Has COVID-19 affected sales of fermented tea beverages?
As the end of 2021 approached, I decided that enough time had passed since the first pandemic measures worldwide so that, based on dozens of published international market analyses, a correct summary could be made of what impact they had on the Kombucha market. I didn’t want to touch on the topic of COVID-19, because everyone is talking about it anyway, but this is about business. We will talk about this multibillion-dollar business and how the fear of this disease and the measures to limit its spread have affected it. I will surprise you with a short answer – there is a positive trend in sales of existing brands, as well as new ones.
World market analyses register a convincing development in the market of fermented beverages and in particular kombucha. In the large-scale crisis that has engulfed the global economy, in which many businesses have suffered, the development of functional beverages and food is gaining momentum. According to FORTUNE Business Insights, the global kombucha market is worth $ 1.84 billion and is expected to reach $ 10.45 billion by 2026, showing a CAGR[1] of 23.2% growth over the forecast period.
But let’s see what exactly happened in 2019 and 2020. We look at these two years, because during them, in different strengths and time periods, the economies of many countries were put to serious tests. Enterprises and logistics warehouses were closed as a result of the need to limit contacts and social distance. Many businesses were on the brink of survival, and those that were more financially unstable closed. Many new projects were “frozen” and left for better times.
Uncertainty, fear and the crisis with supplies of raw materials have stifled most industries and negatively affected the development of the global economy. This is probably not something new for you, but I wanted to recall these events, because today in 2021 we somehow forgot that in 2019-2020 you could not even go to work freely. And what happened to the kombucha market during this period? GROWTH AGAIN!
Before we look at what is the reason for this, let me clarify that the growth in the years 2019-2020 is observed against the background of the rather unfavorable development of the soft drinks market. Estimated at 1,257.77 billion dollars, the decline in 2020 is nearly 30%. Normal levels are expected to recover in 2024-2025. A similar situation existed in 2008-2009. It is clear that on the one hand the segment as a whole has a huge decline, and on the other – part of it even in the pandemic 2019/2020 is developing at an enviable pace. This fact makes any project related to kombucha even more interesting and fascinating.
Let’s see what the reasons for the unstoppable rise of Kombucha sales during the pandemic are. Several teams of analysts provide guidance for understanding this economic phenomenon, which is viewed in two directions.
At a time when public attention is focused on health, a healthy lifestyle is gaining in popularity, and this includes the consumption of functional foods and beverages. According to the Institute of Food Technologists (IFT), more than 70% of the soft drink market in the United States is held by the functional ones. Stunning!
The market for probiotics is also growing, and so is the demand for Kombucha. Particular attention is paid to probiotic drinks. Most probiotic drinks are made from fermented milk – yogurt and kefir. Kombucha is also a probiotic drink that has the advantage of being able to be taken by people who have an intolerance to dairy products. The millennium and Z-generations are strongly oriented towards a healthy lifestyle and it is no coincidence that they are the biggest consumers of functional drinks. Another plus of Kombucha is that it can be combined with any diet and is practically a universal drink for any time of the day.
Another interesting trend in consumer attitudes, which is part of the reorientation of many people to a healthy lifestyle, is the reduction of alcohol consumption. According to the World Health Organization (WHO), 5.3% of all deaths are due to alcohol use and related diseases. There is a shift in consumer preferences for kombucha or other soft drinks. My personal observations are that the consumption of alcoholic beverages increased sharply during the lockdown, but this is not enough to change the market trend and is not a reason to include wine producers in the global health conspiracy 🙂
If you still need more reasons to start drinking more Kombucha, I will quote the 2020 study by the National Center for Biotechnology Information (NCBI), which states: “Consumption of kombucha helps maintain the immune system because of its antioxidant, anti-inflammatory and cholesterol lowering properties”.
The health benefits of taking kombucha are not new to fans of the drink, but such a specific statement made by an authoritative institution, and in the context of the COVID-19pandemic, gives a special incentive for new users.
The second reason why kombucha continues to gain market speed is the ability to achieve a high production margin. From large conventional productions to small neighbourhood Kombucha brewers – all apply specific know-how in the development of specific aromatic compositions, the use of fruits and herbs, which in turn contribute to an even greater health effect. The possibilities are thousands and it is this uniqueness of each manufacturer that allows for a higher rate of profit. After all, we are talking about a business and everyone wants their investments to have a high rate of return. Of course, you also need a lot of love for the craft to make a real kombucha!
But for now I will stop with the specific numbers and analyses. Let’s put it this way – this business has a high added value and a positive trend, because kombucha is increasingly valued by consumers for creating emotions and giving health. And this is rewarding!
A few words about the market in Bulgaria. Here, too, we follow global trends, ie there is an increase both in the volume of sales and in the brands offered on the market.
If until 2017 in the shops you could find only one Bulgarian and occasionally one imported brand, now there is a much greater variety. Four new Bulgarian brands were created. Unfortunately, one of the most technologically prepared could not continue its development. In my opinion, due entirely to marketing mistakes.
Another new brand is almost entirely export-oriented and has gained serious momentum. A brand was created, which was initially focused mainly on MLM sales, but I see that they are already present in the retail network. The fourth brand is rather regional, with a focus on Sofia. In 2020, there was another project we were working on, but unfortunately the stress of uncertainty deterred investors. Today, at the end of 2021, we consider this a mistake, but we believe that the interesting thing for this company is yet to come…
You can now buy 3 foreign brands on the Bulgarian market. They are more price oriented than the Bulgarian ones. My personal opinion is that the quality does not correspond to the higher price, but they have interesting tastes that are worth trying.
Unfortunately, I cannot provide you with specific numbers for market penetration, due to the fact that the industry statistics in our country have not yet identified a specific, separate group for kombucha or functional drinks. Sales of kombucha “flow” into those of “cold tea”, which does not give an idea of the specific state of affairs. The facts I share here about the market in our country are based on information from the largest traders of kombucha through all distribution channels, as well as personal contacts with manufacturers and importers in Bulgaria.
I would be happy if through this post I challenged you to consider investing in a business with great potential. But I would be even happier if I made you pour yourself a glass of kombucha. Just like I do every day!
Cheers!
[1] CAGR – Compound annual growth rate – an index that calculates the rate of development in percentages.
