Increasing numbers of brew pubs and high demand for craft beer is growing the brewery equipment market. The brewery equipment market is estimated to be valued at $16.8 billion in 2019 and projected to reach $24 billion by 2025, growing at a CAGR of 6.1%.

Markets and Markets

Put down the Gatorade, athletes — the best performance-enhancing substance is fermented food and drinks. An article in sports magazine STACK says athletes are overlooking fermented products for workout nutrition. Fermented products — like raw sauerkraut, kimchi, yogurt and kefir — heal the body with beneficial bacteria and combat gut imbalances. “The better our digestion, the better we utilize the food we are putting into our body, leading to even better improvements in our strength and health,” the article states. Though there is little research in the field, the article points to one study which found probiotics helped female college athletes improve body composition and deadlift performance.

 

Read more (STACK)

Kombucha brands biggest competition are not other kombucha brands – it’s soda and functional beverages. Sales continue to hemorrhage in the soda category as consumers shun sugar-filled drinks. And kombucha companies have a great opportunity now to grab that market share.

A panel of leaders in the kombucha and beverage industry shared their insights on the future of kombucha at KombuchaKon, Kombucha Brewers International’s 6th annual conference. They agreed the fermented tea is not a fad, but brands “have to be nimble and creative” to thrive in an increasingly crowded market.

“The future is really, really bright,” said John Peirano, the vice president of marketing at Humm Kombucha. “It’s super exciting – and we’re just getting started.”

Local Brands Will Reign

As more and more kombucha brands enter the industry, the brand’s biggest strengths will be selling to their regional market.

“There are all these local brands retailers are going to want because they care about what’s happening locally,” Peirano said. “Local brands are going to be really, really important.”

John Craven, editor of beverage industry news site BevNET, has covered the beverage world for nearly two decades. He said marketing brands locally works in the kombucha category, but not in any other beverage space.

“Prior to (kombucha), if you said ‘I want to build a regional brand,’ I would have said ‘That’s not a thing,’” Craven said.

Educating Retailer & Consumer

Retailers want to give \consumer’s a variety of product choices, Craven added. They’re more likely to commit to selling kombucha if there are multiple brands and SKUs on their store shelf.

“With (kombucha), it’s OK to like a bunch of different brands,” Craven said. It’s normal for a kombucha consumer to switch between different brands and flavors. “That is one thing this category has going for it that’s really unique. … It definitely has defied traditional beverage logic in that regard.”

Litigation against kombucha brands continues to top headlines, as lawsuits claim alcohol content is misrepresented or sugar levels are understated in different brands. In the next few months, KBI will be releasing their own standards defining kombucha.

Truth in labeling will drive trust with the consumer and the retailer, Peirano said. “It’s important that what’s inside the bottle is on the label,” he added.

“As category leaders, we also have to be category captains. We have to go to the retailers with really strong selling stories. And those selling stories aren’t just about Humm. Those selling stories are about the category and what will drive the most profitability for that retailer category and that shelf set, so they can be successful.”

Refrigerated kombucha and the fermented beverage category has grown 31.4 percent year-over-year, according to data from SPINS market research. And household awareness continues to climb – it increased 20 percent in 2018.

Kombucha is sold in the refrigerated section, some of the most expensive space on a grocery shelf.

“I think it’s all our responsibilities, if we want to continue to grow this category, we’ve got to go out and education and tell people about the magical, beautiful benefits of what kombucha brings to the table from a functional health standpoint,” Peirano said.

Brands Need to Remain Fresh

The kombucha industry is already dominated by a handful of national brands – GT Kombucha, Kevita, Health Ade, Humm Kombucha and Brew Dr. control the majority of market share. The panel agreed smaller brands can still successfully enter the category, but the top sellers are locked.

“There’s not room for a dozen million dollar-plus brands,” Craven said. “But the reality…is that some of these (smaller) brands will be acquired and will probably be absorbed and evolved, ruined, whatever, which makes an opportunity for the next brand to come along.”

