GT Dave

25:34One Life, may they rest in peace in Venice. Because there was no Whole Foods at the time. There was Mrs. Gooch's. Yeah. And I aspired to get into Mrs. Gooch's, but they, honestly, they were getting a little too corporate at the time that something as cutting edge as kombucha was actually against what they were looking for. So I kept on getting rejected. So I was like, all right. They were more mainstream. They were getting very mainstream, which is why ultimately Whole Foods purchased them. Yeah. But yeah, like I really grew things almost like an overprotected parent. Like I wanted my babies to be happy and healthy and grow, but not too far too fat.

26:07As he said, the mission wasn't to grow big. It was to be pure. And as big as it can get being pure is great. The quality was the key. Yeah, that's exactly right. I knew I wanted to share this with as many people as possible, but on the condition - But not at the expense. Yes, the quality, the integrity, its core purpose. I remember later on in my career, or like call it by year five, it was trying to gain traction. And so now call it opportunistic individuals started to come into the fold and they started to give me advice. Like one was like, hey, put it back in plastic. You'll save a ton of money.

26:47I was like, no, I got out of plastic for a reason. I'm not going back. Also they'd say like, hey, like the stuff floating in it, like find a way to get that out. Cause it's like off-putting. And I said, okay, but there's a mother in apple cider vinegar. And that's what people look for. So if you're turned off by that, then maybe you're not ready. So I had a response for things. And I really was anchored in my, even though I probably didn't know it, but I was really anchored in my way. So I was able to somewhat avoid some of these bad advice that I was getting. Well, they were giving you good business advice.

27:20Yes, on how to mainstream and scale. But not good advice for what this was that you were doing. Yeah. So luckily, I was able to kind of stay steady and say no to a lot of those kind of bad suggestions. What do you think it is about you that was able to keep true to the mission? I think it really is, Rick, is that all I wanted was to do something that I believed in that I knew was going to resonate with others. And I didn't really have in my mind like a threshold or a milestone of like, I need to reach a million people or I need to sell a million bottles. It was just like, I want to make one great batch that's going to affect one person or more.

28:00It was like I had this low bar. And I think by being so young and being so curious, but also like unaffected by the material world, it allowed me to lead with such purity. Well, it's the reason it worked. Yeah. And I try to bring myself there more often than not these days. Because this world can change you, especially right now. And, you know, I'm 48 now. I have three kids. And, you know, my life is crystallizing more as like a human. in, but I'm trying not to forget like this origin story, so to speak, that I was born from. How did you make the labels in the beginning? You know, I designed them on my dad's computer.

28:37They were black and white. My mom was a big source of inspiration and she loved these, you know, interesting cosmetics and things like Calvin Klein. And there was this one brand called Laszlo and Coco Chanel. And they were always very, just like simple and beautiful. And so my first label was a black and white label that just said kombucha kvass. So I thought kvass at the time, it was a Russian term. They referenced kombucha as kvass back when kombucha was big in Russia and still is. And then it was the ultimate, nature's ultimate beverage, which was like a tagline that it came out. And that was it, no flavor.

29:15And that was it, there was no, you know. Well, it was kombucha flavored, really. Yeah, that's exactly right. And it was very simple. And I think it stood out because there was, even when Edwala debuted, everything was very bright and even cartoony at times. And I was like, no, I just want people to feel that all the energy is going on into what's inside the bottle, not marketing or puffery or posturing. And I think I was somewhat right at that. I think that allowed me to stand out. So how long was it like that? Was it the black and white kombucha label? The black and white label lasted about maybe a year and a half.

29:52What caused it to change is I wanted to come out with a flavor. Because I noticed that as my mom and dad really now became evangelists for kombucha, they started to experiment with how they would serve it. So my mom would sometimes put cranberry juice to change the color. They would sometimes add ginger to kind of brighten it. And so I started to explore with flavors. And I thought to myself, OK, this label architecture is too singular. It won't support a line extension. So I hired a graphic designer and we created a new label. And then that also allowed me to, I explored a different packaging.

30:28So the bottle that I started off with was actually a plastic juice bottle because that was only what was available to me at the time. But I knew I wanted to get into glass. But at the time, the barrier to get to glass was so high. But I found a loophole and it was a barbecue sauce bottle sold from a tiny, tiny distributor. and with the new label and the new bottle, that became my new look and that was probably about a year and a half afterwards. And how many flavors did you have at that time? Three. The first flavor became just the original. Then I came out with a vitamin enriched citrus, which was, it's going to sound so silly now, but I was taking what was very popular.

31:07Do you remember the brand Emergency? So I was taking a packet of the Emergency and putting it in the kombucha because it added all these vitamins and a little bit of flavor and I'd bottle it. And you'd only do that by hand, which I was bottling everything by hand. So it was my second flavor. So that did modestly well. But then the one that put me on the map was Gingerade. And the name came to me like one night because Gatorade was big. And ginger was nowhere near where it is now in popularity. Yeah. Probably no drinks other than maybe ginger ale, which doesn't really taste like ginger. No. Actually, what inspired me from a gingerade, and I have to give him credit, is yet again, the Beverly Hills Juice Club.

31:44He had the apple lemon ginger and he used like, and he even had apple lemon double ginger, apple lemon triple ginger, where he would increase the amount accordingly. And I just love the brightness. And I thought, I'm going to explore that. And it just, it took kombucha to another level. And I think it was one, a flavor enhancement to an added nutritional or health benefit because raw ginger is so good for so many different things. And then it slowly started to give, I think, this maybe apprehensive consumer something relatable to anchor it. Because if it's just kombucha, it's a little too foreign.

