• 🥭 Hard Kombucha’s Path to Success
•  💸 Urban Chestnut Faces 2 Lawsuits
• 🍺 Prost Expanding to Utah
• 🚛 Atomic Brands Moves in IL, IN
• 🗣️ A-B Wholesaler: “It was really hurtful personally”

Five years ago, hard kombucha was expected to become the next big “fourth category” product, building off the initial momentum of hard seltzer, but promising bolder flavors and potential gut health benefits. 

The fermented beverage accounted for $3.8 million in dollar sales in Circana-tracked off-premise channels in 2018, more than double the previous year. Meanwhile, the overall kombucha segment (non-alc and bev-alc) was a $1.2 billion industry in the U.S., and was on pace to be a $5.45 billion industry by 2025, according to Grand View Research, Inc.

By 2020, total kombucha had grown to just $1.8 billion, and hard kombucha made up about $12 million of that. However, in the past two years, hard kombucha has faced declining numbers, even past the initial effects of the COVID-19 pandemic.

The apparent stall of the segment is not a mark of failure, but rather a harsh mix of bad timing, off-point consumer marketing strategy, and unrealistic early growth expectations, according to many still playing in hard kombucha. Slow and steady might still win out, they believe.

NOVA Easy Kombucha founder Tiago Carneiro told Brewbound: “I saw some brands trying to go national and then failing and then coming back to their original markets. They tried to buy market expansion, but the velocities weren’t there.”

Carneiro, who is also the creator of NOVO Brazil Brewing, launched NOVA during the initial hard kombucha boom in 2018. The brand is headquartered in San Diego, part of the largest hard kombucha market in terms of volume and consumer demand.

Despite the push to go national in 2018/2019, NOVA’s strategy is to focus locally, creating a brand that connects to consumers directly in San Diego, rather than marketing to a broader audience. Carneiro is also highly critical of the early strategies embraced by producers, retailers and investors when it came to expanding hard kombucha.

Carneiro said of the initial exponential growth of the segment: “The market was not growing – it was growing because you were forcing the growth. Once you don’t have money anymore, you cannot do big promotions, you don’t do big price discounts anymore and then people stopped [buying].”

😬 Kombucha’s Reputation Problem

Non-alcoholic kombucha brands highlight the health-centric characteristics of the beverage, including high levels of probiotics. Initial alcoholized versions of the drink leaned into the “better-for-you” image. But marketing alcohol as “healthy” is hard (and a great way to open yourself up to legal action). 

Mate Maker co-founder Justin Medcraft said: “We need to be responsible as brand owners to be transparent with people and tell them that drinking isn’t healthy – you’re not going to be functionally better for drinking this.

“The category back then was really struggling with this messaging, because it was so dependent on how kombucha had established itself through the functionality. That’s been pushed so much as a core message where people don’t care.” 

The key for hard kombucha to return to growth is to attach itself to those characteristics that factor into consumers' buying decisions, including flavor and quality, Medcraft said. 

Insiders can read more here, including keys to hard kombucha growth, and comments from leaders at Jiant, JuneShine and InvestBev.

Urban Chestnut Brewing is a defendant in two lawsuits from lenders claiming the St. Louis, Missouri-based brewery owes them nearly half a million dollars.

Both loans were made in 2013 – one for $50,000 from Lester Nydegger and the other for $100,000 from David Luetkemeyer and Pensco Trust Company. The lawsuits were filed in St. Louis County Circuit Court in May. 

Nydegger is seeking $330,680.33 in payment, which includes the $50,000 original loan, $242,500 in late fees and $38,138.33 in unpaid interest, according to his complaint, which was brought against Urban Chestnut co-founders David Wolfe and Florian Kuplent on May 30. 

Luetkemeyer is seeking damages in the amount of the $100,000 loan, “plus all accrued interest, late fees and costs,” and “reasonable attorney’s fees.”

Both plaintiffs claim Urban Chestnut has not made payments since 2016. Both loans matured in 2023.

Insiders can read more about the loans’ schedules and Urban Chestnut’s output.

Colorado-based lager brewer Prost Brewing will enter Utah, its seventh state, with Anheuser-Busch InBev-aligned General Distributing, the company announced.

David Deline, president of Prost, said in a press release: "Prost is bringing German craft bier perfection to the state of Utah. We’re on a mission to bring good bier to good people. In partnership with General Distributing, we’re proud to share our authentic biers and our passion for traditional German brewing in Utah."

Prost will launch in Utah with a variety 12-pack that’s exclusive to the state and includes Prost Pilsner, Kolsch and Hefeweizen. In addition, Prost will distribute can 6-packs of Vienna Lager, Dunkel and its rotating seasonal offering. 

The brewery also distributes within Colorado (Coors Distributing, High Country Beverage, Keg 1, Mountain Beverage, B & K Distributing, A & L Coors), Wyoming (Bison Beverage), Kansas (Central States Beverage, Crown Distributing, LDF Sales & Distributing), Nebraska (Premier Beverage, K & Z Distributing) and Idaho and Montana (Hayden Beverage in both).

Atomic Brands is switching distributors in Illinois and Indiana. 

The maker of Monaco Cocktails is transitioning in Illinois to Reyes Holdings subsidiary Chicago Beverage Systems, as well as G&M Distributors (A-B), LaMonica Beverages (A-B) and Rinella Distributing Company (A-B).

In Indiana, the company is going to Reyes subsidiary Monarch Distributing, Indiana Beverage (Molson Coors) and Five Star Distributing (Molson Coors). The transitions are expected to close in mid-July.

