Over 650,000 workers in the brewing industry will lose their jobs due to the pandemic by the end of 2020, and beer sales could fall as much as $22 billion. – John Dunham Associates

The global kefir market is projected to reach $1.84 billion by 2027. – Fortune Business Insights

Restaurants in Crisis

A new restaurant survey shows 1 in 6 restaurants have closed during the pandemic. And 40% of restaurants say that ”it is unlikely their restaurant will still be in business six months from now if there are no additional relief packages from the federal government,” according to the survey by the National Restaurant Association. The association called the results “startling” and asked Congress for more help.

“For an industry built on service and hospitality, the last six months have challenged the core understanding of our business,” said Tom Bené, president and CEO of the NRA, in a statement. “Across the board, from independent owners to multi-unit franchise operators, restaurants are losing money every month, and they continue to struggle to serve their communities and support their employees.”

The NRA also found consumer spending in restaurants is down an average of 34%, the good service industry lost $165 billion in revenue from March to July and 60% of restaurant owners say their restaurant’s operational costs are higher prior to the COVID-19 outbreak.

Read more (Nation’s Restaurant News)

During a year of dramatically changing consumer grocery-shopping patterns, kombucha sales are continuing to grow, but at a slower pace. U.S. retail sales of kombucha sales grew 2.4% over the twelve months though mid-July 2020, to $703.2 million. But this growth rate compares to 9.8% in the prior 12-month period.

Distribution remains strong in conventional stores (up 5.1%), but is decreasing in kombucha’s core, natural stores (down 6.1%).

“This is a piece that’s one to watch and one to manage because it’s one of the better indicators of category health,” says Perteet Spencer, vice president of Strategic Solutions for SPINS (retail data provider). Spencer shared the stats at KombuchaKon 2020. The natural channel, Spencer explained, is where consumer shopping trends emerge. 

As grab-and-go shopping and restaurant dining declined during the COVID-19 pandemic, so did kombucha sales. “COVID has hurt,” says Spencer, “but I expect this category will certainly rebound.”

KKon 2020, organized by Kombucha Brewers International (KBI), was a virtual event this year after KBI’s annual in-person KKon in April was cancelled due to the coronavirus outbreak. Hundreds of kombucha professionals from all over the world joined digitally for the two-day conference.

Six months into the coronavirus outbreak and more consumers are purchasing health products. Hannah Crum, KBI president, says education in the kombucha industry is more important than ever as consumers seek health drink options. 

“I think this is a really vital opportunity for us as fermentationists,” says Crum. “This is teaching us that health is paramount…this is where kombucha’s opportunity thrives.”

The conference marks the first time industry leaders have met since KBI announced their new kombucha Code of Practice, the first set of safety and quality standards for the industry. 

Kombucha has infiltrated mainstream retail, with 83% of stores selling kombucha in some form — a statistic Spencer said is especially impressive. “Rarely do we see full saturation of categories,” she adds. “Certainly there’s room to expand there.” 

The retail category SPINS tracks represents sales of refrigerated kombucha and fermented beverages. Kombucha is competing with other adjacent fermented drinks, like cider, functional juices, teas, kvass, vinegar drinks and coffee/cold brew. Kombucha still dominates, representing nearly 90% of the category sales.

The entire beverage industry is a $122 billion market, comprising 16 categories, with soda and carbonated beverages the largest portion ($30.3 billion). Categories with the highest growth rates include plant-based milk (13.4%), creams and creamers (11.1%) and performance beverages (8.9%).

“As you can see, it’s incredibly crowded,” Spencer says. “We’re seeing beverages are playing a lot of different roles. This is important because the consumer data would suggest that consumers are not buying one beverage type.” For example, she says a consumer may want a protein drink in the morning, a yerba mate in the mid-day for a boost, then a kombucha at the end of the day. 

“We are seeing the rise of new digestive health benefits and formats really gaining traction, as kombucha and its derivatives scale mainstream,” Spencer says.

Consumers are looking for diverse, nutrient-rich ingredients and flavors. Wellness-focused brands with clean ingredients and holistic ideals are “the engine of growth for the natural products industry…the future is bright for these spaces.” Spencer notes “90% of kombucha brands live and shine in this space.” 

The top-selling kombucha flavors in the natural channel include mixed fruit, pineapple and coconut. In the conventional channel, top flavors are ginger, berry and mixed fruit. Top-selling brands are: GT Kombucha, Kevita, Health Ade, Brew Dr. and Humm.

