Molson Coors has acquired Clearly Kombucha, a California maker of the fermented tea beverage, for an undisclosed amount, according to a MillerCoors blog post.The kombucha company joins Molson Coors' U.S. business, MillerCoors, as part of its craft and specialty unit called Tenth and Blake.
Clearly Kombucha was started in 2009 by Ali Zarrow and Caleb Cargle, who were then Stanford University students. They will stay with the company after the deal closes.
In a note to distributors, Tenth and Blake President Pete Marino said the kombucha category is in its early stages. "Molson Coors, MillerCoors and Tenth and Blake are ideally suited to help Clearly Kombucha grow in the years ahead by driving greater awareness, strengthening its brand reputation and boosting retail availability," he said.
As beer companies struggle for growth, Molson Coors has been looking for potential investments in areas beyond its signature brews. This is the latest investment in non-alcoholic beverages after the company took a minority stake last year in Bhakti, a Colorado company that makes ready-to-drink chai tea.
Following an initial sales jump from its 2017 purchase of the rest of MillerCoors from SABMiller, Molson Coors has experienced sagging beer sales. Sales of its flagship brew Coors Light fell 4.1% in 2017. Overall, the MillerCoors division has watched its market share slip from 30.1% in 2009 to 25% a year ago. This market softness has afflicted most of the U.S. beer industry, leading brewing companies to diversify into other categories, including non-alcoholic drinks that won't compete with their main products.
Other companies taking this path include AB InBev's Anheuser-Busch, which last summer bought Hiball, a maker of natural energy drinks and organic sodas. In 2016, AB InBev partnered with Starbucks on a line of ready-to-drink Teavana products that the beer giant makes, bottles and distributes. It's evident that, as beer companies struggle to turn around their core brands, they realize they need to be in other beverages popular with consumers in order to grow.
Functional and probiotic beverages have proved to be a popular space for M&A activity. In 2016, PepsiCo bought KeVita, a kombucha and vinegar tonics maker, and it recently launched a Tropicana Essentials Probiotics line. 301 INC, the venture capital arm of General Mills, led a $6.5-million investment round for Farmhouse Culture, a startup that makes fermented and probiotic foods and beverages. And last summer, Peet’s Coffee took part in a $7.5-million round of funding for Revive Kombucha.
The global kombucha market is projected to hit $1.8 billion by 2020 as people gravitate toward the fermented tea drink known for its health benefits. While not all kombucha is organic, more than 90% of its global market share is, Statista noted.
Its popularity stems in part from millennial interest in better-for-you foods and drinks and a general focus among consumers on gut health and food as medicine. Clearly Kombucha is organic, non-GMO, gluten-free, vegan and kosher — all qualities that check important boxes for the increasing number of people looking for health and wellness products.
The California company will now have the investment and distribution heft of Molson Coors behind it and the founders on board to provide a guiding hand. They posted a Facebook message to that effect June 6, writing that the deal with Molson Coors had been in the works for some time and would allow them to grow the brand in "exciting ways."
There could be more acquisitions coming for the brewer. A Molson Coors spokesman told BevNET that the company continues to look for other investment opportunities, particularly in beverages making brewed, fermented, or distilled products.