Fermentation Farm’s Painstaking, Community-Based Approach to Kombucha Leads to Growth and Popularity

The story of Costa Mesa, Calif.-Fermentation Farm begins much like many others, with a mom in search of better nutrition for her children. From that inspiration, Orange County’s Yasmine Mason, a chiropractor by trade, decided to share her discoveries with the world and Fermentation Farm, a hub for all things cultured and fermented, was born.

Brad Hill joined Fermentation Farm a few months after it opened in 2014, is now the director of marketing. He brings to the mix his background as a digital marketer and personal mission to spread the gospel of health eating. Hill, with great passion, speaks to Fermentation Farm’s place in the community.

“When ownership first started, they were not sure the store was going to go. They wondered if people were prepared to jump on board and accept this new idea of fermented food products,” recalled Hill. “The idea was to build it like a co-op where people in the community invest in the idea.”

As with other co-ops, Fermentation Farm charges a membership fee–$5 per month or $25 for lifetime access. Hill said one reason for the charge is to recognize the dedication that goes into their production process. Ingredients are hand peeled, and every step of making kombucha, fermented vegetables and sauerkraut (to name a few products) are done with painstaking care.

Hill sees Fermentation Farm’s members—now numbering more than 2,100– as participants in a crowdfunding exercise much like you would find on Kickstarter. As the number of fermented followers grows (the folks aren’t fermented, but the probiotic delights are), the business will expand. For example, as the ranks of its consumers grew, a second kitchen opened two doors down from the main store with a new brewing facility in the works which will pump out 100 gallons of kombucha per week. The store’s marketing guru says the goal is to keg more of the kombucha and get it into local cafes and restaurants.

The store has become more than a center for Fermentation Farm’s own products which include fermented soda, water kefir grains, kits for home brewers and even fermented cod liver oil. With the spirit of community as its mantra, the retail space has become a hub for local artisans to sell their goods. Hill said, at this point, the store is split 50-50 between its own products and those from outside vendors.

Growth plans for Fermentation Farms follow a logical path. For a business that deploys old-world techniques of creating probiotics goodies, the future is built on a decidedly modern approach. “One nice thing about membership is that we are able to gather data on our customers,” Hill explains. “With that information, we know other possible areas of expansion based on where our customers live. It gives us a built-in market.”

Describing Fermentation Farm as a retail storefront that sells trendy probiotic and gluten-free goods does not do it justice. The store blends small-batch crocks of Lacto-fermented vegetables with such modern touches as in-store seminars and healthy cooking classes (led by Hill). As you enter the store, a Kombucha bar is on the left and a retail space on right. Hill said they want people to immerse themselves in the experience by tasting taste everything and asking questions. “We want to make sure people are really happy with what they are getting,” Hill noted.

The Costa Mesa store features 15 flavors of kombucha, with six taps constantly rotating. Theirs is a fruit-based kombucha that uses a 21-day fermentation, which includes organic cane sugar as well as green and black teas with local fruits.

“Our goal is to be the best fruit-based kombucha in Southern California,” Hill adds. With the small batch approach, combined with the focus on “community” and smart grown, there is every reason to believe Fermentation Farm could become a Southern California staple.

 

Will The Global Kombucha Market Really Be Worth $1.8 Billion by 2020?

It’s a scene out of Shark Tank: “Where did you get that crazy valuation?”

I found a report from a few months back from the research firm, Micro Market Monitor, which suggests the Kombucha market will be worth $1.8 billion by 2020, after being worth half a billion in 2015. The math says that’s growth of 25% compounded annually.

Without a careful evaluation of its research methodology, I would be remiss in poking holes in the India-based research firm. However, after more than 20 years of working in the market research field, and seeing lots of over-hyped projections fall flat on their faces, I need to think aloud about the viability of such growth. I don’t necessarily think a number such as $1.8 billion is off –but it’s worth some thoughtful rigor.

For example: the U.S. soda (soda pop or pop depending on you region) is worth north of $97 billion, according to Statista. Figure 10x that for a global number. The Ready to Drink Tea (RDT) market is past $50 billion worldwide and growing at a slower rate that is projected for kombucha. What sort of clues can we gather from this data?

Soda and tea are driven largely by well-established global brands with bottling facilities in every nearly country. These companies such as Coca-Cola and Nestle have billions to spend on marketing. Both beverages have cracked every channel of distribution, often dominating shelf space in supermarkets and convenience stores. New competitors emerge—some with new angles such as less sugar or sparkling flavors—but fail to make a dent in the leaders’ revenues. The hope of many newcomer–which is true in any business–is that Coke, Pepsi, Nestle or Tropicana will snap up their brand in a lucrative buyout. And that’s a key: soda and (RDT) upstarts have a clear exit strategy the day they sell their first can or bottle.

Currently there are a number of kombucha brands that seemingly dominate the landscape and are featured on the shelves of such retailers as Whole Foods, Sprouts, and even Target. It’s likely these leaders will remain recognizable for a while but two—possible three—events could change the face of the market and prove the $1.8 billion market number wrong.

First relates to overcoming the scalable bottling issue. As many brewers have told me, the reason they cannot expand is that if they open a second plant in another state—one a few thousand miles away—they lose quality control. These same brewers are hesitant to work with copackers inexperienced with the temperamental nature of this fermented brew. Alongside that concern is the fact that kombucha (unlike soda or tea) needs to remain refrigerated for transport. Such a requirement adds cost for long-haul distribution.

Secondly, all it takes is for one buyout domino to fall for the industry to take off. When whatever research a company like Coca-Cola uses to determine precise market timing indicates go-time for a kombucha product launch, the Atlanta-based giant will probably buy an existing brand. After Coke, every major beverage brand (and some food brands) will start a feeding (or drinking) frenzy in the kombucha market.

In the wild card position is Starbucks. While I have not looked at every Starbucks, the ones I frequent don’t have kombucha among their cold bottled drinks. Adding a kombucha or two—or perhaps even having some on tap—will help obliterate a less-than $2 billion four-year forecast.