32:19But like when you start to, you know, kind of ground it with something that they do understand, then the barrier, the fear of the unknown went away or at least was reduced. And that put me on the map. Like those three flavors, it started to really get traction. And then after that, Synergy was born. Why does it taste carbonated? Because it's fermented. So the beauty of fermentation is that, I mean, there's so many things going on. But to put it simply is you're starting with ABC ingredients, right? So tea, water, and some kind of fermenting agent. There's always tea in the base? Yeah, because it's the tannins and the caffeine that actually are the nutrients that the kombucha culture feeds off of.

32:58I see. And it's black tea and green tea. You can't use white tea or decaf tea. Some teas will actually hurt the kombucha because of oils or other things. It's very sensitive. So you have that base. And then, you know, the time that you create is temperature, time, again, just allowing nature to run its course. And then the output is this busy, not very sweet, tangy, kind of dynamic thing that we call kombucha. How long does it take to ferment before you put it in the bottle? So when you do it on a very, very, very small scale, right? So when I started with like the, called the three quart vessels, that was seven to 10 days.

33:39But then as you scaled, and this is the trap that a lot of competitors fall into, to be honest, is as you try to scale, even though I kept mine still at a homemade level, you have to extend the fermentation time to make sure that the fermentation is complete. So once I went from the seven to 10 day small batch, when I went to the four gallon batch, I ended up at about 30 days. 30 days. Yeah. And so that's where a lot of the cost comes into play with making kombucha. Because even though, yes, it's a beverage, it emulates more that of a farm, right? Because you plant something, so to speak, and then you need it to justate.

34:16And then you harvest it. And then you start all over again. So that's why, like, my facilities, we occupy half a million square feet. Wow. Because 70 % of our facility space is pure fermentation. And where is this? In Los Angeles. Honestly, I miss being a small company because there's just things that you can do when you're smaller and there's things that you can't do when you're bigger. That's why I think, honestly, it's the curse of a growing business is a lot of times you're forced to change even if you don't want to. Well, I would say if you can make as much as you can make and sell all of it, it's okay.

34:50If there's a limit to it, that's okay too. Yeah, that's exactly right. And that's something that I'm coming to peace with more and more these days is, as I mentioned, the world's changing. And at least right now, consumer behavior, they're seeking more of like the low sugar, the quick fix, all of that. Like I'm wrestling with like, do I follow that trend or do I just find comfort and solace and confidence in what I'm doing and the why? And listen, you know, I employ 1 ,100 people now. So I'm responsible for people's livelihood and food on the table. So it's weird. I'm tasked to kind of keep the business thriving, technically no matter what, so I can take care of them.

35:29At the same time, I have to make sure that I'm still honoring the soul of why I got started. And they sometimes compete, and it can be challenging.

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37:09So after the three flavors, what would you say the next big change was? The debut of Synergy. Yeah. So I debuted Synergy around like year, two and a half, three years in. You know, everybody judged what I was doing. My parents got it for the most part and people their age got it. But people my age were like, GT, like, what is this? Like, you're wasting your time. And they wouldn't drink it. But I noticed that if I added juice to it and I called it something else, like Synergy and Red Bull had just debuted. So energy was a big kind of word that was trending in people's vocabulary. Like it sounded like it was cool, like it was going to do something.

37:49It was healthy versus Red Bull. Yeah. So I would just say, hey, try this. It's called Synergy. We didn't get into the kombucha conversation initially. It still said kombucha though, yes? On the ingredients. Yeah. So it said Synergy, organic and raw. And then on the ingredients, it would say kombucha. I see. Right? So you almost had to look for it. It was a little bit more of a traditional play, right? Where you're focusing on the branding and the benefits, but the what's inside is somewhat secondary, even tertiary. And I think that helped me democratize kombucha a little bit more. And then again, as we were talking about having the two brands, because I kept the kombucha brand still going, but then I had Synergy.

38:24It's almost like I was catering to two different markets. It was confusing to me at the time. I can remember. And I always bought the kombucha. I don't remember ever buying the Synergy. Yeah. But the fact that the bottles were the same, it seemed like they must be related. Yeah. Because while they looked alike, they didn't look like anything else in the store. Yeah. You know what? So I eventually changed that, which in my mind, I don't know if I really did something good or bad. But I went to this event in 2019, right before COVID. And it was like a wellness retreat. And it was a lot of people in the health food industry, whether they worked in the industry or they were participants like consumers or whatever, right?

39:02and people were asking me at the table I was sitting at like so what is it you do and I said oh I you know I have a kombucha brand they're like really which one I said she teased kombucha because that's what we were known for and she goes never heard of that and she leaned over to her husband she goes I drink Synergy and I said I'm sorry did you just say you drink Synergy and she goes yeah I go that's my brand too and she goes oh my god and that's when I was like okay I need to fix this because I'm diluting things. And as things get more competitive or as I need to allow the brand to evolve, I need to crystallize its identity.

39:36So in 2020, we merged them and made them both synergy. But it's fine because the drinks didn't change. Right. The drinks didn't change. The only thing that changes, you unified the name. Yes. And now it's all synergy. It's all synergy. But I still think that there was, and maybe this is me overthinking, Rick, I think there's a potential in the audience that is very purist and synergy feels just a little bit too mainstream. Yeah, I think it's okay. You think it's okay? Okay. Yeah. As long as what's inside is the same. Yes. It's okay. Yeah. Yeah, I think you're right. There are some consumers, like we recently changed our logo when we celebrated our 30th anniversary.

40:10People were calling me out. When was the 30th anniversary? 2025. Wow. Yeah. Can you believe that? 30 years? Yeah. Unbelievable. So I decided to change the logo because I'm into evolution. And, you know, as I'm getting into this next chapter, my life of being a parent and a more mature adult, I wanted to create a logo that was about servitude. Because I think ultimately, if you maintain a commitment to service, to doing something for others, I think those values keep you honest. And I thought, my luck runs in threes. I'm the third born, November 3rd, all this stuff. And so I thought, okay, 30th year is going to be a symbolic year for the company.

