My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Cool Idea

The Rise of Kombucha in Asia Pacific

While the fermented beverage industry has been enjoying wholesome success in the West since the 1990s, Asian startups have just started banking on it
The Rise of Kombucha in Asia Pacific
Image credit: Pixabay
Former Features Editor, Entrepreneur Asia Pacific
7 min read

 

Steven Kehler keeps his “big momma” in the storeroom. The momma in question is a hunk of gelatinous and, well, rather gross-looking bacteria and yeast floating atop a vat of regular tea that will soon turn it into kombucha, a drink which is alive, probiotic, good for gut health and touted as a tonic for digestion, hair loss, even cancer. Kehler started brewing the effervescent and mildly alcoholic beverage after first tasting it at a local restaurant in Vietnam’s Ho Chi Minh City. “When we (wife and him) were introduced to kombucha, we instantly inquired about making it ourselves,” says the Calgary born, who came to Vietnam, along with his wife, seven years ago to adopt a child and made the “beautiful” Ho Chi Minh City home.

Two years later, in April 2017, Kehler turned his hobby of making kombucha at home for friends and family into a startup, Steve’s!, with an investment of US$20. The brand has since grown to include six flavors, including hibiscus rosehip, passion fruit, green tea and ginger lime, with a monthly sale of 500 bottles via Facebook, website and phone. His 300ml bottle costs 50,000 VND ($2.25 USD); 500 ml, 80,000 VND ($3.75 USD); and one litre 150,000 VND ($7.00 USD). “It’s still a small business but I never had to add any additional cash, it has been self growing,” says Kehler, adding 80 per cent of his customers are foreigners. “Most of these people have tasted it in the West. They understand the importance of a health drink like kombucha.”

THE ROOTS
In the past 10 years, kombucha has become an influential player in the global beverage economy, especially in the US, because of the growing demand for health products. The global market size of the the fermented beverage, made using SCOBY, or symbiotic culture of bacteria and yeast (often referred to as “mother”), is anticipated to hit $6.2 billion by 2026, according to a report by Acumen Research and Consulting, a provider of market research studies. It estimates the market is anticipated to grow with 23 per cent CAGR during the forecast time period. “The global kombucha market is growing at a steady rate, especially in developed regions like the Americas and Europe owing to the growing incidences of chronic diseases like diabetes, high blood pressure, cancer, and osteoporosis,” said Manjunath Reddy, a lead food research expert from market research company Technavio, in another report. 

Despite kombucha’s origin reported to be in China in 220 BCE during the Tsin Dynasty, after which it traveled to Japan with a physician named Kombu (rumoured to be from Korea), the beverage is more popular in the West. North America alone represented 59.4 per cent market volume in 2018. Major companies like Red Bull and Honest Tea (of which Coca-Cola owns 40 per cent) too have their own brands.

Vanessa Dew, co-founder and chief sales officer of Health-Ade, one of biggest kombucha companies in the US, believes one of the main reasons for the increased consumption in the West is the consumer is proactively looking for products that are organic and better for health. “The level of acceptance is higher, perhaps due to better education and exposure. With internet and social media, it has become easier for word-of-mouth and finding information about kombucha. In fact, you may find that many kombucha brands have only started appearing in the last 10 years. With the abundance of choices and high accessibility, it is not hard to see why it is more popular in the US,” says Kehler.

Dew, however, insists Asia certainly has the opportunity to be the world leader in organic foods and certainly kombucha. “I believe that consumer taste profiles, supply chain, regulation, and even the way in which consumers shop have to be disrupted in order for kombucha and other organic foods to have an accelerated growth track in Asia Pacific,” she says.

THE BEGINNERS
Asians are slowly realising the potential of kombucha as a profitable business. Several small players across India, Vietnam, China and Japan, and also Australia, hope to bank on the kombucha trend.

Delhi-based sisters Rebekah, 28, and Ariella Blank, 24, joined the bandwagon last year with their brand Awesome. Rebekah first tasted kombucha in the US while pursuing a degree in computer engineering. “As a competitive athlete, I was always looking for ways to improve my health. But since kombucha was expensive to buy, I learnt to brew it myself from a friend, who had interned with a kombucha company,” she says. She then taught the skill to her sister. They started by selling kombucha in smaller quantities to a handful of cafés in 2017. Today, Atmosphere Kombucha is available at 25 retail outlets and 30 restaurants in Delhi, Jaipur and Chandigarh; they also do home deliveries. “In one year, the demand has increased 10 times,” claims Rebekah. “It started as an edgy, hipster drink, but now people realise its health benefits.”

Kombucha is healthy simply because it is full of good bacteria, says Joseph Poh, the co-founder of Malaysian kombucha brand WonderBrew, which offers flavors like Markisa Breeze (passionfruit + mint), Purple Pari Pari (lemongrass + butterfly pea flower) and original (black & oolong tea). Poh first tasted the drink in Bali, and fell in love with it. Soon, he enrolled for a workshop by Boon, who had eight years of brewing experience. Poh discovered three key pain points that partially shaped the ideas of starting a kombucha brand in Malaysia: accessibility, value for money, and taste.

“Kombucha wasn't widely accessible, which makes it hard for more people to enjoy,” he says. More than 50 per cent of the kombucha brands in the supermarkets of India, Vietnam and Malaysia are dominated by costly imported brands from Australia and the US. “It is hard to find kombucha with tastes that appeal to Malaysians considering majority of them are accustomed to local beverages with a bit more flavor and taste,” he explains. WonderBrew, he says, aims to address all these gaps.

SOUND PROMOTION
Poh believes one of the biggest reasons for lack of popularity of kombucha is that it is restricted to being a side businesses. “They remain small scale and scattered all over for many years and mainly rely on word-of-mouth. Also, there is a lack of visibility, promotion and awareness about this drink until recent years whereby some local players started branding on social media (i.e., FB and Instagram),” says Poh. Thanks to the increasing health awareness, however, adds Poh, people are looking more into healthier lifestyle and alternatives to sugary drinks. “Gut health and probiotics have become the buzzword among local consumers,” says Poh, who plans to achieve 100 outlets target by the end of 2019. Since its launch in January, WonderBrew has experienced a CAGR of over 60 per cent increase in total bottle of kombucha sold. Of course, social media has played a critical role in popularising kombucha as the new modern and lifestyle drinks, especially among the millennials, adds Rebekah. “The only problem perhaps at the moment is pricing,” she says.

A PASSING TREND?
Critics says kombucha is just another stay-healthy fad that will soon fizzle out. Dew disagrees: “What’s not going away are two things: consumers searching for better products with real ingredients and gut health. Kombucha has the opportunity to be the millennial soda of the future.”

The challenge is about making this part of “people's lifestyle just like coffee and bubble tea culture in Malaysia,” says Poh.

A passing trend or not, the key players will play an important role to decide whether kombucha becomes a mainstream drink like in the US instead of a drink enjoyed only by the niche group, says Kehler. “I do think that there is a market cycle for kombucha, the West has not reached its peak yet as it is one of the fast growing beverage sectors. I believe we are just at the beginning here in Asia.”

More from Entrepreneur

Dustin's experience and expertise can help you monetize your message, build a marketing strategy and connect with influencers.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur