As the law currently stands, fermented beverages containing 0.5% or more of alcohol by volume are classified as beer for tax purposes, and are subject to federal alcohol excise taxes.
“Because of the natural process of fermentation, the alcohol content [in kombucha] may occasionally increase slightly [taking it over 0.5%], especially during transport or handling by third parties,” notes a press release from Rep Blumenauer’s office issued Tuesday.
But no one is drinking kombucha “because of its insignificant alcohol content,” says the release. “For example, a person would have to consume between five and 10 bottles of kombucha to equal the alcohol in just one beer.”
To place this in context, popular light lager beers typically contain about 3.2% abv, while many craft beers can be 5% abv+. ‘Hard’ kombucha brands such as Flying Embers (7% abv), JuneShine (6% abv), Luna Bay Booch (6% abv) and Boochcraft (7% abv) - which are marketed to over-21 year-olds and sold as alcoholic beverages - typically contain between 4-7% abv.
“There’s no reason why kombucha brewers and sellers should get taxed like beer,” said Rep Blumenauer. “Our common sense legislation would eliminate this burden and support a burgeoning industry that has a major impact on Oregon’s food and beverage economy.”
‘Today’s outdated federal tax rules still treat some kombucha as beer’
The KOMBUCHA Act (‘Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act’) would amend the internal revenue code to ensure kombucha is exempt from excise taxes and regulations imposed on alcoholic beverages.
It defines kombucha as:
“(A) fermented solely by a symbiotic culture of bacteria and yeast,
(B) contains not more than 1.25% abv,
(C) is sold or offered for sale as kombucha, and
(D) is derived from—(i) sugar, malt or malt substitute, tea, or coffee, and (ii) not more than 20% other wholesome ingredients.”
KBI: ‘Our lobbying efforts have been well-received’
According to KBI president Hannah Crum (who argues that the 0.5% threshold was “not based on any scientific study or process”), raising the threshold to 1.25% would make it a lot easier to make authentic raw kombucha using traditional methods, with alcohol levels that are still low and would “not get people intoxicated.”
She told FoodNavigator-USA last month: “Our lobbying efforts have been very well received and we have consistent bipartisan support for the bill. In the last four years, we've seen an uptick not only in staff members who drink or brew their own kombucha but also from members of Congress and the Senate who actively enjoy the beverage on a regular basis."
While the Act is supported by the KBI and backed by high-profile KBI members including GT Dave, some kombucha brands who say they have invested a lot of money to ensure compliance with the 0.5% limit, have argued that raising the threshold would be a mistake (read more here).
However, Crum noted that, "Laws of man don't always harmonize with the laws of nature. This is why KBI remains steadfast in our lobbying efforts to update to the tax code so we can protect consumers' access to the healthiest products they can find in the marketplace."
What is kombucha and why does it contain alcohol?
To make traditional kombucha, firms typically brew tea, add sugar, and then ferment the mixture with a kombucha culture or 'SCOBY' (symbiotic culture of bacteria and yeast). The yeast converts some of the sugars to alcohol, most of which is consumed by the bacteria and converted into acetic acid (explaining the slightly vinegary taste) and other organic acids.
Keeping the alcohol level under 0.5% throughout the shelf-life has been a challenge for the industry from its inception, with firms using a variety of techniques such as heat pasteurization to kill off residual yeast; micro-filtration to remove yeast and prevent secondary fermentation in the bottle; spinning cone technology to remove alcohol; or other approaches such altering the shape of fermentation vessels.
However, some purists take issue with some of these approaches, arguing that ‘authentic’ kombucha is a raw, ‘living’ product that should be manufactured in a particular way, prompting a protracted debate over standards of identity in the category.
The TTB (Alcohol and Tobacco Tax and Trade Bureau) took a close interest in the alcohol levels in kombucha in 2010, prompting a high-profile withdrawal of products in Whole Foods. However, since then the pressure to address the alcohol compliance issue has been driven by lawsuits, with multiple brands in the space being sued by competitors or by consumers.