Hard kombucha brands also thrived in the past year. Prime examples are: Boochcraft ($8.6 million in sales, 72.6% growth), June Shine ($6.1 million, 211.2%) and Flying Embers ($3.5 million, 1,398.1%).

Spencer says another major opportunity for kombucha brands is selling larger-size growlers. The 48-ounce size growler is the second-fastest-growing kombucha size. Shoppers are shifting to purchasing larger sizes as they stock up during the pandemic. 

“This is such a resilient industry,” Spencer says. “What an incredible opportunity to move with your consumers as they embrace the fundamentals of what kombucha delivers, but also experience it in slightly different ways. People are looking for new experiences and a sense of escape, and so I think (kombucha) brands are uniquely positioned to enter that conversation.”

Tofu Sales Increased

Year-over-year tofu sales increased 40% in the first half of 2020. – Nielsen Data

As more people plant gardens during the pandemic, then ferment and can the produce, “the canning industry has seen an unprecedented demand for supplies.” A spokesperson for Newell Brands, owner of Ball, one of the leading producers of Mason jars and other canning supplies, told the Minnesota Star Tribune that the demand has made supply constraints. Ball has “increased glass production, found additional lid manufacturers and expanded its pack out locations.”

The food safety specialist at the University of Georgia and the master garden helpline at the University of Vermont have both reported a huge increase in calls since mid-March from new gardeners.

Read more (Associated Press)

How should an artisanal, fermented food or drink brand spend their time and energy: making the product or selling it?

Both, say John Gray, owner of Bubbies pickles and TFA Advisory Board member, and Steve Rustad, his marketing partner. The two spoke at a TFA webinar “The Bubbies Pickles Story: Food Marketing Fundamentals.”

“You have two jobs if you’re a small businessman. One is making it, the other is selling it,” says Rustad, owner of Rustad Marketing. “If you’re prioritizing making it and putting selling in the back seat, you are not looking at one of the most important parts of your business.”

Marketing should never be considered a distraction — promoting the product needs to be as fundamental to a business plan as making it.

“I’ve seen very few people who can do marketing and making successfully. It is a different world. It takes two people,” Rustad adds.

Sharing Your Brand’s Story

How did Bubbies grow from a small, struggling brand to a financially successful category leader? Good marketing.

Gray, who has a background in finance, decided to purchase the Bubbies brand with his wife, Kathy, in the late 80s. A lawyer friend had recently taken the brand through bankruptcy, and John said he knew that helping the brand survive would “take every last dime we’ve got. And it did.”

The original Bubbies label.

His first step was partnering with Rustad and recreating the label. The original one featured Bubbies written in a bubble font script. It was difficult to read, and people confused “Bubbies” with “Bubbles.” And the image on the label of vegetables wasn’t particularly noteworthy. Gray and Rustad wanted to maintain the old-fashioned look, but in a way that would resonate with customers. 

A picture of Kathy’s Jewish grandma Bubbe (Bubbe is the Yiddish word for grandmother) became the inspiration for the label image. She became the mascot, a Bubbe that stands for valuable cooking principles —  keeping the kitchen  the center of  the home,  the worth of a home cooked meal and, most important, creating great flavor.

Once the new label was introduced,, sales grew  40% the first three months.

“That’s the power (of a good label),” Gray says. “Your label is your face to the world. And you need to spend the right kind of money until it hurts to get it right because it’s probably the most important money you’ll ever spend.”

To market a product, you need to have a story, Rustad adds. The dream to always ferment vegetables is not a story. “What makes your product unique?”

Bubbies used their quirkiness as a selling point, a strategy Rustad recommends for new, artisanal brands. Don’t look to major consumer packaged good brands for guidance on how to market a maker business. “Your quirkiness is your advantage when you’re a maker,” he says.

Marketing Fermented Products

But how do you market a fermented food or drink, with its own unique qualities?

First, Gray advises, do not become an authority on health food.

“We don’t talk about probiotics at all,” he says. “We make no health claims, we’re very careful about it. One of the reasons I got involved with and wanted to get The Fermentation Association started is because the FDA refuses to deal with what natural is and what it means.”

“If you’re going to talk about your probiotics, you better be legally sure that what the consumer is getting when they crack open the jar is what you are promising them, not just what you made originally,” Gray adds. “As a result, we completely stay away from any claims about health, probiotics or anything else because you can’t prove it.”

Though Bubbies includes all-natural ingredients (cucumber, artesian well water and spices) without sugar or preservatives, Bubbies doesn’t put “natural” on the label, either. Rustad notes, when you try to put “natural” on a product label, it becomes contentious, turning your product into “a magnet for people to sue you.”