40:52So I'm going to evolve the logo and create this almost like servant servitude kind of image, immediately people were like, you sold the company, didn't you? And I was like, why would you say that? And they're like, well, because you changed the logo. And I'm like, but there's a story behind that. But people got spooked by it. So that's why it's so interesting. Like some of the little changes can still rub people the wrong way. Well, it tells you how devout your following is. Yeah, and how much they pay attention. True believers. Yeah, which I love. I mean, that's why I'm here is because of those people that believe to me and supported, you know, kombucha.

41:25So what would you consider the biggest breakthrough? The biggest breakthrough, I would say, happened in like 2003 when now I was starting to mature and evolve again. So like the labels that I referenced that I did with the barbecue sauce bottle and all of that, people were saying, hey, the bottle, I can't put in my cup holder. This was back when cars didn't have the flexible cup holder. It was very rigid. And that's a problem because then I can't drink my kombucha when I want to. So I said, okay, I need to fix that. So that's when I came out with a long kind of cylinder bottle. And then I worked with the design team in Seattle for almost a year to yet again redesign the packaging with what I call now the Lotus architecture, which is our current packaging.

42:12And I think that mixed with the new bottle, mixed with the liquid that hadn't changed inside, took us to another level. It was like this trifecta of positioning that now the liquid and the packaging were saying the same thing and saying the right thing to people that were seeking a product like this. And that's when I started to sell out. Wow. Like I would make product and the next day it was gone. And it was thrilling yet daunting because it was like, it's not like it was on Oprah or there wasn't a moment. It was just all of a sudden something started to click. and that informed a very big change where I had to go from this very small facility that I had kind of organically expanded into like unit by unit because in an eight unit complex and I was in four of the eight units by you know right around this is happening and so I had to do the unthinkable I had to go find my next new facility and find my next home so I could make more but still make it the right way yeah and I was scared of the Edwala effect that I was now going to, something bad was going to happen.

43:17But you were in control of it. Yes. Yes. And I was very conscientious of what the guardrails needed to be, so I didn't burn the house down. Yeah. As long as you stayed pure, it would be pure. As big as it got, it's okay. Yeah. As long as you don't deviate from your primary path, I've learned, it keeps you honest. Last time we discussed flavors, you were up to five flavors. Yeah. Has it changed since then? Oh my gosh. I mean, at some point we got too crazy. I think we had like over 30 flavors. Wow. Yeah. Which is a great thing because we technically have something for everyone. But as consumer profile and flavor palates change, we've expanded and contracted certain flavors.

43:52We had, which is still one of my favorite flavors, like a carrot turmeric, which was so good. But then carrot became synonymous with sugar. I see. So people were like, I won't drink that anymore. So we had to kind of weave and bob with trends. and sometimes, you know, we had a product called Heartbeat, which was like fresh pressed beet juice with like rosemary. And I thought it was delicious, but then beet got vilified too because it was considered a high sugar. So, you know, that's the sad part. I think there are times now where the things that are sincerely healthy don't register with people that way.

44:28And you sometimes just have to accept it. What's the current menu? Well, the current menu on the Synergy side, we're always looking for, again, functional ingredients that still impart a palatable or pleasant taste. So that can mean things like elderflower, elderberry, blue spirulina. Like when we did our 25th anniversary, I created a flavor called Sacred Life and it was coconut water, a little bit of ginger and blue spirulina. And it was in honor of this planet, right? The blue vibrancy of the blue spirulina in my mind was a reminder of what makes this planet so special, which is water in the ocean.

45:06You know, so we have products that still has some fruit juice in them, like blood orange or mango, because there's still a flavor preference for exotic fruits. But then, like, for example, for our 30th anniversary, we debuted a flavor called wildflower, which was like ashwagandha and passionflower. So we're just always, I guess the short answer is we're always trying to just challenge ourselves and demonstrate to our fans and consumers that we're not a one-trick pony, that we always look to nature on what we can create. We want to make sure that it's, yes, tasty, but more importantly, it's nutritious.

45:39And is the ginger always there? Oh, yeah. Yeah, the gingerade is still one of our top sellers, and they rival gingerade, which is my third flavor, so that's how my luck runs in threes. And then right behind it or sometimes above it is trilogy, which is lemon, raspberry, ginger. Oh, nice. Which is also symbolic of three, so it's somewhat poetic.

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47:36Tell me about distribution. Once you got past going to one store and selling it, How did it expand? For the first, like, two, three years, I self-distributed. I had a delivery van. I would rather load it up myself and did that for a couple years. Was it only available in Los Angeles? Only available in Los Angeles, yeah. For how many years? I'd say two, three years. Wow. Yeah. It wasn't until, like, 1999 where Whole Foods had just acquired Mrs. Gooch's. And they kind of rang my phone and said, hey, you know, people are coming in. They're asking for this product. we would like to put it under review.

48:11Much better when they come to you instead of you going to bed begging. Oh my gosh, yeah. Those are the high moments, right? When someone that you've been wanting to get in actually calls you and says, yeah, the door's open. So they reached out to me and said, yeah, we would like to consider this product. And so then I went through the process and then they said, yes, we would like to bring it in, but under one condition, you sell it to our distributor. What does that even mean? So a third-party distributor is basically call it a middleman, right? Where you ship your product to them. They order it from you based on demand.

48:47They put it in their warehouse, which can be dry, refrigerated, or frozen typically. And then stores like Whole Foods order from them, but they'll order vitamins, milk, juice, like basically 80 to 90 % of what's in their store. And the benefit is, is they have a concentrated, systematized delivery program that can be almost daily, it's really efficient for the store. And so it's very simplified. And so it shocked me initially in two ways. One was like, I was like, wait, I'm going to lose that touch. Because again, to me, putting the product on the shelf ourselves was like, it was like essential experience, right?

