'Many kombucha makers are thumbing their nose at the regulators'

KeVita CEO: If you want to succeed in this industry, you’ve got to pitch your tent and plan on camping out for a while

By Elaine Watson

- Last updated on GMT

Related tags Probiotic

In 2010, KeVita sparkling organic probiotic beverages were available in a handful of Whole Foods stores in Southern California. Today they have 90%+ ACV in the natural channel, and a growing presence in the conventional channel, and CEO Bill Moses sits at the helm of a business that is growing 100% year-on-year and operating at an annual run-rate of $25m.

But why has KeVita struck CPG gold while most new healthy/functional beverages gather dust on shelf before quietly disappearing as their founders run out of cash and retailers run out of enthusiasm?

Lots of reasons, says Moses - who co-founded KeVita with business partner Chakra Earthsong Levy in 2009 - and is now going after drugstores, foodservice and other channels after securing national distribution in chains from Kroger to Safeway, and reckons he can boost revenues to the $100m mark within five years.

 “The stars aligned for us,” ​he told FoodNavigator-USA.

“It was a case of the right timing, the right attributes, and the right execution. But it’s really hard to make money in this industry, and you need access to a lot of capital. If you want to succeed you’ve got to pitch your tent and plan on camping out for a while, because you’ve got to be in it for the long-haul.

“I think what’s also interesting about our category is that it’s still new, so it can take longer to get consumer adoption, whereas if you launch a juice, you could potentially scale up much more quickly because people understand what juice is. Our products are completely new. It’s more a case of invention than innovation.”

Awareness of probiotics has increased significantly in the past five years

But more broadly, he says, what KeVita has proved is that consumers have not lost their taste for bubbles, they have just become more demanding, and expect more bang for their buck in terms of taste and health.  

Bill Moses CEO KeVita
Bill Moses: "Kombucha manufacturers are thumbing their nose at the regulators."

Why can’t there be healthy sparkling refreshing beverages that are flavorful and yet low-caloric that can compete at a price point with traditional sodas, and actually be good for you?”

You see a similar phenomenon in the beer category, he says, where shoppers are demanding more interesting products: “15 years ago you’d get Bud and Coors and Amstel and now you’ve got all these craft beers that are just bigger and bolder and yeastier.” 

Probiotics are central to KeVita’s proposition, but they are not the sole purchase driver, says Moses, who says he has the capacity in place at the company’s new manufacturing facility in Oxnard, CA, to meet its needs for the next several years (KeVita products are manufactured by KeVita, and bottled by third parties).

“For us I’d say that the probiotics are a significant motivator for trial, but research shows that people come back to KeVita because of all these other attributes it has as well.”

 But having said that, awareness of probiotics has “increased substantially since we started out ​[KeVita uses a proprietary culture with four strains of live probiotics including Ganeden Biotech’s BC30 product],” he says.

“Five years ago, around 20% of US consumers were aware that probiotics were beneficial. Now it’s close to 80%, although people aren’t necessarily sure why​ they are good for you.”

KeVita landscape

Master Brew Kombucha: First and foremost, our alcohol level is compliant

One of the biggest growth opportunities for KeVita right now is its new line of Master Brew kombucha products (tea fermented with a mixture of live bacteria and yeast that creates carbon dioxide, alcohol and acetic acid to give a fizzy, slightly vinegary taste), which have just launched nationwide at Safeway and in selected Whole Foods stores.

Kevita kombucha
KeVita's new Master Brew kombucha is available nationwide at Safeway and in selected Whole Foods stores

“We spent years telling everyone that we’re not a kombucha​,” says Moses (KeVita is a fermented product but is produced differently and is light in flavor, unlike kombucha, which is tart & vinegary).

“But there is definitely a consumer base out there that likes a really strong vinegary product, and KeVita was never going to deliver that.”

While there is a risk that the new Kombucha line could cannibalize sales of existing KeVita products, this seems unlikely, given that the flavor profile of the two is so different and kombucha is a standalone category, he says. “We’ve also come out with a different brand​ [Master Brew] and we’re targeting different day parts.”

They are thumbing their nose at the regulators

But how do the leading kombucha brands compare, and what’s distinctive about KeVita’s offering?

Says Moses: “The taste profiles of the leading brands are all quite different, and ours has five times the glucuronic acid of other leading brands. We’ve also perfected a filtration process to get all the yeast out of the product. But first and foremost, our alcohol level is compliant.”

But given that most kombucha brands were pulled from shelves in 2010 after it emerged that their alcohol content was above the 0.5% abv legal limit, surely all brands back on shelf today have addressed this issue and are now compliant?

KeVita box
KeVita sparkling probiotic beverages are made with a proprietary culture with four strains of live probiotics including Ganeden Biotech’s BC30 product

Not according to Moses, who claims that he tests his product - and competitor products - on a regular basis, and agrees with Chris Reed at Reeds Inc that not everyone is monitoring the alcohol content of their brands closely enough, because there are products on shelf that are still above the 0.5%.

It’s astounding to me the amount of industry negligence

And it’s an open secret, he claims. “They are thumbing their nose at the regulators.It’s astounding to me the amount of industry negligence; it’s an ethical issue apart from anything else, but they can only succeed in doing that for so long. These brands should be properly labeled.”

It is also frustrating that some firms erroneously claim that their kombucha products contain probiotics (live microorganisms or ‘good’ bacteria, which when administered in adequate amounts, confer a beneficial health effect on the host), he argues.

“Some companies such as GT’s do add a probiotic to the natural fermentation product, but other kombucha brands claim to contain probiotics and they don’t.”

Making a consistent product

So what else keeps him awake at night?

The biggest challenge is probably ensuring that the company continues to put out a consistent product, says Moses, who currently shares production lines at co-packing facilities that bottle his product, but is working with a co-packer on the east coast to build a dedicated line and evaluating options for doing the same on the west coast.

“We have a cold fill product that has good bacteria in it but no bad bacteria in it and no yeast, and the level of oversight on those [shared] lines as it relates to cleanliness has always been an issue.

“We have to be onsite making sure the regimen of them moving from a five step clean in place to a seven-step clean in place is all done properly.”

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