Small Kombucha Brewers Find Themselves in Hot Water
Dozens of small brewers suddenly in dire straits as the government weighs whether the popular bottled tea should be regulated as an alcoholic beverage.
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Booch or Hooch?: Amid concerns that its alcohol content is high, kombucha has been pulled from many store shelves.
Demand for very few products has grown as fast as that for kombucha, the fizzy, tea-like beverage with the tart, vinegary taste. Packed with probiotics because it's brewed with a living culture, kombucha has been promoted for aiding digestion, boosting energy, and providing other health benefits.
During the product's meteoric rise, celebrities talked it up, Whole Foods embraced it, and dozens of small brewers sprang up to meet burgeoning demand. Sales doubled annually for the past four years, reaching $150 million in 2009.
Then, just as suddenly as stores started stocking kombucha, various brands of the drink disappeared from beverage cases around the country.
What happened? Interviews with small producers and industry insiders suggest an intricate web of events that led to the nascent's industry implosion. The story seems to begin with a retired software entrepreneur in Maine who wanted to teach his daughter a lesson in entrepreneurship, and ends with a federal inquiry into the tea's content. Along the way, the country's largest natural foods retailer pressured a major distributor into halting national delivery of kombucha.
The core question spurring the sudden distribution lockdown: Is the 'booch… hooch?
Though marketed as a healthful beverage, a variety of kombucha (pronounced com-BOOCH-ah) brands appear to exceed one half of 1 percent of alchoholic content—the legal definition of a non-alcoholic beverage. The federal Alcohol and Tobacco Tax and Trade Bureau is testing and reviewing dozens of kombucha varieties to determine whether they should be taxed and distributed as spirits.
News of the inquiry has sent makers of the tea scrambling to rework their brewing techniques and tea formulas. But solving the problem is easier said than done. Minimizing alcohol-content in kombucha is a tricky thing, because kombucha is a raw, fermented food. Due to a complex fermentation process, individual batches and bottles vary in composition, but it appears quite likely that at least some brands — if not most — do exceed the legal limit. Pasturization could help bring the drink's alcoholic content down but would, purists say, defeat the purpose and health benefits of kombucha.
The issue is further complicated by the fact that neither the government nor anyone else knows how many small kombucha producers exist. A guidance issued by the TTB reads: "As a result of the inquiries received on this issue, TTB is coordinating with the Food and Drug Administration to ensure that kombucha products that are currently on the market comply with federal laws." It continues: "At this point in time, we do not know how extensive the problem is." A TTB spokesperson notes that if kombucha is classified as an alcoholic beverage, any retailer who sells it would be subject to federal excise taxes.
Chris Hallweaver, co-founder of Maine Kombucha Company, has been at the center of the controversy almost since it began. Hallweaver started brewing kombucha after his daughter, a Vassar College graduate and kombucha enthusiast who home-brewed the tea, took a yearlong trip to India. He started tinkering with her brewing equipment, and developed a fondness for kombucha. Together with a partner, they started a company.
"I thought, at very least, this is going to be a great way to teach my daughter about starting a business," Hallweaver says.
As the company prepared to distribute locally in Portland, Maine, Hallweaver contacted the state's Department of Agriculture. "They didn't know a thing about kombucha," he says. "So they started testing it, and asking around."
As Hallweaver tells it, Maine's Department of Agriculture asked local colleges for advice, and the inquiry made its way to Cornell University. A professor there replied with a scathing note, saying she'd tested myriad varieties of kombucha, and each of them contained between 2 and 3 percent alcohol. The explanation? When a bottle of kombucha is sealed, the bacteria growth is halted and the beverage's alcohol content soars. The professor allegedly wrote that once kombucha is bottled it's a "hand grenade."
Hallweaver was baffled. How was it possible that dozens of brands were selling their products, distributed as tea, nationally?
"I decided to call the regulators' bluffs," he recalls. "I said, 'if you believe there's a problem and you won't license us, you can't sell anyone's.' We went up to the Department of Public Safety's alcohol enforcement branch, and they sampled all the kombuchas. And every single one was over the legal limit."
Around the same time, Whole Foods, the country's largest natural foods retailer, was reviewing kombucha. A spokesperson for Whole Foods, which is based in Austin, Texas, would not explain why it took a look at the product, but many industry insiders believe that several state chapters of Alcoholics Anonymous, including Hawaii's, raised questions about the drink's alcoholic content.
The kombucha-is-alchohol meme went mainstream in June when a slew of tabloid reports claimed that Lindsay Lohan's alcohol-monitoring anklet issued a warning after she drank kombucha. (The report was erroneous, and Lohan tweeted, "FYI #kombucha was not the reason that my scram went off — i wouldn't of been allowed to drink it if that were the problem.. i love kombucha.")
Around this time, kombucha brewers claim that Whole Foods asked them to submit samples for product testing. When tests of some bottles came back positive, suppliers say they were pressured to pull their products from shelves. Honest Tea, the all-natural beverage company in Bethesda, Maryland, that had recently begun selling kombucha, quickly complied to its largest retail account's wishes. "Frankly, the labeling issue upset Whole Foods, and that upset us," says Samme Menke, an Honest Tea spokesperson.
