Kombucha’s the real thing for Coca-Cola

The Coca-Cola Company has hitched its wagon to kombucha, a naturally fermented tea that is one of the fastest-growing beverage categories in Australia, after buying the nation’s biggest producer of the drink.

The purchase tilts its portfolio slightly away from fizzy soft drinks and towards an organic brew aimed at the popular “gut health” movement.

The US-based Coca-Cola group yesterday announced it had bought for an undisclosed sum Adelaide-based Organic & Raw Trading Co, which makes the MOJO brand of naturally fermented, live culture, organic kombucha drinks.

The deal is a big win for founders Anthony and Sarah Crabb, who created the business less than 10 years ago after they were introduced to the beverage by a friend and began experimenting with brewing kombucha in their kitchen.

Now with more than 60 staff and a factory in South Australia, MOJO is one of the leading brands in the category, which is growing at rates of more than 150 per cent to make it the fastest-growing alternative to soft drinks.

The Coca-Cola Company has long realised its traditional consumers were shunning Coca Cola for beverages that claim to be healthier, or simply offer an alternative to carbonated drinks, with water brands proving a successful brand extension. Coca-Cola further diversified last month, buying Costa Coffee, one of Europe’s biggest coffee chains, for $US5.1 billion.

Locally, Coca-Cola’s bottling partner, the ASX-listed Coca Cola Amatil, has also re-engineered its portfolio to lure health-conscious drinkers by buying bottled-water businesses and coffee brands.

CC Amatil chief executive Alison Watkins has previously indicated an interest in kombucha, and it is proposed that the bottler will take on sales and distribution for Organic & Raw’s range.

“In just over eight years, Organic & Raw has gone from selling MOJO at a local farmers’ market to producing one of Australia’s leading organic kombucha brands,” said Vamsi Mohan, president of Coca-Cola Australia.

“Our goal is to bring MOJO to more Australians by making it available in more places across the country. Consumers will be able to see the same great MOJO products on more store shelves.”

Mr Mohan told The Australian the acquisition of Organic & Raw was also part of the “ongoing evolution” of the Coca-Cola company, with the beverage giant determined to follow consumers as their tastes change — but Coke remains its flagship product.

“This is purely a reflection of what people’s tastes and preferences are. As people’s tastes and preferences grow, so do we, and we respond.

“Coca-Cola as a brand is the core, heart and soul of our company, and continues to grow and continues to enjoy preference among consumers in all its variances. Coca-Cola remains very important for us.’’

Mr Mohan said consumers were becoming increasingly interested in probiotic drinks and gut health, helping to drive the category.

However, it is from a small base. Globally kombucha sales are estimated to be just over $US1bn, of which half is generated within the US, although worldwide sales are expected to climb to more than $US2.5bn over the next four years.

Not to be outdone, Coca-Cola’s arch rival PepsiCo bought kombucha brand KeVita in 2016. Last year KeVita was hit by a lawsuit claiming it wasn’t authentic kombucha because the drink was pasteurised. Similar arguments over the definition of kombucha have also been fought out in Australia. Kombucha is typically seen as a low-sugar, naturally fermented, live-culture, organic drink.

The two key leaders who have been responsible for driving MOJO’s growth, Mr Crabb and sales and marketing director Andrew Buttery, will remain in their current roles.

“When we started out, we couldn’t have imagined the incredible growth and consumer demand we see today,” Mr Crabb said.

“As we continued to innovate, we soon realised that for us to take the business to the next level and provide probiotic beverages to even more people, we needed to find the right strategic partner.”

Mr Crabb said when he began brewing kombucha there was no how-to book or recipe to follow and his team beat their own path to become one of the most successful kombucha brewers in Australia.