2019-2020 SPIRIT OF INNOVATION AWARD WINNERS
BEST RETAIL BEVERAGE
KOE ORGANIC KOMBUCHA / STRATUS GROUP

Pardon the play on words but kombucha (fermented tea) presents a fluid market with plenty of room for innovation. 

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For the record, Grand View Research, San Francisco, predicts kombucha will generate USD$7.05 billion in global sales with a revenue-based CAGR of 19.7% between 2020 and 2027. Grand View data show North America as the largest regional kombucha market and the firm’s analysts divide the category into “original” and “flavored” segments. These analysts expect flavored kombucha to continue holding the leading market share and register the fastest CAGR of 21.8% during the 2020-2027 forecast period.

Those types of figures weren’t lost on the team at Stratus Group Duo, LLC, a Los Angeles beverage development firm focused on better-for-you, natural options. In reviewing the segment, Louisa Lawless, Stratus Group’s chief strategy officer, says the company saw not just one—but several white space opportunities for a new product line. 

Three to five years ago, many (if not most) original products came with a strong vinegary taste, were packaged in glass bottles and required refrigeration. Most also carried a suggested retail price starting at $3.99 per bottle and above.

Stratus was determined to create something different on several levels. And it was two years ago, in 2018, when Stratus first tested its own line, called, KÖE Kombucha, in regional Southern California markets.

“With kombucha consumption on the rise and growth outpacing the traditional tea category, the kombucha world has inarguably exploded, yet few brands have embraced a shelf-stable formula,” says Lawless. “The original vision for KÖE was to create a kombucha in approachable flavors that tasted amazing. We wanted the function of kombucha with the full-bodied refreshment of our soda days, minus the artificial ingredients and high sugar content. We understand that consumers want better-for-you drinks, but that taste is what entices people to come back again and again. We also decided to put KÖE into a shelf-stable can so it's convenient to store, take on-the-go, and recycle.”

Stratus Group debuted three varieties: Blueberry Ginger, Mango and Raspberry Dragonfruit. Lawless says the 12-month test and consumer insights work gave brand officials and formulators the additional information they needed to refine the product and package.

“We took those key learnings and reformulated with fewer calories, a couple new enticing flavors, and updated the package to highlight that our product was packed with probiotics,” says Lawless. “Consumers are becoming more aware of the nutritional benefits of probiotics and are inclined to enter the kombucha category because of this mainstream function.”

More specifically, Lawless says KÖE formulators needed to hit all the right nutritional and flavor marks.

“Initial feedback helped us learn that consumers were looking for a super low-calorie beverage that doesn’t taste like a diet drink,” she notes. “We launched just before the Keto craze hit the market, which has caused so many people to carefully count carbs and sugar. Each 12oz can of KÖE is made with real fruit juices and purees, but only has 35 calories and 8g sugar. The nutritional details are super impressive for a drink that tastes so bold and full.”

Lawless says every can has billions of live probiotic cultures to support the immune system and optimal gut health. The beverage features natural fruit flavors, no artificial ingredients, and a touch of 100% organic cane sugar. All varieties are certified USDA Organic, Non-GMO Project Verified, vegan and gluten-free.

KÖE Kombucha was relaunched last fall and included two additional flavors: Lemon Lime and Strawberry Lemonade. 

Lawless notes that for retailers, KÖE is easy to store and merchandise because it doesn’t require refrigeration. Moreover, the drink’s 12-month shelf life results in less waste from expired product. When it comes to pricing, KÖE Kombucha carries a lower suggested retail price of $2.99 per can.

For the environmentally conscious, KÖE’s BPA-free aluminum cans also are easy to recycle and are lighter than glass. This ultimately creates greater truckload shipping efficiencies (by weight and volume) that reduce environmental impact (fewer trucks shipping more product). Cans also make it easy for busy consumers to take KÖE on-the-go.

Lawless says KÖE kombucha is available in convenience stores, drug stores and traditional grocery. That includes distribution at 7-Eleven stores across Southern California, national placements at CVS and shelf space at nearly 1,000 Publix locations. She says the business continues to extend its national reach with new distribution across the U.S.

Says Lawless, “We're introducing new people to the world of delicious kombucha every day and we're creating believers! We've talked to so many consumers, buyers, and distributor partners who are convinced kombucha isn't for them. But once they try KÖE, they're hooked. It's so exciting to see these people find a healthy, functional beverage they truly love.”

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