Analysis: Kombucha companies that shut up shop
Kombucha company founders know that starting a business is not easy. There are many challenges to overcome — from getting the necessary permits to producing a consistent beverage in volume, packaging, and distributing to retailers and consumers. Not to mention making payroll and having enough to live on at the end of each month.
The Booch News Worldwide Directory lists over 2,700 brands worldwide. However, this is an archival list. We list any company with an online presence, even those that have gone out of business. Without the resources to call each one to check, we can’t say for sure how many have shut up shop.
According to the Bureau of Labor Statistics, approximately 20% of small businesses in the US fail within their first year. The failure rate increases to 30% by the end of the second year, 50% by the fifth year, and 70% by the tenth year. Only 25% of new businesses make it to 15 years or more.
I was curious to investigate if this applied to kombucha companies.
California and the UK
Checking sources of information in the UK and California for companies with “kombucha” in the name of their corporate entity showed that around half had closed. This was only a general guideline since many brands sell kombucha with a corporate name that does not include this term. Examples from the UK include:
- Equinox – The Flower of Life Ltd
- Real Kombucha – The Real Brewing Company Ltd
- GO Kombucha – Gaia Brands Ltd
- GTs Synergy – GTs Living Foods
- Health-Ade – Health-Ade LLC
- Boochcraft Hard Kombucha – Boochcraft LLC
These would not appear in a simple search for legal entities with ‘Kombucha’ in the name. And some of those that do might not have launched commercially. However, given these limitations, the numbers make interesting reading.
Note that the Companies House data from the UK covers the whole country. There’s also financial data on each available. The situation in the US is more complicated. Searches need to be conducted state by state. I chose to look at California — the home of commercial kombucha since 1995 when GT Dave started selling his home brew. It also, interestingly, has about the same number of companies as the whole of the UK (for a population of 40 million vs. 67 million).
It’s interesting to see that the average ‘Kombucha’ company lasted just over two years in both regions.These failures account for around half of all companies, as shown below.
Looking at the year all companies with ‘Kombucha’ in the name (both active and dissolved) were founded shows some interesting parallels.
2018 is the ‘red letter year’ when Booch News was launched 🙂 It corresponds to the time of most active company formation. The ‘mid-point’ is when the number of companies formed before and after that date — 2017 in the UK and 2018 in California. The early years were more active in California, with 16 companies staring from 1996 to 2014. Only four companies were founded in the same period in the UK. However, from 2019 to today, 35 companies were founded in the UK against 28 in California. Is Britain playing catch-up?
Again, these statistics are ONLY for companies with the word ‘Kombucha’ in their name. They omit many of the original, long-established players. GT’s was founded in 1995. In the UK, Go Kombucha was incorporated in March 2003.
It’ll be interesting to consider the causes of these business failures. There might be lessons for us all.