49:25That's, it's like tucking your baby in, so to speak. So like losing that control really shook me. And then from a, like a business standpoint, let's say I sold to Air One at$2.50 a bottle and they would turn around and sell it for$4.50, right? Making it up. Now, if I'm using a distributor, I have to sell it to the distributor for like$1.50 so that they can sell it to the store for$2.50 and then the store can mark it up. And I was like, you're eating into what I need to make this high quality product. So initially I said no. But then I wrestled with it. And ultimately, I was like, OK, let me see the positive in this.

50:05This will allow me to be an expert in making the product. And I can delegate the distribution. Which is probably OK. Yeah. It allowed me to then proliferate with flavors and allowed me to be more concentrated on the operations. But it was hard. It's almost like, you know, I'm a young parent. So I use a lot of child analogies. It's just like that first day of dropping your kid off at school. Like, it's hard. You're used to being around them all the time. And now they're not there and they're crying and you're crying. But you have to overcome it. It's a necessary experience. So once that happened, where was it available?

50:39It was a big step for me, but still a small step, I think, by today's standards. So it gave me access to all of California, Northern California specifically, which was huge for me. Arizona, Nevada, and New Mexico. That was their distribution footprint. So I could be in any store. I still had to approach the store, but I physically had now capabilities of getting my products to those stores. And that was an unlock for me. And how often would you deliver to the middle band? Once or twice a week. And tell me, when would you refrigerate? When you're making it, it's not refrigerated. No, it's actually in a warm environment because fermentation likes warm.

51:13When you put it in the bottles, is that when it gets refrigerated? Yes, immediately. Right away. And then you keep it refrigerated until the person drinks it. Yes. How many other drinks are like that? Oh my gosh. Right now, we're a dying breed. Back then? When I started, it was juice, milk, juice, milk. Yeah. And that's really it, right? Everything else was Sobeys, Snapple, teas, things of that nature. And then when things really started to peak in the health and wellness space, let's say it was by around 2012 to like 2016 was like the peak. You had cold brew coffee. You had cold pressed juice.

51:54Does cold brew coffee have to be refrigerated? Yeah. I didn't know that. Yeah, because it has no preservatives. I see. But all that stuff went away. Like even all the fresh pressed juice companies, like even though, yes, they still have to be kept refrigerated, but everything kind of shrank. And then everything somewhat moved to like ambient, which is a clever way of saying non-refrigerated. I never heard the expression used for beverage. Yeah, an ambient beverage means it requires no refrigeration. but that means it has preservatives. It has preservatives or it's been killed. Killed is the thing that, honestly, Rick, if there's just one thing that I just hope and pray people still recognize when they're on their, call it their health and wellness journey, is do not underestimate the importance of living versus dead.

52:37That's why like early on, it just came to me, it wasn't like a cute slogan, but my first slogan was living food for the living body. Like if you want to have vitality, if you want to live long and thrive, ask yourself, what are you putting into your body to support that objective or that journey? That's my greatest fear right now is that people are overlooking how the product's made in exchange for like, again, how much sugar's in it. Convenience. Yeah. It's wild. So after that first distributor, what was the next step in terms of distribution? So the next step was now West Coast. So at the time, Whole Foods was still a much, a very, very small company, but they were the premier health and wellness natural food store.

53:25So I used them as kind of almost like a direction of where I should go next. And I would marry that with what I believe was the demographics and psychographics of the country, right? So I knew like, you know, West Coast typically is a little bit more advanced when it comes to health and wellness because I think we have more nature. So that's why like the Pacific Northwest immediately became like, I need to go there, the Rockies. And so I basically went to the, I went to the Rockies first and sold to Whole Foods there and other natural food stores. I mean, where Granola was popular. Yeah, where the co-ops were.

54:02Yeah. I mean, the co-ops, as you know, were like, those are the diehard stores. They were like the early days of Erwan. Yeah. So that's what I did. I just regionally grew. But then at a certain point, I started to sell out to the point where I couldn't make enough. And so like, I had to pause on any kind of growth. And then that's why I had to get to that bigger facility. And once I did, by 2005, which was 10 years from the day I started, that's when I went nationwide. Was it successful nationwide right away? It was to a certain degree because I think what happened is because it was selling out on the West Coast, you know, as people are bi-coastal, they would discover it, fall in love with it, and then want to get it.

54:43So I had this like built up demand. Because there wasn't social media, thank God, at the time, it was like the best kept secret. Nobody knew what I was doing. Coke didn't know. Pepsi didn't know. PE firms didn't know. VC firms didn't know. Like, it was wild. It was totally mom and pop independent. Yeah, it was totally underground. Yeah. And it was, you would say, for 10 years? Well, actually, it's funny. I gave birth to my own competition. And it was because, luckily, I was reluctant to cut corners, right? So when I started to have capacity challenges, yet again, the peanut gallery came into my life.

55:22I was like, hey, so just dilute it. Just, like, make more. like shorten the fermentation, add more water, like come on. And I was like, guys, like if my consumer is not stupid and I'm not stupid, like they'll notice a difference and they'll stop buying it. So the unfortunate outcome of not doing those, taking that advice was the shelves were empty. And so little by little, and I know this because now some of my competition is straight up set it on the record. It's like, I was buying GT's brand. I fell in love with it. I noticed they were having supply issues. I decided to make my own and sell it.

55:55So that's when you started to see sometimes regional, but even sometimes more than regional competition. Do you remember the first time you saw any competitive item? Oh, yeah. What was it? Well, there was two, and they were on different sides of the spectrum. There was one called Kombucha Wonder Drink, and it was based in the Pacific Northwest. It was founded by a guy who I respect named Steve Lee. He was one of the co-founders of Stash Tea. and because he was a tea guy, kombucha felt right for him. His packaging was beautiful. His marketing was beautiful. But candidly, the mistake he made is he decided to pasteurize it.

