- The Coca-Cola Co. has made a $20 million equity investment in Los Angeles-based Health-Ade Kombucha, according to BevNET. The publication said a proprietary report from Mergermarket noted the deal occurred in May.
- Coca-Cola initially invested an undisclosed amount in Health-Ade in 2014 through First Beverage Ventures, a limited partner of its Venturing & Emerging Brands unit, BevNet reported.
- In 2016, Health-Ade raised $7 million from CAVU Venture Partners to build a new production facility in Torrance, California.
Coca-Cola continues to evolve its product portfolio to support its vision as not just a soda business, but "a total beverage company," as CEO James Quincey has said. The move to invest in a kombucha brand fits well with other efforts the beverage giant has made recently to augment its core soda business with healthier items such as tea, water and coffee products.
Kombucha has shown steady growth in popularity over the past few years, although there are challenges. Food Navigator reported sales for the year ending February 24 of refrigerated kombucha and other fermented beverages rose 21% to $728.8 million in measured channels. During the same time, however, velocities were down, meaning more places were carrying the product, but may not be selling it as fast as it had before.
Besides Coca-Cola, other big food and beverage companies have gotten into the category to expand their core portfolios. PepsiCo acquired KeVita in 2016, and Molson Coors bought Clearly Kombucha last year. In 2017, 301 INC, the venture capital arm of General Mills, led a $6.5 million investment round for Farmhouse Culture, a startup making fermented and probiotic foods and beverages, and Peet's Coffee took part in a $7.5-million round of funding for Revive Kombucha.
Health-Ade, in particular, has attracted a dedicated fan base due to its probiotic content, variety of flavors and use of cold-pressed juice from organic local produce. The company said it only uses four ingredients to make its fermented tea products, and that the process is the same as someone making kombucha at home.
According to Business Insider, Health-Ade produces 120,000 bottles of kombucha per day and is "one of the fastest growing functional beverage brands in the U.S."
Not everything has been smooth sailing, however. The company was sued twice last year for allegedly containing four to six times the amount of sugar indicated on its labeling. And Health-Ade, along with Whole Foods, recently settled a 2018 class-action lawsuit for $4 million that was filed by customers claiming the kombucha products were mislabeled as nonalcoholic.
Despite these legal problems, Health-Ade will likely forge ahead, especially with the recent $20 million equity investment from Coca-Cola. While the company didn't specify what it planned to use the money for, it will probably continue innovating with new flavors and testing out different types of sizing and packaging to help expand beyond the competition.