeah. No, I still buy kombucha on a relatively regular basis. That's not what we're talking about here. And you know, at Trader Joe's, I think the GT's is still$2.99 a bottle. I'm pretty sure. Yeah. I guess I'll have to go back to Trader Joe's.

26:26Go stock up. Yes. And ironically, you remember when it was that rumor that Anheuser-Busch was going to buy GTs for a billion dollars? I forgot about that. Remember that? Yeah. Oh, Dr. Evil number. I imagine that AB, and no disrespect to AB, it probably wouldn't have worked out very well. You never know. Yeah, you never know. You never know. Quick break. If this episode has you thinking about what's next in food and beverage, explore BevNet and Nosh Insider, our subscription platform with deeper insights from the BevNet team. Visit TASTERadio.com slash insider to learn more.

27:23actually phenomenal i love this cases of this said stuff i don't know oh i should have known what do you think makes this i'm gonna go with the arizona iced tea arizona arizona beverage company makes this stuff yes say you're killing an arizona product i love what's wrong with that i mean there's nothing wrong with it i i saw this product i don't think i've actually tried it yet but you know i saw it on uh social media and i think it's pretty clever what they did because you know it's like when you look at it it doesn't scream Arizona right you know there's no 99 cent no giant can but once you know it you're like the color palette staring me right in the face I mean it is next door to Santa Fe the irony is in New Mexico not in Arizona actually I like that no but this um now I know sometimes brands round down when they can so there might actually be a little bit of calorie it's like maybe one calorie maybe one gram of sugar in this you can round down a little bit.

28:19That's the FDA's. Yes, I know. Yes. But this tastes amazing. Really well done, Arizona. I'm sorry. Juice always equals calories. At least one. Yeah. You know, two weeks ago, John, you talked about straightaway cocktails, breakfast martini. Yes. On the show. Had some for breakfast. And I have in my hand, obviously, a breakfast beer. Hoplark, a maker of hop infused beverages has unveiled their latest limited edition product this one's called the breakfast beer one little bacon and eggs in there i don't like so here's the thing with that right hold on let me explain what was in here the ingredients are carbonated water white tea allura hops and citric acid it contains caffeine the tasting caffeine there you go the tasting notes are peachy melanie floral hoppiness level is quite so apparently quite hoppy yeah okay Have you had this yet?

29:16I have not. No? I'll try some. You want me to try some? I always love a good Hoplark. Yeah. Hoplark breakfast beer. I have another beverage that should be drank in the morning. Parch's Sunrise Super Tonic. Yes. Yeah, this is delicious. And it's cool to see them do something a little bit different because I know that they're mainly like non-alcoholic cocktails, but this is a non-alcoholic tea elixir and it has 50 milligrams of caffeine. So low caffeine. And then it also has reishi mushroom, lemon balm, has some additional adaptogens. And it's cool because you can drink it chilled or you can pour it out and warm it up.