“There are a lot of functional products out there…the beverage history lesson is consumers are really fickle,” Craven added. He pointed to Vitamin Water as an example, a brand that rapidly grew popular in the beverage industry but then lost sales. “The consumer keeps moving on to the flavor or the function of the month, so to speak.”

Craven does not think kombucha will be a victim like Vitamin Water because kombucha includes value-added health benefits. The kombucha brands that survive the next decade, though, must be adept to change. They must evolve with new flavors and brewing styles, while maintaining affordability, consistency and health benefits.

Growing Kombucha Enhancement: CBD

One of those kombucha styles keeping the industry fresh: CBD. Conrad Ferrel, founder and CEO of True Büch, said combining the benefits of the cannabis plant with the functional compounds in kombucha makes sense.

“The evolution of cannabis used with kombucha, it’s a natural marriage,” Ferrel said. “If you want to have kombucha for sleep, there will be a specific kombucha for that. If you want it for pain management, it will be there. It will be functional and specific to the certain (medical aid) people want.”

There are 140 compounds in the cannabis plant, but so far only two – THC and CP – have been studied, added Ferrel. CP is a value-added compound, known to aid in improving medical ailments. But science is lagging.

“As the world gets used to the science … the struggle is to sell people something that for years was considered a drug, now we’re trying to sell people on the fact that it’s good for you,” Ferrel added.

Hard Kombucha Gaining Traction

Hard kombucha is another brewing style keeping the kombucha category competitive. It’s evidence of how many beverage categories kombucha bleeds into – like alcohol, tea, juice, flavored water and functional beverages.

Kyle Oliver, quality assurance scientist at Boochcraft, said regular kombucha has an ABV of .5 percent to 2 percent. Hard or high alcohol kombucha goes above that level. Boochcraft has 7 percent ABV. The ABV is higher because hard kombucha goes through a secondary fermentation process, where more yeast and sugar are added.

“Our organisms we want in our kombucha are spoilage organisms in other industries (like wine and beer),” Oliver said. “The higher ABV doesn’t kill probiotics, they’re able to still grow in that environment.”

Craft cheese sales lag behind craft beer sales, despite the similarities in the two industries. Craft beer sales in America totaled $27.6 billion in 2018, while craft cheese sales totaled $4 billion. Experts tell VinePair why cheese doesn’t keep up with beer’s growth: cheese’s short lifespan (less than two months), greater risk of cheese mishandling by a distributor during the supply chain and the high price of artisan cheese. What can a cheese brand do? Experts advise increasing social media promotion. Craft beer has thrived on social media because people love seeing the hops being picked, brewers experimenting near the fermentation tank and the beer displayed in glassware. Craft cheese brands don’t self promote the same creation process, like a goat that made the milk or a family that runs the dairy farm. Cheese brands could also benefit from better merchandising, experts say. Beer labels are constantly and creatively changed and updated, but cheese labels remain the same for years.

Read more (VinePair)

Superchef David Chang is transforming his restaurant business into a multimedia empire. The restauranteur, author, publisher, TV celebrity and podcast host announced this month that he’s adding another television gig to his resume: “Family Style.” Chang will co-host the food-centric talk show with celebrity and cookbook author Chrissy Teigen.

“We’re not trying to promote the restaurant; we’re trying to promote our ideals. And I think, to the younger generation, that’s more important to them than ever before,” Chang said at Recode’s Code Conference.

The Korean-American founder of Momofuku restaurant is known for shaking up the restaurant industry with cutting-edge culinary innovations. A major proponent of fermentation, Chang’s innovation in the cooking technique has propelled fermentation’s recent renaissance in America. In his Kaizen Trading Company fermentation lab, Chang develops his own line of fermented products for restaurants.

Chang aims for his media projects to reflect the values of the restaurants he’s created all over the world – authentic and honest. He compared starting a food-based media company, Majordomo Media, to chef Wolfgang Puck’s entrepreneurship. Puck “created a giant business of every kind of thing related to food,” like consumer-packaged goods, cookware and catering.

“If the media takes off, that’s more stuff we can bring back to the restaurants,” Chang said. The media arm feeds his restaurants. “Maybe people will never want to pay that much money for [Momofuku] food, maybe we can subsidize some of the costs with [the media projects] that’s alleviating our bills.”

