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Published in Food/Agribusiness
Cultured Kombucha Co. has scaled up production over the last few years to meet growing market demand. Cultured Kombucha Co. has scaled up production over the last few years to meet growing market demand. COURTESY PHOTO

Michigan kombucha producers expand as consumer demand spikes

BY Sunday, June 06, 2021 04:15pm

When Courtney Lorenz launched her business in 2015 brewing and selling kombucha, she started working with just three 5-gallon containers. 

Her Traverse City-based Cultured Kombucha Co. now occupies a sprawling 5,000-square-foot facility where a dozen 500-gallon brewing tanks are running at any given time.

Cultured isn’t the only Michigan-based kombucha brewer that is finding steady growth in a quickly expanding industry that centers on this fermented, sweetened tea with a centuries-old history.

Kombucha Brewers International, the industry’s primary trade association, identified kombucha as a $1.8 billion dollar industry and growing. Brewers throughout Michigan are carving out their niche in this quickly expanding market.

Steady growth

Cultured Kombucha distributes to 180 locations throughout Michigan, including restaurants, gastropubs, breweries and independent grocers. 

Just recently, the brewer inked a 22-store distribution deal with Meijer Inc., allowing it to break into the big box retail environment and furthering Cultured’s reach throughout Michigan while also emerging into parts of Indiana and Ohio.

The deal was the result of two years of lobbying with Meijer buyers.

“(The Meijer deal) is allowing us to really create steady jobs throughout the entire course of the year,” said Lorenz, whose business employs three currently but could use additional staffing. “Beverage is a seasonal market no matter what beverage you’re in. We’ll have some consistency with our ability to employ people, which is great. It will also allow us to have a really solid brand awareness.”

Cultured Kombucha is also developing two new products, including a hop tea and hard kombucha, a particularly hot segment of the kombucha market.

For its hop tea, Cultured Kombucha will leverage the availability of home-grown hops made available through Traverse City-based of MI Local Hops LLC to create a sparkling beverage that Lorenz described as a more refreshing, alcohol-free version of an IPA.

“You can have these crafted beverages but don’t have to consume the alcohol,” Lorenz said.

“Our goal was to create a crafted alternative for people who don’t want an alcoholic beverage.”

Cultured plans to cover consumers that do prefer an alcoholic beverage as it develops a hard kombucha, a variety with a longer fermentation process and added sugars to increase alcohol content.

Cultured Kombucha recently received a $10,000 Food and Agriculture Investment Fund grant from the Michigan Department of Agriculture & Rural Development, which Lorenz said will be used to create the infrastructure for that expansion.

She also said that Cultured Kombucha’s hop tea should be available in the fall with the hard kombucha coming in mid winter. Cultured plans to use its existing distribution network for the products while opening new markets. 

With the recent moves, Lorenz and her team are striving to carve out a significant presence for Cultured throughout the region.

“I think Cultured Kombucha could really be one of the greater kombuchas of the Midwest,” Lorenz said. “I think it’s a highly underserved market and is dominated by national brands right now, but consumers are really asking for something that is more crafted and less Pepsi or Coke.”

New demand

Muskegon-based Lively Up Kombucha LLC is another prime example of a kombucha brewer that has grown quickly and completely organically.

Founded by Brenna Kelley and Zack Smith in June of 2017, Smith recalled the early years when his startup worked out of a rental kitchen while he had pallets of bottles and a chef’s freezer stashed in his living room.

Despite no investor backing, Lively Up just recently moved into its new 2,600-square-foot production space at 1945 Stebbins Road in Muskegon Township where 2,000 gallons of kombucha are constantly brewing.

Already with a patchwork of retailers across Michigan that carry Lively Up’s kombucha, which is a low-sugar, dry variety with raw fruit and herbs, Smith said his company just signed a deal with Whole Foods Market Inc. to distribute to all of its Michigan stores.

Lively Up and Cultured are both proof of how the drink has crept into the mainstream just within the last decade.

“Even 10 years ago, it was this health tonic that some people may have been afraid of or did not know of,” Smith said. “It was something that your hippie cousin had in their closet or your weird friend drank it. I think now, especially in the last five years, kombucha is becoming more acceptable as an overall functional beverage and just a common beverage. It’s still a niche product.”

Smith credited local kombucha makers across the state and country for helping the beverage make this transition.

“I think a lot of it has to do with us spreading the word and making it taste good and warming up the market,” Smith said. “Also, people are feeling good from it.”

As the market continues to grow and attracts additional players — including large, national brands — Smith says he’s not worried about oversaturation, and stressed the importance of authenticity when it comes to a product like kombucha.

“I think if you’re making a really good product and are authentic, you’re going to stick around,” he said. “Those who are not in alignment with that will end up phasing out. … Craft beer teaches us that and really any of these niche industries.”

The next kombucha frontier

While the kombucha market continues to expand as a whole, hard kombucha is emerging as a popular alternative to both beer and hard seltzers.

Kombucha Brewers International reported that sales of hard kombucha have grown from $1.7 million in 2017 to more than $12 million in 2019.

National names like Sierra Nevada Brewing Co. (which brews Strainge Beast), San Diego-based JuneShine Inc. and Wild Tonic of Arizona have capitalized on the surge in popularity while local makers like Cultured Kombucha get in the game.

However, the entire market originated in Michigan, which is home to Ypsilanti-based Unity Vibration Kombucha LLC. Founders Rachel and Tarek Kanaan refer to Unity Vibration as “the O.G. of hard kombucha” after developing the first kombucha beer, which is never diluted, pasteurized, distilled or bottled before being fully fermented. 

Unity Vibration continues to expand in a market it essentially created, and is expected to finish out this year with a distribution that reaches into 25 different states.

“All of these hard kombucha companies saw the opportunity in a segment that we were the only company in for years — they got a lot of funding and took off,” Tarek Kanaan said.

The hard kombucha space is another area where authenticity is key — not only in the way a company conducts business, but in the product itself.

Tarek Kanaan said that many of the national brands align with seltzer makers in their approach to production.

Unity Vibration aligns with, and piggybacks on, the state’s thriving craft beer industry. Not only is Unity Vibration a member of the Michigan Brewers Guild and Brewers Association, but it regularly participates in local beer festivals and even refers to its hard kombuchas as “beers.”

“People want something that is authentic and they can tell you’re not full of crap,” Rachel Kanaan said. “We’re really a heritage brand. We’ve been doing this for a long time and have been authentic since the beginning.”

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