Atomic Brands was previously distributed by Breakthru Beverage in Illinois and RNDC in Indiana.

Monaco is the No. 2 spirit-based ready-to-drink offering in the Midwest, per a press release from Reyes.

Atomic Brands founder and CEO Don Deubler said in the announcement: “We see these strategic partnerships as the future where our teams can focus on building an infrastructure that prioritizes a multi-channel approach with high-touch, in-person customer support. 

"We look forward to continuing our relationship with Reyes, as well as the opportunity to work with Koerner Distributor, Inc., G&M Distributors, LaMonica Beverages, Rinella Distributing Company, Indiana Beverage and Five Star Distributing, so that we can take our portfolio to the next level."

“I’m trying to understand what my kid is going through and then this happens,” the owner of an independent Anheuser-Busch InBev wholesaler in the Northeast, who has a transgender child, shared with ABC News when discussing the fallout from the conservative-led boycott of Bud Light last year. 

The anonymous wholesaler told ABC News that they have taken a 30% pay cut and are considering retirement.

The distributor continued: “It’s still very upsetting. It’s very difficult to come in every day and look at those sales numbers, knowing I have a responsibility for everyone here.”

The Brewbound Podcast will feature an interview with Bernstein analyst Nadine Sarwat breaking down the factors influencing a potential sale of Boston Beer Company, as well as potential suitors.

Also on this week’s agenda is Ball Corp’s investor day, and a Circana webinar giving “a fresh take on craft beverage alcohol.” We’ll have any highlights that may come out of the events. 

The Kelce brothers and Hulk Hogan are in the beer business now. 

Super Bowl champions Jason and Travis Kelce are now the “largest investors” in Garage Beer, the Ohio-based light lager brand. The brothers and New Heights podcasters “will be involved in every aspect of the business, including brewing, distribution, sales, marketing and national expansion efforts,” per the announcement. 

The Kelces were also joined in the light lager wars of 2024 by Hulk Hogan. The former pro wrestling champion and former A-B InBev exec Terri Francis launched Real American Beer, via Breakthru Beverage in Florida, Missouri, Colorado and Minnesota. 

Hogan, who announced his sobriety in 2023, has since adopted a “moderation lifestyle,” Francis told Brewbound. 

Those moves come amidst an increased focus on light lager in and out of craft. They also come under a backdrop of continued sales declines for A-B’s Bud Light. However, as Brewbound’s Zoe Licata noted, the declines keep coming for Bud Light, but they’re decelerating on the lower base after -20%-plus declines last year.

Get more scan data, including a mixed performance for Voodoo Ranger, which is still on the ascent even as some of its offerings are on the decline.

In other news, Athletic Brewing has acquired another former Ballast Point San Diego-based production facility. This one is a big one in Miramar that will double the non-alcoholic beer maker’s production once it opens in 2025.

Creating experiences is a key to the future of the business. Burial Beer’s Doug Reiser and Brewbound’s Jess Infante discussed on the latest edition of the Brewbound Podcast. Plus, an Anchor strategy session with the Brewbound team.

Schilling Hard Cider is expanding into hard lemonade and the early returns are looking good.

It was a week of legal news too:

• Judge Rules in Favor of Anderson Valley in Lawsuit with Reyes’ Harbor
• Investor Lawsuit Accuses Big Storm Brewing of Money Laundering, Brewery Founder Denies Allegations

The latest edition of A Round With … features Alvarado Street’s J.C. Hill, discussing a decade of brewing, lagers and working with his dad.

Catch up on more headlines of the last week:

• Crowns & Hops Named Samuel Adams Brewing the American Dream Winner
• CGA: All 3 Bev-Alc Categories Record Growth Vs. Average Sunday on Mother’s Day
• CPI: May Beer Inflation Outpaces Total Bev-Alc, Wine and Spirits At and Away From Home
• Pronghorn Makes First NA Investment in Mocktail Club
• Southern Glazer’s Founder and Chairman Harvey Chaplin Dead at 95.

For a funnier take (and more GIFs) on the beer biz, here’s Brewbound’s Insider’s Week in Beer.

Brewbound is excited to announce three additional speakers for the Brewbound Live business conference December 11 and 12 in Marina del Rey, California. 

The two-day conference will bring together leaders from all three tiers for business-focused conversations on driving the bev-alc industry forward, data presentations, networking and brand building at the Marina del Rey Marriott. 

Joining the speaker roster are:

• Arthur Moye, owner and CEO of Full Circle Brewing;
• Kaleigh Theriault, director of thought leadership, beverage alcohol vertical, NIQ;
• Brian “BK” Krueger, VP of business development and portfolio strategies, Bump Williams Consulting.

They join previously announced speakers include: 

• Natalie Cilurzo, co-owner, Russian River Brewing;
• Peter Skrbek, CEO, Deschutes Brewery;
• Lester Jones, chief economist and VP of analytics, National Beer Wholesalers Association;
• Jennifer Hauke, founder and president, Draftline Technologies.

Additional speakers will be announced in the coming weeks. Interested in speaking? Follow this link to see our speaker guidelines. 

In addition to the mainstage programming and networking parties, Brewbound Live will feature opportunities for one-to-one conversations between brewers and bev-alc brands and retail buyers from chains such as Whole Foods Market. Registered attendees will be considered for meetings with buyers, as space is limited. Find out more details here.

Brewbound Live tickets are available now.