Changing Kitchen Atmosphere

Majordomo Media produces the Netflix series “Ugly Delicious” and the podcast “The David Chang Show.” Chang won’t discuss viewership numbers. But he says the exposure has made Momofuku busier than ever, and that’s not because the restaurant is featured heavily in the TV show. It’s the message about the food industry and corporate responsibility that sticks with viewers, piquing their interest in  Momofuku.

“Everyone has an understanding of food now; the food awareness is higher than ever before,” Chang said. “But no one quite wants to understand how that food gets made. They understand maybe from an environmental perspective, but they don’t understand it from a restaurant perspective.”

Customers should make themselves aware of restaurant ownership, especially in a post #MeToo world when sexual assault accusations have put into light the deplorable behavior of restauranteurs like Mario Batali.

Important, too, are proper working conditions. The culinary industry is historically a “brutish system,” Chang said. The hours are long and tiring. Today’s labor force is changing workplace culture, though. Millennial employees are disrupting the horse race work pace, they are “allergic to the working conditions and the stress that we were creating.”

“You work long hours in the culinary world, and I’ve always believed that the culinary world and those that lead people in the culinary world have maybe one of the hardest jobs because you can’t motivate people with a giant stock option package or a giant bonus that you might get on Wall Street. You have to motivate someone to do physical hard labor and to try and get better at that through sheer integrity and personal will and that’s hard, that’s incredibly hard to motivate people,” Chang said.

He added: “How do you balance out what’s essentially still a blue-collar labor, which is cooking, [that] is now glamourized to a point that it now has white-collar values? That’s a collision that’s hard to mitigate and sort out.”

Chang’s creating that white-collar environment at his restaurants, giving vacation days, mandatory breaks and a shift drink at the end of a service. He wants to professionalize the restaurant industry when, historically, it’s never been professional.

“I’ve been so allergic to a corporate body for so many years, but now I think I’ve convinced myself it’s the only way to go,” Chang said.

Experimental Triumphs & Failures

Lauded as the bad boy in the food world, Chang is a chef willing to take unapologetic risks. His innovation has not come without failures, though. Lucky Peach, the award-winning food magazine he co-founded, shuttered after creative differences. Maple, a New York food service Chang backed that prepared and delivered gourmet food, folded amidst massive debt. Ando, another Chang backed food delivery service, suddenly closed, then was acquired by Uber Eats. Chang closed Má Pêche last year, citing declining foot traffic around New York’s midtown thanks to extra security at Trump Tower. New York Italian restaurant Momofuku Nishi closed too after a touch review, then remodeled and reopened.

That review – by Pete Wells of the New York Times – was Momofuku’s first bad review. It destroyed the restaurant, Chang said. But he added that he’s weirdly thankful for that review because it helped Momofuku reevaluate, “our restaurants around the world are doing better than before because of that review.”

“My fear is that once you become too systemized in the restaurant industry, you’re going to lose any of the coolness, creative parts,” Chang said. “I got into cooking because it wasn’t cool. Everyone thought it was career suicide when I said ‘Hey I’m going to start to cook,’ it was sort of that sense of danger, that sense of recklessness that no longer really exists.”

“It’s completely different than a tech business because scaling a brand in food, yes, it can work in McDonald’s or if you have a beverage,” Chang said. “But the idea of scaling something that’s intimate, some kind of contract between you and a prospective diner, that’s hard because we’re still trying to be best in class in making the most thoughtful, delicious food and it’s hard to scale excellence I think.”

(Photo by Wall Street Journal)

To celebrate its 100th anniversary, Danone is releasing its collection of 1,800 yogurt strains to the public. In a press release, Danone said the announcement coincides with Danone’s “commitment to promoting open science, a movement toward openness in scientific research, sharing and development of knowledge through collaborative networks.” Danone would like others to use the strains for research purposes. The French company is also granting access to its current collection of 193 lactic and bifidobacteria ferment strains deposited at the National Collection of Cultures of Microorganisms, held in the Biological Resource Center of Institut Pasteur in Paris. The first Danone yogurt was made by Isaac Carasso in 1919 in Barcelona. Barcelona’s own children suffered from poor gut health, and he was inspired by research from the Institute Pasteur that detailed the role of ferments in gut and overall health. Barcelona began selling his first yogurts, which were fermented with lactic ferments, in Barcelona’s pharmacies.

