Will Savitri, who founded and runs Katalyst Kombucha, a nationally distributed brand based in Greenfield, Massachusetts, describes Whole Foods' reaction as "freaking out." When the company asked Savitri if there was any possibility his products contained more than a trace of alcohol, he says "I, being an honest person, said, 'well, it is possible.' They said: 'well then, we're pulling your product.'"
Whole Foods declined to provide a company official for an interview; in a statement, Whole Foods said: "To ensure all products are in regulatory compliance, our Kombucha suppliers have been working to address this labeling issue for their products and for the category as a whole.'
United Natural Foods International, the largest distributor of health foods to stores in the U.S., was also involved in the conversation. "Whole Foods is our largest customer, and we're in close contact with them on many, many issues," says John Raiche, the distributor's national vice president of marketing. "When something like this arises, we certainly want to communicate with our largest customer."
While Raiche calls the Lohan and AA rumors "the stuff of urban legend at this point," he confirms that the distributor contacted suppliers to access third party alcohol-content testing, and "no one sent us testing saying here's our exact number."
So United Natural Foods fell in step with Whole Foods, and stopped distributing kombucha, including popular GT Dave's Synergy Kombucha, the Beverly Hills-based brand favored by Lohan, as well as Madonna and Halle Berry.
Predictably, avid kombucha fans freaked out. "My patience is the size of a quinoa! I need more Kombuch!" one fan wrote on GT's Facebook page.
Another begged: "KOMBUCHA!!!!!!!! Please I need it!!! Hurry Do you need testimonials sent to the feds??"
United Natural Foods did not take the step of pulling a popular product lightly. But executives worried that, without solid evidence to the contrary, they could be accused of illegally distributing alcohol, Raiche says. Then there's the lingering question of bottle-to-bottle consistancy. "You have a little bit of a Catch-22, where you can't test perfectly," Raiche says. "We have some companies saying that it might not be possible – but we have others that are trying, and we have been shown testing that shows the reformulated products are well below the standards."
Even if testing satisfies United Natural Foods, there is still the question of what Whole Foods will do. Before the flap, the company seemed committed to expanding the category, going so far as to provide some small kombucha brewers with loans. Entrepreneur Adam Goodman, for example, was able to build three kombucha fermentation rooms in Santa Cruz, California, thanks to the retailer's financial help. But that was when kombucha wasn't taboo.
For now, kombucha producers face an uncertain future. Some companies are investing in expensive equipment to extract alchohol from their brews, others have cleared the hurdle of third-party testing. Over the past two weeks, for example, United Natural Foods has re-introduced distribution of High Country and Vibranz brands but, Raiche says, "Before we agree to reintroduce any more brands, they must show us third-party testing of where the alcohol content is of their product."
Still other brands seem unwilling to tinker with the formula that made their products so popular in the first place. GT's did not return calls requesting an interview, but a post on the company's Facebook wall states, "We won't be participating in the watered-down reformulations that are appearing on store shelves lately. We only want to make real Kombucha — or nothing at all." If GT's is considering retaining its original formula, that would mean beginning distribution as an alcoholic beverage.
Will Savitiri of Katalyst, which has cut production by 75 percent since Whole Foods dropped its product, says that he is in talks with the chain to resume distribution using a new formula. "They're our biggest customer, so I'd love to be back on the shelves there," he says.
Savitri's in an interesting position: He also runs a winery on his property, and believes he could obtain a license to sell kombucha as an alcoholic beverage in less than a week. But he's hesitant to change markets. "If we decided to not sell in health food stores, we'd lose 90 percent of our business, and have to build a market back up in a different way," he says. Indeed, one aspect of this episode that he has enjoyed is going back to his roots, working with local health food stores and small distributors, which have been the backbone of its sales market, to get cases on shelves.
In Maine, meanwhile, Hallweaver is plowing ahead, looking for a solution. "We have submitted our application to be a winery, which is what the TTB is suggesting for us," he says. "They seem to be trying to expedite that and help out kombucha manufacturers who want to play by the rules."
He's aware there's a lot of federal money at stake if differently taxing kombucha sales comes into play, and is trying to imagine a future in which his healthful tea product is positioned in an entirely different way.
"Kombucha could be an appropriate, healthy alternative to beer at lunch, or a great start to an evening," he muses. "Admittedly, these are not ideal markets. But you play with the hand you are dealt."
Read more: "A Cold Call, a Blog, and a $20 Million Lawsuit."