56:32And I think mass produced it. So it was missing a soul. And it wasn't alive. And it wasn't alive. So that debuted and I wasn't even worried about that product. I was like, yeah, maybe some people will buy it, but I'm not threatened by it. If they buy it, it's because they don't know that it's dead. That's exactly right. And then the other competitor that actually was somewhat of a formidable competitor back then was called High Country Kombucha. And they were based in the Rockies. And because I think of their background, they got kombucha. They didn't make, I say this lovingly, they didn't make the best quality, but they made real stuff.

57:05And that started to compete with me. And especially during the times where I was selling out and I couldn't restock, that gave them a big boost. I see. But again, as they say, high tides raise all boats. So I was fine with it. And then over time, have there been more perishable drinks that have to be refrigerated now? Well, in our world, so in now called the GT's Living Foods portfolio, everything we make has to be kept refrigerated. I mean, that's why we put Living Foods in the name of the company. What was the first thing you made that was not kombucha-based? Alive. And what is that? So everything I make, Rick, is for better or for worse inspired by like a personal experience, right?

57:46So kombucha, my mom, kombucha helped my mom with her breast cancer. And then ironically, in like 2016, I had a loved one that was suffering from their own illness. And friends and people I respect came into the fold with adaptogenic mushrooms. You know, reishi, chaga, turkey tail, cordyceps, things of that nature. And unfortunately, this individual is too far gone. So they weren't able to really benefit, you know, long term. But they saw short term benefits. And then I started to consume it and I saw the benefits too. And just like, you know, the early nineties of making kombucha, I was just like, there's nothing like this out there.

58:23Like that's a problem. So I developed a product called Alive and it was this, we called it, I mean, it's gone through so many different iterations, but it's still around today and it's our number two brand. And it was called an adaptogenic tea. And we would take the fruiting body medicinal mushrooms of rice, chaga and turkey tail. We'd brew them for nine hours and extract all the nutrients and antioxidants and then bottle it. But we used raw apple cider vinegar to still consider it living. And we used like herbs and other teas to kind of enhance it. And it, you know, like anything that's brand new and people aren't used to it, you have your ups and downs, that early adoption phase.

59:01But now it's, like I said, it's our second best-selling product. Wow, cool. Yeah. And then altogether, how many different things are you making now? Oh, wow. So it started with Synergy, then Alive, which is our mushroom. And there's only one flavor of Alive or more? No, now Alive has five. So we have a root beer, a cola, a lemon lime, a ginger turmeric, and a matcha cream soda. And then later this year, we're going to do a lavender mint and a raspberry lychee. What gives them that flavor? A little bit of juice. They are sweetened with stevia because, again, that's because it's not fermented. we're able to influence the sugar content more than when it's fermentable.

59:41So it has, you know, a lighter flavor. It's still kind of bitey because we still use like real ingredients. And we're repositioning it right now because we're learning more and more about the mushrooms. They're really good for cognitive health, for homeostasis and balance. And I didn't know it at the time when I created Alive, but you might relate to this. Like a lot of us are just overwhelmed, right? Like the buzzing and beeping of life and our devices and the world around us, like we do need something to kind of round the edges. And so these medicinal mushrooms help that. So we're slowly repositioning alive as like a mood and mind beverage.

1:00:16Nice. So then after that came, which is a little bit of a curve ball, it's called Kokuyo, which is a raw young Thai coconut yogurt. That is one of the hardest products we make because it's literally just raw coconut meat and raw coconut water that we ferment and that's it. Like we don't have any fillers. So it's a yogurt. You eat it with a spoon? Yeah. It's our first and only spoonable product. What's the package look like? It's in a glass jar. It's eight ounces and it sells for like, depending on where you shop, anywhere from seven to$9. So it's like a vegan yogurt substitute, would you say? But high probiotic content, like the highest that you can find for the most part and just super, super boutique, right?

1:01:01It tastes like something that you would make at home, which is, you know, a standard that I still emulate. And do people eat it by itself or do they put it in things? Both. You can almost use it as like an acai bowl base or in smoothies or straight out of the jar. So there's really no wrong way. How would you describe the taste? Depends on the flavor. Like the pure, which is literally its name, like no flavor, no stevia even. It's just coconut water, coconut meat fermented. It tastes just like a tangy coconut plain yogurt, but really pure. And then with the other flavors, we decided to use stevia and like whether it's vanilla extract for vanilla or cacao for the cacao.

1:01:42We keep it pretty simple, but I would say the taste is like a healthy, it almost feels like a healthy dessert because it's very satiating because the young coconut has body to it, has healthy fats, but it's delicate because of the young Thai coconut meat. So it's really nice. I love it. And it's alive. And it's alive, yeah. And it's refrigerated as well. Yeah, it's almost too alive sometimes. I mean, we'll get calls from like people who open it. It's like exploded on them. Yeah, I've had that happen with kombucha too. There were times where they would - It just burst on you. Pop. Yeah, and that's an example of like nature's in control.

1:02:19Like we're just holding her hand. we're not in the driver's seat. The manufacturing has only changed in terms of scale. Yeah. Not in process. The process is the same. Yeah. Can it exist outside of the U.S.? It can with a version of two potential prices, right? So one is the literal price where, I mean, we're based in California. So we ship to Canada and we ship a little bit to the U.K. So Canada is at a premium because first of all, the currency exchange, but also the distance, so freight and stuff causes the retail price to be high. The UK can take six weeks to get there. So if you have a three-month shelf life, you have six weeks to sell it.