Read more (Danone)

 

On the cusp of an announcement from KBI on standards defining kombucha, GT Dave — founder of GT’s Kombucha — gave KBI a $1 million endowment to protect authentic kombucha. Speaking to attendees at the annual KombuchaKon, GT said: “Kombucha is now being mass produced by some newer brands that have entered the market and they are positioning them for a mainstream palate. These barely fermented products are missing the heart and soul of what the industry of kombucha should be, and it’s looking more like a new age soft drink.” GT believes kombucha brands need to be upfront about what techniques they’re using to make their kombucha, like pasteurization, hyper-filtration, artificial carbonation, concentrate use and/or spinning cone technology.

Read more (Food Navigator)

Consumers are in favor of allowing plant-based food to use traditional dairy terms on their labels — but dairy farmers are strongly opposed to it. Last year, the U.S. FDA issued a public comment period to examine if plant-based foods and beverages should use the traditional dairy names: milk, cheese and yogurt. The results are out. Of those comments, 76 percent were in favor of using dairy terms on plant-based products, 13.5 percent were against and the remaining 10.5 percent were inconclusive. Of the commenters that identified themselves as dairy farmers, nearly all were opposed. Dairy farmers are concerned consumers will believe plant-based foods are nutritionally similar to cow’s milk (94 percent) and that consumers are being misled with a dairy term on a plant-based item (91 percent).

Read more (Linkage Research)

The kombucha industry is exploding – sales were up 21 percent to $728.8 million last year. Kombucha and non-alcoholic fermented beverages are now the third largest beverage category, representing 10 percent of total refreshment beverage sales.

Distribution is high at conventional, natural and convenience stores. But velocities (sales) are declining.

“A word of caution – there’s going to be a reckoning,” said Bobbi Leahy, director of sales at SPINS, a natural products market research group. “All these retailers are taking all these lovely kombuchas … they will be evaluating you, probably far soon than you think is warranted. There will be some slashing going on.”

Leahy spoke at KombuchaKon, the Kombucha Brewers International (KBI) annual trade conference in Long Beach. The year’s KombuchaKon was the industry’s largest since the first conference six years ago, with 424 attendees from 17 countries.

“I applaud you all on the growth. I think that’s wonderful,” Leahy said. But “I would be ready with some materials to go in and defend your spaces.”

In her presentation on the kombucha market analysis and future trends, Leahy emphasized that refrigerated beverage shelves are expensive retail space. She shared advice with kombucha brands on how to survive the current high distribution wave. The SPINS analysis is based off 52 weeks of sales ending in February 2019. Her tips:

