How Kombrewcha used consumer research to increase alcohol levels
Research found the company's base customer is a middle-aged active mom who needs to feel good about her beverages — and wants the effect of drinking beer.
How did Kombrewcha CEO Garrett Bredenkamp decide to bump the alcohol content of his product up to 4.4% ABV — roughly the same as a beer?
The story of the harder kombucha, which is coming to shelves in New York before expanding to the Pacific Northwest in March, can be told through the lens of surprising consumer research.
When the alcoholic kombucha brand first launched in the New York area in late 2017, the company targeted younger millennials. Bredenkamp said the plan was Kombrewcha would be a lifestyle brand for them. But after a survey of 2,000 people nationwide, and in-depth interviews with 300 consumers, he found someone else entirely was picking up their product: Women between 28-45, mostly married and with children.
“The reason they're drinking the product is because they want to be healthy. They're active. They're all over the place, and it just makes them feel good on a Friday to sit down with their husband and he drinks beer and she drinks a kombucha,” Bredenkamp told Food Dive.
These findings helped Kombrewcha better refine and target its product. In March, the product will have 4.4% ABV — a bump from its current 3.2% ABV — and new packaging and branding that speaks to its core demographic. It also will have its first big expansion outside of the greater New York area, appearing in grocery and liquor stores in the Pacific Northwest.
Bredenkamp, who has been with the company since 2016, has led the beverage’s path from ordinary kombucha to something more. He said the way the company has focused on learning, as well as its partnership with AB InBev’s growth and innovation arm ZX Ventures, has set its course.
“We feel like we're very well positioned competitively to lead this category,” Bredenkamp said. “We know we may not have the widest distribution at this point, … but what we've been trying to do is set the table for success here. ... Now we feel like we're finally hitting that spot where we think we're primed for success.”
Building a better hard kombucha
In 2014, Kombrewcha was founded by Barry Nalebuff — who is also a co-founder of Honest Tea — and Ariel Glazer. They handed off the company to Bredenkamp, who continued to produce and market the beverage near New York.
Bredenkamp started early with consumer research, and found consumers had a hard time finding alcoholic beverages they could feel good about drinking. He saw an opening to make kombucha — which already has a low ABV of about 0.5% — an actual alcoholic beverage. And through research and development, the company came up with a proprietary process to boost the alcohol content.
Kombucha is definitely a beverage that is primed for expansion. 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 a compound annual growth rate of 25.9% in North America, growing to a value of $2.7 billion.
Sales of beer, on the other hand, are dropping off. Volumes of the beverage have fallen annually for the past five years, with 1.1% less beer sold in 2017 than the year before — a decline to 2.8 billion 2.25-gallon cases, according to the Beverage Information Group's 2018 Beer Handbook. As tastes change, brewers are scrambling to find things that consumers will want.
“We feel like we're very well positioned competitively to lead this category. We know we may not have the widest distribution at this point, … but what we've been trying to do is set the table for success here. ... Now we feel like we're finally hitting that spot where we think we're primed for success.”
ZX Ventures invested in Kombrewcha in 2016, and Bredenkamp said its backing helped the company do sophisticated consumer research to learn how to build the best possible product. Bredenkamp said they have had a deep learning plan, backed by the board of directors, to work on getting there.
“We actually haven't been trying to maximize revenue or sales over these past 15 months, which has actually been fantastic,” Bredenkamp said. He added that while he doesn’t have dollar figures for sales and revenues at the front of his mind, the company has doubled sales every year.
At the center of the company’s learning was a snapshot of who is in the market for alcoholic kombucha, as well as what consumers want from that kind of beverage. While Bredenkamp said the demographics of the consumer base was initially surprising, it made sense — especially looking at the lifestyle of these women.
“What these people are really looking for from their beverage, specifically from hard kombucha, is a drink that meets their desire to be healthy, live a natural life,” Bredenkamp said.
The typical Kombrewcha customer also doesn’t drink a lot, he said. Maybe they’re meeting up with girlfriends on a weeknight, or enjoying an adult beverage with their spouses after the kids have gone to bed. They may have just a couple drinks, but they still want to feel like they’ve had some alcohol. And the previous 3.2% ABV wasn’t doing it for them.
The company also learned the top three aspects that any consumer would want in alcoholic kombucha: something organic, refreshing and natural. Bredenkamp said Kombrewcha has stuck with these principles throughout its development, but it’s also informed how they go forward. The beverage is certified organic, and the company keeps it refreshing through appropriate carbonation and flavors.
As far as the flavors go, they’re natural — as is the process by which the fermented tea becomes an alcoholic beverage. While the exact method is a trade secret, Bredenkamp said it goes through multiple fermentations and uses additional sugars.
“Just being a little bit more sophisticated and using chemical reactions that are in a very natural way,” he said.
Kombrewcha isn’t widely available just yet. Since the debut of the alcoholic product, it’s only been available around New York City. In fact, it’s produced at AB InBev’s Blue Point Brewery on Long Island.
Bredenkamp said that by keeping the distribution area super tight, the company was able to get a close read on their consumers and make changes quickly.
“We feel like now because we went deep and really learned those things, we're ready to start expanding,” he said.
The expansion to Washington and Oregon is coming as many grocery stores there do their spring resets. Currently, agreements are made to get the drink on shelves at Whole Foods, Trader Joe’s, Safeway, QFC, Fred Meyer and Total Wine. Bredenkamp said he wants to see it at smaller and independent retailers there as well. There are six distributors the company will be working with as it expands, so there will be ample opportunities to get it to shelves.
“What these people are really looking for from their beverage, specifically from hard kombucha, is a drink that meets their desire to be healthy, live a natural life.”
Regardless of how confident Kombrewcha is about its consumer research, why is its first expansion on the other side of the country? Bredenkamp said it makes sense when kombucha consumption patterns are examined. Seventy percent of all kombucha in the U.S. is consumed in Oregon, Washington and California, and people in Portland, Oregon and Seattle drink seven times more kombucha than anyone else, he said.
As Bredenkamp was eyeing the West Coast, AB InBev wholesalers also were encouraging him to bring Kombrewcha there.
The company’s next steps are riding on this expansion. If it goes well, Bredenkamp said, the beverage could go even further in 2020.
“This is exactly what we spent two years learning," he said. “We're going to continue learning. I mean, there's nothing saying that we won't have other pivots, but we know going into the Northwest is really where we want to be.”
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