1:03:01Also what's happening is, you know, all the costs that it takes to get it there is probably$7 a bottle. So that's the cost curse. The other cost is if you really want to make it the right way, meaning like have it affordable for people in that region, you really need a facility in that area. Have you considered that? I have, yeah. I mean, I want to, again, learn from the Edwala lesson that I still keep to heart almost daily is don't grow too fast. So like, you know, obviously I have executives now with the company and they're always pushing for what's that next phase of growth. But I always remind them, but can we say confidently, have we mastered the US?

1:03:40Have we mastered the markets that we're currently in? And usually the answer is no, because master is such a high standard. It keeps us focused. And so I do eventually want to be more in Europe. I have a home now in Portugal. And I did that so much strategically, where it was like, I could see Portugal being a good home, my next facility, whether I built it myself or I partnered with somebody. But there's a quality about Portugal that reminds me very much of California. So I think that could be interesting. And I could easily kind of access the European market. so that's kind of further out in the future have you ever considered having a facility on the east coast as well i have but same thing is like i ask myself but what am i looking to accomplish you know if i'm looking to cut cost okay what's the price of that because you know i still i'm in the office monday through thursday almost every week i mean i'm very still tethered to my company.

1:04:41Totally hands-on. Totally hands-on. To almost a fault, to be honest. I love what I do and I do it for a reason. And I don't want that reason to change. And as much as I love the people I work with, this is my baby. So they'll never be able to fully understand what it feels to create something and the connection and pride and passion and protectiveness I have over it. So because we produce Monday through Friday, typically, like I need to taste test. Like I want to be there. And if I'm not there for too long, like I feel estranged and it feels like that's the beginning of losing control. So for 30 years, you've been taste testing all of it.

1:05:21Yeah. Amazing. Yeah. I mean, even this current chapter that I'm in because of my kids mostly where, you know, I'll take a Friday off or I'll work from home on Friday. Like I still wrestle with that because I'm not used to not tasting every day. You must have a very fine palate for it after all these years. How different is it from batch to batch? It's like, again, using the analogy of a farm or a plant growing from the earth, like you could have an orange tree, but oranges from different sides of the tree taste different. Kombucha is no different. You can have the same base. We brew the tea in a large vat, right?

1:05:57So that's where we can scale. But when we go to ferment, it's small batches, right? So even though they're all on the same base, they have different qualities, whether they have their different cultures or the heat or humidity or the way the air exchanges in the room is different. Each batch is different. So my team tastes us every small batch, grades them, and then blends them to create a standardized finished base. But even with that process, you'll sometimes see it's maybe a little bit more tangy or a little bit more mild or a little more carbonate or a little bit less carbonated. And then you also have the ingredients that we use post-fermentation, right at the time of bottling.

1:06:36Like, you know, sometimes the ginger will be out of season. Or something weird will happen with that apple juice. And you want to really study it. But I guess in some ways the fact that it's a little different from batch to batch also speaks to the realness of the food. Yeah. You know, if it's too similar, then it feels like it's machine-made. I agree. And we actually used that in the early days as kind of a secret to our success. We would say, hey, this isn't sterilized or standardized or pasteurized. This is just straight from the earth. And just like anything, nature is perfectly imperfect.

1:07:13And so we would highlight and frame that for people, and people would really get it. So you think of it more like fruit and vegetables. Exactly.

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1:09:39How would you say the market for the drink has changed over the years? Oh, wow. Well, first of all, I mean, as I mentioned earlier, like health and wellness has been infiltrated. It really started to get infiltrated a lot in like around 2016 to 2018 because you started to see news hit where companies were selling. And they were selling for a large dollar amount, right? So the first notable kombucha brand to sell was a brand called Kavita. And they sold to Pepsi in 2016. seen and they sold for 200 million, which at the time was like, that could have been like 10 billion in people's minds. Like that dollar figure was huge and it rocked the health food industry and specifically the kombucha category.

1:10:26And how big of a brand was that? I think at the time when they sold, they were probably at like maybe 75 million in sales, but they, they really, I mean, their Their growth was remarkable. You can't take away the success that that brand had. Was theirs alive as well or no? It kind of did a little bit of a dance of like live probiotics and it used certain language. But at the end of the day, it was discovered it was pasteurized. Did it have to be refrigerated or no? Well, so the jury's still out on that. There are products, Rick, that are technically ambient, but they claim they need to be kept refrigerated.

1:11:05Well, pasteurized milk is still in the refrigerated section. Exactly right. But even more so in this like ready to drink beverage space, it's a little bit of a secret approach of how to get high traffic store shelf placement and almost hijack certain categories. So like even in the last couple of years, there's been brands that have said they need to be kept refrigerated. So they're immediately in my set, which is a highly desirable set because the store has only so much refrigeration space. So that's how they're able to kind of naturally appeal to a shopper that's maybe looking for a product like mine, because they think refrigerated means fresh, means pure.

1:11:43But a lot of these brands, if you look at the ingredients, they're like, what's in this that needs to be kept refrigerated? Have there been any complications along the way or unexpected difficulties that came up? Well, I mean, the biggest, candidly, was when the kombucha space call, it was getting so popular because I was selling out and, you know, the category was growing even after like the 2008 Great Recession. Almost every industry was soft, but health and wellness was still growing. And within health and wellness, kombucha was like on fire. And so what happened is overnight you had like five dozen brands.

1:12:22Really? Yeah. Like every day there was an announcement of another kombucha brand. And it was, you know, it was thrilling to see because you're like, oh, we're part of a movement. But then you started to see like they were changing the narrative. They were going after other brands. Some were pasteurized. So it just really started to confuse the conversation. And then 2010, a brand that had just started out on the East Coast was delivering their product unrefrigerated, probably for cost-cutting reasons. and it was starting to ferment more and the bottles started like fizzing out on the shelf. And somebody saw it and they called the health department and the health department came in and just standard procedure, they grabbed the bottles and took them to their lab and just paneled them to see if they were safe or anything like that.

