Millennium Products Inc. has so dominated the market for kombucha, the fermented tea drink, for 21 years that it is said to account for 70 percent of the $600 million carbonated ready-to-drink tea business in the United States.
It’s a market that shows no sign of fizzling out, and that has drawn a flood of challengers large and small into an industry centered in and around Los Angeles.
The latest, biggest entrant is PepsiCo. Inc., the soft drink behemoth that last month bought Oxnard’s KeVita Inc. for a reported $200 million. That deal came just as L.A.’s No. 2 kombucha player opened a plant in Torrance that is expected to boost its production capability tenfold.
Secure in its market lead, Millennium, founded and run by GT Dave, has moved to diversify its product line by adding a fermented coconut milk product called kefir.
The move, Dave said, is not a reaction to fear of an eroding market share for his core product but rather a natural progression of the lifestyle represented by the commercial U.S. kombucha movement, which he is credited with starting in 1995 with the launch of his drink.
“Kombucha just happened to be this thing that came into my life at a certain time,” said Dave. “It’s clearly not the only thing I’m passionate about. There are definitely other foods that haven’t been discovered.”
Indeed, Millennium’s lead is so great that even Pepsi’s entrance into the market is not seen as an existential threat.
“I think other companies are starting to encroach on GT,” said Virginia Lee, senior beverages analyst for London-based market research firm Euromonitor International. “But GT has such a head start, it will be hard to catch up.”
Still Dave, 36, worries more that deals such as Pepsi’s acquisition of KeVita, a maker of kombucha and other probiotic drinks, will result in the beverage losing its authenticity. He attributes the health benefits of the tea, which originated thousands of years ago in Asia, to helping his mother when she had breast cancer.
“It’s always risky when any big company steps into a market and does their version of something,” said Dave.
The drink’s rise has coincided with the decline in the consumption of soda, which hit a 30-year low last year, according to industry research firm Beverage Digest. Meanwhile, Lee estimates that the market for carbonated, ready-to-drink teas will reach $1.5 billion by 2020.
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