How a Water Kefir Producer Tanked

/ / Business

Scott Whitley, of failed LAB Water Kefir, shares lessons learned from launching – and then shuttering — the business. Whitley is open about his blunders, providing great insights for fermentation brands.

His first problem: Knowing nothing about the food and beverage industry, and even less about selling a fermented drink. The company used a recipe that contained fermentation blunders, so products exploded on store shelves!

Second problem: Spending too much time on low-leverage activities. The two co-founders were filling tens of thousands of bottles of water kefir themselves — something Whitley says in hindsight “was a big mistake.” They thought they were saving money but, in reality, they weren’t making enough money to stay afloat. Bottles sold for $5.50 at retail, and stores bought them for $3.30. After covering production costs, LAB Water Kefir made only $1.10 per bottle. They were bringing in a few thousand dollars per month, but expenses were over $6,500.

Third problem: Lack of consumer understanding. The brand sold well at farmers markets, where half  the people who approached their stand and sampled the drink would buy a bottle. But they learned that many people didn’t know what water kefir was. Whitley shares the story of watching a man grab a bottle off the shelf, shake it, then open it to drink – and the water kefir shot out of the bottle and all over his face. Also, people don’t go to a grocery store to experiment with a new, pricey drink, so their water kefir didn’t sell well at retail. 

Read more about the story behind the brand at Trends.

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