1:13:10And what came out was a hit of alcohol above 0.5%, which in this country, unlike the rest of the world, is the definition of non-alcoholic or alcoholic. You can be 0.049, but you can't be 0.5 or 0.51. And even though there's no difference physically, like one isn't like non-intoxicating, the other one is intoxicating. It's just a technicality. It's just a line, arbitrary number. Exactly, exactly. And so now this revealed that this fermented tea may have alcohol in it. And so like overnight there was like, stop the press, stop everything. We need to understand that. and every brand, including mine, was taken off the shelf.

1:13:54Wow, for how long? Well, so what happened was initially they said, hey, we can't sell this anymore, it has alcohol. And I said, okay guys, I put that on the label. Like it says may contain alcohol because it's fermented. And I believe in transparency. I'm not, I understand alcohol is a stigmatism for people. I want them to know that, but this is by no means alcoholic. Like you're going to try to drink this to get drunk. Believe you me, like something else is going to happen. You can be spending more time on the toilet. You drink it before you get drunk. Yeah, that's exactly right. So I was like somewhat caught off guard with this like newfound conversation.

1:14:27But because now kombucha was so big and the players, Whole Foods specifically, were now publicly traded companies. Like they had a lot at stake. And they're like, no, we can't risk this. You need to reformulate. You need to find a way to suppress the ability for the ethanol, a.k.a. alcohol, to rise to a certain level. Had you ever tested alcohol levels before that? We did, yeah. And they were low. But what happens is, is like, we can't control what people do. So if somebody buys a bottle from the refrigerator or a store even takes a delivery and doesn't put it in the refrigerator right away, you know, an hour or two of being out, yes, you kind of awaken the fermentation.

1:15:07And depending on the fruit juice that's being used, nature will start to take off. So yes, that was the challenge. It was this conversation about like, OK, but what if there is alcohol? Are people going to now believe that this is bootleg product, black market product, potentially even unhealthy product because alcohol is not healthy? And so that was the really strong, most existential moment. When was this? 2010. It was June 15th, 2010 when I got the phone call of like, hey, because in May, there was the whispers of like, hey, we're hearing there's like alcohol concerns in kombucha. and that's why I said we test like we're good it's like okay and then they came back they're like no we're not comfortable with what we're hearing so effective tomorrow we're taking all your products off the shelf and it was hard but you know what helped me navigate that is what I kind of said earlier is I anchored myself in hey if everything ends today yeah I'm okay with it because what I've been able to do is beyond what I ever dreamt so I'm not a failure this isn't a bad thing.

1:16:14Maybe this is just the conclusion of this chapter. So what happened? How did it get resolved? Well, so initially I was like, this is it. I'm being told that I need to change the way I make my product. I don't agree. I think I'm going to be making a substandard product. Not going to do it. And so that was like month one. Month one, I just started to make peace with the fact that this is it. This is the end and I'm okay with it. But what changed my point of view is some of the other brands on the shelf rushed back to the shelf with diluted, dumbed-down product. And that bothered me because I said, wait, I'm not saying I'm the kombucha godfather, but I do feel that I have a responsibility and I cannot allow only that to be on the shelf.

1:16:59So it kind of changed my perspective. I was like, okay, yes, I want to still be a purist, but I'm going to find a purist with like, not with a compromise, but a purist positioning that still is now navigating this new kind of criteria that I must meet. And that's actually when I shortened the shelf life because my kombucha used to be six to nine months. I see. But what was the issue with this conversation of ethanol wasn't what I was doing. It was what was happening afterwards. Over time. So one of the ideas I had, in addition to slightly modifying the fermentation approach, was, hey, if I can treat this like a fresh-pressed juice, then I'm going to limit or reduce what could potentially happen downstream in the market.

1:17:44So what I did is I immediately, I think I launched with a 60-day shelf life. And I told every retailer, I said, this is our new positioning to remind you that this is raw, this is living. So it was two months down from what could be as long as nine months. Yeah. Big difference. There's a huge difference. In reality, how long were your things on the shelves typically? That was the interesting part. Not that long. Probably, it seems like. Yeah, and so that's why it was comfortable. I was like, hey. Probably wouldn't change things so much. It didn't. Yeah. For the next, like, five years, Rick, the short shelf, like, did nothing.

1:18:20In fact, it actually gave us the ability to use ingredients that we couldn't use before, like chia seeds, right? We were one of the first companies to do a drinkable whole chia drink. After Born to Run came out? Yeah. And chia is such a fascinating ingredient. Yeah. But it's volatile because once it hydrates, the cellulose becomes very unstable. And so we sold those, I think, with like a 45-day shelf life. And it was remarkable. And we got a lot of - And is it 45 days from - Bottling. From bottling. Yeah, from bottling. And from bottling, how long does it take to get to a store typically? Well, to get to a distributor, depending on what their inventory is, right, which we don't influence, it can be anywhere from one day to five days to get to a distributor.

1:19:04So obviously like a distributor on the East Coast takes longer. And then it'll probably take another five days to get on the shelf. So call it 10 end to end, which is still pretty good. Yeah. You know, we use the same distributors that like yogurt uses. So they're familiar with the cold chain kind of requirements as well as the fast turn. So it didn't hurt us back then. Now it hurts us because, as I mentioned, people are now being more programmed for products that don't have a short shelf life or better yet, don't even have a shelf life. Yeah. So we're noticing on the shelf. But those aren't your customers.

1:19:36They're not our customers. That's the reality. Yeah, that's true. But it's influencing the way stores behave. I see. Because back in the day, like when I was sharing the shelf with Edwala, you had to rotate. You had to make sure that what was in the back comes to the front and you stock from behind. I'll walk into a store and they're just pushing bottles. So you're moving fresh product to the back. So we're now seeing, like, I buy my product periodically at the stores. I'm seeing it sometimes up to its expiration date or sometimes past its expiration date. And that just crushes me because I'm like, well, then my fans, my consumers, whatever you want to call them, they're not getting the best product.

