- Fermented Sciences, the maker of Flying Embers hard kombucha, closed a $25 million round of funding led by Ecosystem Integrity Fund and PowerPlant Ventures with participation from Blueberry Ventures and Monogram Capital Partners. The company also announced it closed deals with 70 distributors across 30 states to get its hard kombucha on shelves.
- The better-for-you alcoholic beverage comes in six flavors — Ancient Berry, Grapefruit Thyme, Lemon Orchard, Pineapple Chili, Ginger & Oak and Black Cherry — with ABVs ranging from 4.5% to 7.5%. The beverage is sugar- and gluten-free, and is brewed with an adaptogen root blend and live probiotics.
- The funds will be used to expand the national distribution of the product to "meet exponential demand" and innovate to create new better-for-you alcoholic beverage lines, the company said in the release.
Despite the myriad of lawsuits in the space, kombucha remains a red hot product for both consumers and manufacturers. More money is being poured into both alcoholic and non-alcoholic versions of the drink, and the space is expected to keep growing. According to Inkwood Research, the North American kombucha market made about $342 million in 2016. Between 2017 and 2025, researchers expect the fermented tea will have an annual growth rate of 25.9% in North America, ending with a $2.7 billion market.
This growth has attracted the attention of legacy companies looking for a way to stay relevant to consumers interested in better-for-you options with functional benefits. PepsiCo acquired KeVita in 2016 and Coca-Cola recently made a $20 million equity investment in Health-Ade Kombucha.
It's not just soda giants getting into the category. Beer brewers have noticed how much today’s consumers like the beverage, creating competition for Flying Embers. And Flying Embers says it is ready. In the release announcing the funding, the company said the brand "is positioned to disrupt the $600+ billion global beer market."
Alcoholic kombucha is the beverage of choice for a distinct demographic. Kombrewcha, which is backed by AB InBev's ZX Ventures, discovered through consumer research that its primary consumers were females ages 28 to 45, mostly married with children, who were seeking a beverage with the alcohol content of beer but that they could feel good about drinking. And with Nielsen data showing about 36% of American women drinking beer, hard kombucha presents another alternative for brewers to offer a similar product to their consumer base.
That’s not to say that only women are drinking this probiotic beverage. As evidenced by investment trends, hard kombucha is a popular option for a variety of consumers. Last year, Molson Coors acquired Clearly Kombucha as part of its craft and specialty unit called Tenth and Blake. Although the kombucha itself is not alcoholic, the brand's blog features multiple recipes for cocktails that use kombucha. Other brewers like New Holland released a seasonal Kombucha IPA this spring with a 5.0% ABV and GT's has a 3% ABV Heavenly Hops flavor.
With some large competitors in the hard kombucha space, Flying Embers’ infusion of cash will come in handy as it works to expand distribution and build brand awareness. The hard kombucha startup is going to need to continue innovating if it wants to stand out on the shelf. One way it is doing so is its ABV. Many of the hard kombuchas on the market have settled into the buzzy realm of 5% ABV, but Flying Embers has upped the ante and is offering flavors with up to 7.5% ABV.
In the future, this higher level of alcohol may pose problems.
"Kombucha" does not currently have a strict definition. So despite an industry push to regulate alcohol level in the fermented tea to below a 0.5% ABV level during its shelf life, there is no requirement for all kombucha to meet that threshold. To change that, Kombucha Brewers International hired a regulatory consultant to help guide it through the U.S. Food and Drug Administration's standard of identity process. If the lobby succeeds in defining the ABV level in its standards of identity, hard kombucha may end up needing to offer more disclosures on its labels.
Nevertheless, Flying Embers remains in an advantageous position. Fermented Sciences was started by KeVita co-founder Bill Moses, whose brand was acquired for somewhere close to $200 million in 2016. Moses' past history likely had an influence on the funding success of his latest venture, and it is likely that big beverage brands will continue to watch this trend and Flying Embers. If its popularity even begins to mirror that of KeVita, a legacy brand could scoop it up.