  • Prepare with Sales Materials. If kombucha sales can’t keep up with distribution, retailers will have to answer to their higher-ups. Why is there so much kombucha on the shelf that isn’t selling? Leahy warned brands to be the ones educating retailers, advising brands to share data points and score cards. She added: “I encourage you to go and get ahead of that, be the one talking that message. You tell them what the right set is, you tell them what they should do, you know this industry. If they’re overstocked on something, then let them know. They’re looking to you to be the experts.”
  • Conventional supermarkets reign. The bulk of kombucha and fermented beverage sales are coming from conventional supermarkets. “If you succeed in the conventional channel, you’ll have success overall because they represent 70 percent of sales,” Leahy said.
  • Don’t ignore convenience stores. Convenience store (like 7-11 and gas stations) sales of kombucha and fermented beverage sales are growing 55 percent. “You have to make it a task to go after convenience,” Leahy noted. “You probably wouldn’t have said ‘That’s my low-hanging fruit, I’m going to go in there.’ But they’re certainly getting the message now … It’s certainly worth having a plan to go after convenience.”
  • Craft different sales messages for each channel. Don’t go in to retailers with the same message. Between conventional, convenience, natural and specialty stores, each channel will care about different things.
  • Know region’s sales trends. The west coast – especially California – has high kombucha sales. The south central, mid-south and Great Lakes regions are under-indexing in kombucha sales. Leahy pointed out that the west is a ready audience and a great spot to experiment with new flavors. The south and Great Lakes regions, though, need an education focus. Demos are a great idea in the area.
  • Highlight brand’s best attributes. Boast about characteristics beyond the label. Features like: clean label, sustainability, brand mission, wellness goals, social impact and great ingredient sources.
  • Top selling flavors are solid. Ginger and berry are the two top flavors across all channels. The “fruit – other” is also a top selling flavor and growing (135 percent), which is defined as unique fruit flavors like watermelon, guava and melon. The past year, there has been the strongest growth in flavors: apple (172 percent), grapefruit (155 percent), pomegranate (104 percent) and orange (98 percent).
  • Tread lightly with unique flavors. Leahy pointed out, if a unique flavor only appeals to a small audience, a conventional retailer will notice only a small number of customers are buying it. “That small and that low is going to be kind of a perfect storm,” she said. “You really want to be careful.”
  • Smaller size bottles sell best. The 14- to 17-ounce size kombucha make up the majority of sales.
  • Start sales promotions. Coupons, mailers and sales are great options to get products off shelves.
  • Use your social network. Let people know which stores you’re at.
  • Maintain a good store locator. Brand’s websites should feature a good store locator detailing which stores carry which flavors of kombucha.
  • Top kombucha brands dominate the market. GT Kombucha, Kevita, Health Ade, Humm Kombucha and Brew Dr. account for 88 percent of kombucha sales at conventional retailers and 89 percent of kombucha sales at convenience stores. GT Kombucha, Kevita, Health Ade and Brew Dr. account for 77 percent of kombucha sales at natural stores and 82 percent of kombucha sales at specialty gourmet stores. Those same top brands likely will not change, Leahy noted.
  • Know beverage trends. “The trends you are seeing in kombucha are special and unique,” Leahy said. “…as you’re sitting across a buyer or a category manager or retailer, you want to be well-versed in what other beverages are on the shelf and which ones they’re probably going to protect.”
    • Natural beverages are contributing more to the growth of the refreshment beverage category than non-natural. The conventional, shelf-stable beverages (like Coke and Pepsi products) account for 63 percent of the refreshment beverage industry, but only 53 percent of growth. Diet soda is especially losing favor among consumers. Specialty and wellness beverages (like energy drinks and Gatorade) make up 29 percent of sales and 35 percent of growth, especially driven by energy drinks. Natural drinks (like kombucha and La Croix) make up 8 percent of sales, but natural is driving 13 percent of growth.
    • Of the natural beverage subcategories, shelf-stable performance beverages (like Body Armor) are experiencing the biggest growth at 87 percent. Declining categories include shelf-stable coconut water (-12 percent) and juices (-3 percent).
  • Emphasize growth of natural products industry. Natural products are no longer a niche market. The natural products industry is estimated to reach $140 billion in sales in 2019. In 2003, natural products were a $52 billion industry.

When SPINS began tracking kombucha sales years ago, Leahy noted kombucha was “barely a blip on the map.” Current Kombucha sales numbers are also likely higher than noted – major retailers Costco and Whole Foods do not share sales data with SPINS.

“In a way, it’s a good problem to have – you can’t sell if you’re not on the shelf,” Leahy said. “ou’re on the shelf – now it’s time to sell.”

In wine making, the grape is the critical element. The majority of the wine’s characteristics come from the grape. “But for sake making, it’s a little bit different. It’s more about technique, about people controlling the process,” says Yoshihiro Sako of Den Sake Brewery in California. Sako was featured in the Los Angeles Times  Rice does not include natural sugars like grapes, so a sake brewer must add koji (a specialized fungus) to convert the rice’s starch into glucose, which then gets fermented into alcohol. Sako says weather conditions, too, can affect the flavor. His latest batches — made after the recent California rains — taste different than batches made during the change. Sako says it’s a way sake “expresses the locality.”

Read more (Los Angeles Times)