1:20:11So I'm trying to navigate that. So it's a work in progress. Have you ever tested how much sugar is in the drinks? Oh, yeah. After the process? Yeah. How much is it? Is it negligible or no? Well, the first thing that is important to know in this wonderful conversation with sugar is that the first thing that kombucha does, regardless of what form of sugar you're using. So whether it's cane sugar, honey, fruit juice, what have you, it breaks it down. So it starts separating the fructose from the sucrose, from the glucose, and it starts modifying the molecular structure of now this simple carbohydrate.

1:20:47So that's like the first thing that happens. So it's already kind of been transformed, so to speak. And then by the end of the fermentation, at least our fermentation, because we still want it to be palatable and we don't want it to taste like a shot of vinegar. it ranges from like I'd say 10 to 12 grams of sugar for a 16 ounce bottle which is still relatively low in today's market it's considered high because everybody wants single digit at best but it's still relatively low when you think about it are there other obscure health drinks that are less popular that you're interested in oh absolutely like water kefir is fascinating to me water kefir in many ways is like a younger sister to kombucha So kombucha dates back to 221 BC when it was first recorded being consumed, which is a long time ago.

1:21:35Yes. Water kefir, on the other hand, is like the 1800s. And it was discovered in the desert. And the kefir culture, a.k.a. tipicos, was growing on the pad of a prickly pear cactus. And somehow someone got the bright idea to put it in like a sweetened base. And it ferments and reproduces. So very similar to kombucha. But what's important about it is unlike kombucha that has a little bit more of like a, it's called an acetobacter ferment. So basically like a vinegar ferment. So that's why it's sour and tangy and all of that. The water kefir has a lacto ferment, not lactose. It's not dairy based, but it has a different kind of chemistry of living cultures.

1:22:21And the end product is not sour. It's maybe a little dry, but it's not sour. And it's really in many ways, it's like nature's natural soda. It's naturally effervescent. It's not very sweet. It doesn't have any tea. So people who are maybe adverse to tea, whether it's because of caffeine or flavor or what have you, it doesn't have any of that. It's just literally a fermented sweet water. Unlike kombucha that you can do honey and fruit, water kefir primarily thrives on a cane sugar base. But that to me has been fascinating. And we debuted that a couple of years ago. And it's doing really well because in my mind, it's hopefully a response to people who think they're doing the right thing by buying these sodas or buying these low sugar products that are really just mass produced snake oils.

1:23:06And it's giving them an option of like, yeah, I understand you want a flavor profile. You maybe have, you know, a macronutrient target and maybe that kombucha can't satisfy it. But I still want to give you something authentic. So we're excited about our water kefir. It's called Agua de Kefir. It's a little bit of a nod to I'm a quarter Mexican. It's a little bit of a nod to my background as well. And it's alive as well. Yes, yes. Yeah. What's the shelf life on that? It's longer than kombucha. I think we coat it with, I think, four months, maybe five. Any other difficulties with either manufacturing or distributing because it's a perishable item?

1:23:42Oh, absolutely. What's getting harder and harder is freight. You know, but like the amount of trucks and freight companies that are available these days, especially after the ups and downs of the economy in the last five years, it's becoming harder and harder to ship cold. And so therefore the costs are going up, the availability is not what it used to be. Has your business been fairly consistent sales-wise over the years? I would say for the most part. So I would say from year one to maybe 2019, it was uncontrollable growth, like double-digit growth without any effort with virtually no marketing.

1:24:19And the reason why I believe that was is I think, well, definitely the market was different, But in addition to that, we were speaking the right language to people who were looking to be spoken to, if that makes sense. But then I think as the health and wellness craze took off and the Kavita brand sold, as I mentioned, just the chemistry and dynamics of everything started to shift. And by 2020, of course, pandemic year as well, is when we first started to see a soft year. And since then, it's been kind of up and down. And we're not alone, like whether it's our category or even Whole Foods or even other players in our industry.

1:24:54Like it's not as easy these days. Are less people going to supermarkets to shop and are more people just ordering stuff from Amazon? Yeah, that's the hardest, Rick, because like I sometimes like to go back to my origins, right? I think it's just who I am. And one of my origin beginnings was sampling at the stores. So from time to time, I actually like to go back into a Whole Foods or some other store and sample my stuff and like interact with people and like visibly see and connect with them and see how they resonate with what I'm offering them, how I'm framing it. And the last time I did it was about a year ago.

1:25:38And I noticed that like, first of all, like 80 % of people would walk up and they'd be having their phone in front of them. And like kind of talking to me, but also like preoccupied. And I was like, okay, I'm not, don't have your undivided attention. So that's the first thing. Second thing is half of those individuals were like Instacart and DoorDash and Amazon Prime shoppers. So I'm not even talking to the actual person who's shopping. I'm talking to like their avatar. Person who's shopping, yeah. Wow. And then. That's interesting. Yes. That's a new thing. It's a new thing. and then on top of that if i'm lucky and i am talking to somebody that's at least giving me a good amount of their attention and they're the actual shopper i would notice i tell this beautiful story of like what kombucha is why it's special what's in it and then they would look at me and eight out of ten times rick would be like how much sugar is in it and i'm like really i just poured my heart and soul out to you and that's your first question no i understand i was that Yeah, I think we're all that at a certain point, but it's just remarkable how much more of that is coming into play.

1:26:47So I think that's what we're searching for right now is how can we breathe new life into things like kombucha? Is it technology and our obsession with instant gratification? I believe, Rick, has allowed us to a little bit of lose our way. And we have to kind of go back to like the fundamental principles and remind ourselves that yes, it's important to have dynamic thinking and dynamic behaviors and all of that, but don't ignore like the essentials.

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