- Better Booch, a manufacturer of premium, small craft kombucha, raised $2.5 million in a funding round led by Crush Ventures, the venture capital arm of musician management firm Crush Music, BevNET reported. It's the first time Better Booch, founded in 2011, has accepted outside money.
- The funding will be used to increase distribution and expand into Colorado, company co-founder Trey Lockerbie told BevNET. Better Booch's fermented tea products are currently in about 1,000 Whole Foods, Sprouts, Lassens and Safeway outlets in Southern California. The company has additional distribution in Northern California, Arizona, Nevada and parts of the Midwest.
- Better Booch also recently hired Josh Rosinsky as its vice president of sales, according to Food Navigator. Rosinsky, who worked in a similar position with Sipp Eco Beverage, will be launching a direct-to-consumer online business and adding new retail outlets.
Better Booch hadn't raised a penny of outside money until now. This change likely happened because the founders wanted to reach new audiences who may not already drink kombucha and make it available in more outlets across the country. The company also may realize that dozens of other competitors are making the trendy beverage, and it either needs to keep pace with them or wants to accelerate its growth to stand out.
Co-founder Ashleigh Lockerbie told BevNet the company also hasn't spent anything on marketing so far, using only word of mouth, events and social media. The brand now has a weekly production run of more than 6,000 gallons.
The funding from Crush Music's VC arm may help provide marketing assistance to the brand and enable wider name recognition — similar to how its parent company works to promote musicians. And since Crush Ventures has invested in Brooklyn Gin, Drops of Jupiter wine and Yola Mezcal, Better Booch may be able to forge partnerships with these brands to create more recognition for the collection. Better Booch also recently completed a rebrand with a new logo, colors and packaging in bottles and cans, which could draw increased attention.
With Rosinsky coming on board as vice president of sales, Better Booch is focusing on building a direct-to consumer online business and increasing product distribution beyond the limited number of states where it currently has shelf space. It's possible the brand could go nationwide with sufficient outreach to new shopper groups and a direct-to-consumer online business.
It could be a good time for the brand to expand despite some potential challenges for kombucha. Food Navigator noted sales of refrigerated kombucha and other fermented beverages rose 21% to $728.8 million in measured channels driven by strong distribution gains for the year ended February 24, 2019. Still, during the same time, velocities were down sharply. This means more channels are carrying the product, but it may not turning over as fast as before.
The trend has inspired some big names to jump into the category and expand their core portfolios. PepsiCo acquired KeVita in 2016 and Molson Coors bought Clearly Kombucha last year. In 2017, 301 INC, the VC 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.
Despite the growing competition, Better Booch could have a good chance at scaling up to a nationwide reach because of its current popularity, its relatively long ramp-up period and this new funding round. It also doesn't hurt to be positioned as a premium, small craft brand that has been independent since first being introduced at Los Angeles farmers markets seven years ago.