Kombucha Industry Expands in the Asia-Pacific Region

Despite several roadblocks along the way – from skepticism to regulatory scrutiny for its alcohol content – kombucha tea has emerged victorious, in recent years, as one of the most sought-after health drinks of the modern era. (Photo by: Sheila_F / Bigstock.com)

Once prominent as a novelty drink – popular only in hipster cafes – kombucha is now starting to catch the eye of more consumers on a commercial scale and it continues to rapidly become a staple on supermarket shelves worldwide.

Dating back as many as 2,000 years, the first known kombucha in history is said to have appeared in China, where it was dubbed the “Tea of Immortality,” a nod to its remarkable health benefits. It continued to be a popular drink across many Asian countries – including China, Korea and Japan – until the trade route expansion in the early 1900s took it to eastern Europe, Germany and Russia. The kombucha trend continued to grow, even witnessing a modern age revival in the 1960s, with a Swiss study claiming that the drink had health benefits similar to yogurt.

The second and significant revolutionary wave for the kombucha market came in the 1980s-‘90s, when the drink began to gain popularity in the United States, as a major contender in the fight against severe health conditions. Despite several roadblocks along the way – from skepticism to regulatory scrutiny for its alcohol content – kombucha tea has emerged victorious, in recent years, as one of the most sought-after health drinks of the modern era. Research from Global Market Insights, Inc. suggests that the global kombucha market may achieve a valuation of over $5 billion by 2025.

Kombucha is a probiotic drink made using a black or green tea base, with an addition of white sugar and SCOBY (symbiotic culture of bacteria and yeast), also known as “tea fungus,” fermented for a period of one or two weeks. Kombucha flavors range from a pleasant sour fruity flavor to a mild vinegary taste, depending on the fermentation period.

Kombucha Sustains Demand Across Asia
In recent years, kombucha has begun to regain favor in its home region, Asia. The main challenges to the growth of the kombucha industry in the APAC region have been its limited accessibility and high price point.
Over 50 percent of kombucha brands in Indian, Malaysian and Vietnamese supermarkets are high-priced, imported brands from the United States and Australia. Furthermore, the small scale of production and lack of promotion, awareness and visibility of the probiotic drink are some of the main factors that have impeded the expansion of kombucha into Asian markets so far.

The rising penetration of kombucha tea in the APAC region is attributed to improving marketing and expansion tactics by major vendors. For instance, in October 2020, Australia-based beverage company Remedy Drinks announced its intention to expand into Vietnam.

The company hailed it as the next big market for kombucha, owing to escalating wellness and health trends in the region, as well as its product ability to be transported sans refrigeration. Remedy had made a similar move to enter mainstream outlets in Asia earlier, when it introduced its range of raspberry and peach lemonade kombucha teas to consumers, through a deal with Starbucks in the Philippines.

There has been a steady upsurge in health awareness, its burgeoning presence on social media, as well as the rise of buzzwords like probiotic and gut health among local populations. Kombucha is quickly starting to gain ground in the Asian Pacific over the past few years, as a healthier alternative to sugary beverages.

Asian producers are also becoming attuned to this growing popularity of kombucha tea and have begun to see the fermented health drink as a profitable business opportunity. Many small, local players across Vietnam, Japan, China and India, among others, are jumping on the kombucha trend. GMI estimates that the APAC kombucha industry will register growth at 19 percent CAGR through 2025.

Malaysia, for instance, has been witnessing a targeted movement to reeducate consumers about the benefits of the fermented health drink and bring it back into the limelight. Until recently, most of the kombucha available in Malaysian markets was imported from other regions, including Australia and America, and consisted of flavors foreign to the Malaysian palate. American shipments, particularly, consisted of kombucha tea that was pasteurized, leading to a loss of the probiotic qualities that are responsible for many of its health benefits.

In order to address this, myriad local Malaysian brands have been making efforts to reeducate the Malaysian population about their shared beverage heritage, while introducing fermented health drinks that are more customized to the Malaysian palate. Amongst the most popular ones is WonderBrew, which is working towards creating kombucha products inspired by Malaysian flavors, using local ingredients like lemongrass, pomelo, and markisa (passion fruit), sourced from organic farms to extend support to local farmers.

Producers Put a Local Spin on Kombucha Tea
As interest in this probiotic drink continues to grow, many labels have started to move from limited artisanal production to a more commercial scale, launching their own versions of kombucha across the APAC region.

In India, for example, Bombucha, a firm based in Mumbai has introduced kombucha in various regional flavor variants, including mango turmeric, smoky oolong, and hibiscus lime.

Meanwhile, in Australia in 2020, Utonic, a functional beverage firm, and Vani-T, a beauty company joined hands to commercialize what was touted as the first collagen kombucha across the nation by February 2021, following an online soft launch in September 2020.

Prominent players in the APAC kombucha industry are also adopting strategies such as production expansions, in order to widen their consumer reach and bring kombucha into the limelight.

To illustrate, during 2019 kombucha brand Yocha, based in Singapore was exploring opportunities to scale up production in its native market as well as overseas, through the construction of a new factory. The aim behind this expansion plan was for Yocha to gain prominence as an industry leader in Singapore, which had a considerably small presence of kombucha vendors. With the expansion, experts claimed, Yocha would become the first brand across the nation to establish its own factory for kombucha production.

Despite its origins in China during 220 BCE and its subsequent expansion into Japan by a physician named Kombu, the fermented health drink gained true popularity in the Western markets. North America alone is said to be among the most prominent consumers of kombucha in the world, especially due to key firms like Coca-Cola-backed Honest Tea and Red Bull establishing their own brands for the drink.

Kunal Ahuja is the senior research manager at Delaware-based Global Market Insights. Ahuja has more than seven years of experience in the food and chemicals industry. He has spearheaded projects that involved tapping into the latest megatrends to understand the impact on consumption/demand development with respect to different products in the industry. The projects he’s been involved with included gathering historical data and analyzing future demand potential, in addition to providing valuable insights regarding the strategies adopted by key players in the industry. To learn more about Global Market Insights, visit GMinsights.com.