The health food is a regulated industry. “As soon as you make any health claims, you’re in bed with the Food and Drug Administration. You really don’t want to do that. So when you talk about your food attributes, you need to be careful that you’re not talking about medicine. Your customers may say your food cures cancer, but you can’t say that.” 

Some uninformed customers still consider fermented goods dangerous. Don’t waste time marketing to the uninformed.“It’s very expensive when you have to educate,” Gray advises. 

Bubbies in the early years ran into a  related problem. Because their pickles and sauerkraut are naturally fermented, the brine is cloudy – a natural byproduct of the fermentation process. Bubbies was unsure how to educate those that thought this cloudiness was a problem. So they made it an attribute of the product, a positive, and,   printed “Shake Until Cloudy” on all jars.

Focus on the taste. “If something tastes good, people will put up with a lot of appearance issues,” Rustad says. And taste better than the competition. Bubbies pickles re-launched at a time when big food brands were switching from naturally fermented pickles to processed, shelf-stable varieties.

“By having a naturally fermented pickle, we had a product that was very basic, had no additives other than the spices and was perceived as healthful,” says Rustad . “And tasted delicious.”

Fermented food and drink are difficult to scale, labor intensive and have  unique production processes with different liabilities. But people are willing to  pay a higher price for an artisanal, fermented product. 

“Your market for this product is conditioned to pay a premium for what they perceive to be a superior product. People expect to pay more, ” Rustad says, comparing it to the organic food industry.

Focus on Customers

“Part of that premium should be used for marketing,” he continues. “You need to invest in marketing. And marketing is an investment because you’re buying awareness, you’re buying the tool to establish relevance and hopefully your marketing is provoking trial, action, relationship, social media engagement.”

Bubbies — a certified kosher product — advertised their product in the Jewish press in Los Angeles County in the early days. They knew it was their target audience, and they couldn’t afford advertising in a mass market publication. 

Customer rapport has been vital to Bubbies success. Over the years, retailers have replaced Bubbies with different private labels —  twice at Safeway  and, more recently, at Sprouts. Customers are the first to call and complain to the store’s buyers.

“That happens because of the relationship you have with your customer. Outreach is key. We respond to every single outreach from any customer, whether it’s Instagram, Facebook, email,” Gray says. “How do you relate? People want real stuff. They want real, authentic food, ingredients they can pronounce, that they know what they are.”

Chocolate sales have skyrocketed during the pandemic. Americans spent $3.7 billion on chocolate during the 17-week period that ended June 27,up 6.3% from  last year. – Nielsen Data

Butter or Not?

A ruling has been issued on a lawsuit against the California Department of Food & Agriculture. It will be a landmark in the vegan (and fermented) food industry. A California judge said vegan dairy company Miyoko’s Kitchen can continue using the terms “butter,” “lactose-free” and “cruelty-free” on its packaging. The state’s food and agriculture department told Miyoko’s earlier this year that those terms could not be used on the vegan butter packaging because it was confusing to consumers. They said the term butter is restricted to products containing at least 80% milk fat. But Miyoko’s butter is a cashew cream fermented with live cultures. Miyoko’s also creates the natural flavor in their products by fermenting rosemary, plum and oregano.

“The state’s showing of broad marketplace confusion around plant-based dairy alternatives is empirically underwhelming,” wrote U.S. District Judge Richard Seeborg. Miyoko’s Kitchen, he wrote, is entitled to label its products as “butter” under the protection of the First Amendment. The case has still not been dismissed.

Read more (Food Dive)

Yesterday we shared about the beer industry pushing to change inequality issues among beer brewers. What about the wine industry? According to Sunset Magazine, “progress has been plodding within the more conservative corners of the wine industry.” Carlton McCoy, president and CEO of the Napa house Heitz Cellars @heitzcellar , is one of the few BIPOC leaders in the wine business. He started a foundation, The Roots Fund @rootsfund as a way to help Black and Indigenous people in the wine industry with financial support, mentorships and job placement.

“I’m hoping that people are quiet because they don’t know what to do yet—if I put myself in their shoes I would ask: How do I even start?” Carlton tells the magazine. “They should know that The Roots Fund is a place where they can have that conversation.”

McCoy launched The Roots Fund with sommelier Tahiirah Habibi @sippingsocialite and restaurateur Ikimi Dubose. The hope is the group can raise awareness that a career in wine is possible for BIPOC.

“It’s not really marketed to Black people,” says Carlton. “We’re trying to recognize that has been a barrier to entry and rectify it. It’s a challenge to hire someone who doesn’t look like you and comes from a different background.”

Read more (Sunset Magazine)