The popularity of kombucha is showing no signs of abating, but consumers are becoming savvier, and their understanding of probiotics has increased.
According to Justin Nel, Lead Consultant, IRI, there is a growing awareness that a lot of the probiotics and thereby the benefits of kombucha are killed in the stomach acid before reaching the gut, which is making shoppers rethink their preferred brands.
“Looking at brand performance there is a movement towards kombucha products that provide the greatest chance for the probiotics to reach drinkers’ intestines and colon, this targeted release or encased probiotics are available in Perkii and Nexba both in value growth of 130 per cent and 316 per cent respectively,” he says.
The overall kombucha category is in value growth of four per cent for 2020 versus 2019 in the convenience channel, and it is these targeted release products that are driving the growth.
“Kombucha products offering targeted release or encased probiotics are driving this growth as consumers want to ensure the optimal efficacy and benefits. Meaning that the probiotics survive the stomach and make it to the gut,” says Nel.
According to Matthew Blake, National Sales Director, Rok Kombucha, an opportunity for retailers would be to consider splitting kombucha into two categories in-store: mainstream and authentic.
“Consumer awareness of the word kombucha has grown through marketing, however, we are continuing to see consumers become more educated regarding the difference in ingredients, process and benefits within the category,” he says.
“The kombucha category could be split into two sub-categories, which include mainstream kombucha (soft drink like, ambient, no sugar and diluted kombucha), which is very competitive with some cheap price points in the market.
“The second category continues to grow as consumer awareness grows, which is authentic kombucha (undiluted, low sugar and kept chilled to prevent further fermentation due to the living nature of the product).”
Innovation in kombucha
Natasya Wright, Organic & Raw Sales Director, MOJO Kombucha, says that recruiting new customers is the greatest opportunity for category growth.
“The P&C channel is extremely important to MOJO Kombucha as we want to be able to offer busy shoppers who are on the go a low sugar, gut-friendly alternative to traditional soft drink or juice,” she says.
“MOJO Activated Kombucha is currently our most widely distributed product in P&C, but in the past 12 months our team has introduced two new product innovations.”
These include MOJO’s new 55ml Gut Shot range, which has been highly incremental, with 50 per cent of sales to date being incremental to category spend, bringing new customers and sales to the category and retailer.
The second new release is Mojo Kombucha Soda, a soda with fibre that offers a prebiotic effect to support gut health. It comes in three flavours, including Tropical Twirl, Berry Blitz, and Cola Kiss.
“We always aim for best possible execution with our retail partners, often investing in point-of-sale pieces, packaging solutions and geo-targeted advertising to support success for all parties.
“For example, MOJO Kombucha Soda is packaged in bright, stackable shelf ready shippers for better on shelf visibility. We also offer our customers a custom point of sale suite and case stackers for off-location displays,” says Wright.
Meanwhile, Rok Kombucha has developed a new range called Rok+, which comes in five SKUs, including Immunity, Clean Energy, Chill, Beauty, and Recovery.
“Following the functional drink trends, we have developed a lightly sparkling functional range of beverages called Rok+, infused with functional adaptogens, probiotics, botanicals and nootropics.
“We believe the range is well suited to P&C channel and have plans to present at upcoming range reviews,” says Blake.
The kombucha category has followed similar trends to what transpired for most beverage categories in P&C, with the COVID environment leading to a decline in impulse sales, particularly in CBD and inner-city locations, partly offset by strong growth in suburban and regional locations. But with Australia reopening and people having a more health-conscious mindset, brands are starting to see growth once again.
One of those brands is Remedy Drinks, which according to the latest quarter of data from IRI, currently holds 67 per cent market share of the category through convenience, which is up around 10 per cent from a year ago.
Santino Luciano, General Manager – Sales, Remedy Drinks, highlighted the brand’s strong growth over the last quarter and said that the P&C channel is hugely important in driving trial with new consumers.
“One thing we have picked up in our insights is that kombucha is purchased mid-afternoon at the exact same time as a sugary soft drink. Being front of mind as a healthier alternative is therefore something we are focussing on,” he says.
“P&C is massively important to us in helping make Remedy more accessible and encouraging trial, capturing people on-the-go to give them a better, tastier alternative when it often matters most.
“We’ve made some great inroads already, but we believe we can convert a lot more people to choose a Remedy over another fizzy drink filled with sugar or artificial ingredients. Our P&C retail partners are actively looking to evolve their ranges across the store to make them healthier, Remedy has a responsibility to support this evolution through kombucha and other beverage offers.”
Across Remedy Drinks’ portfolio, kombucha is the top performer as a range across all brands, with its hero 330ml glass impulse pack being a favourite across the P&C channel.
Flavour wise, Raspberry Lemonade has been a mainstay leader for some time, followed closely by Ginger Lemon, however a couple newer flavours have travelled up the ranks very quickly with Mango Passion and Wild Berry both performing strongly.
“We’ve recently launched a Cola kombucha flavour, which we believe has huge potential to recruit new consumers to kombucha, or more specifically Remedy, by giving them the world’s most popular soft drink flavour in kombucha form. It’s early days but already showing really positive signs,” says Luciano.
“In terms of NPD to come, all I can say is watch this space in September when we will be launching something completely new for us and completely new for the P&C channel.”
Advice for retailers
When it comes to pushing kombucha sales through P&C, Luciano’s advice to retailers is, “don’t write kombucha off as a niche health offer”.
“Consider how you can position it to become a consideration for the consumer who wants a refreshing drink but doesn’t want to sacrifice either health or taste. Think about proximity to offers like sparkling water or diet soft drinks. Kombucha is generally priced at a premium, so converting a water or soft drink purchase into a Remedy is going to deliver greater sales to the store.
“We’ve also seen good results in P&C from bundling Remedy as a meal deal with healthier food options like wraps, sushi, salads and healthy snacks. Our other point of difference is that we can be sold out of the fridge and have had some innovative P&C retailers begin trialling ambient off-locations with our four-packs to tap into our highly loyal heavy consumers.”
Wright from MOJO Kombucha agrees with this strategy, saying: “Look at meal bundling as 43 per cent of kombucha is consumed with meals (Colmar Brunton 2019). Chilled off-location ranging alongside ‘grab-and-go’ food options are an interesting way to drive trial by tapping into a key consumption occasion.”
Consumers have shown that they are willing to pay a premium for a product that they know will meet their authentic kombucha needs. Rok Kombucha’s Blake suggests placing premium, authentic products with better eye-level positioning.
“My advice for retailers to upsell any beverage to kombucha is that it is a great alternative to a full sugar beverage, with a full-bodied taste, plus the added benefit of probiotics for gut health.
“If it is the Rok Kombucha difference, then also share that only real ingredients are used (no natural flavours or sweeteners), made by an award-winning winemaker in the premium Margaret River region, but more than anything we are an Australian family owned and made product,” he said.
This article was written by Claire Hibbit for the June/July issue of Convenience & Impulse Retailing magazine.