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Portland maker treats it like a tea and wins big.



TRIBUNE PHOTO: JOSEPH GALLIVAN - Brew Dr. Kombucha uses a cedar wagon to promote its new flavors. Here it is at Project Pabst on the Portland waterfront on August 29 2016.

Kombucha gets a bad rap for being gentrifier fuel.

Elixir of the comfortable.

Precious treat of the self-medicating straight edger.

It’s the $4 Snapple for yoga people, the fizzy drink of choice for health nuts who flaunt their flatulence.

But the fermented, slightly sour drink is not just good for the guts. It’s good business for stores trying to serve people who want an alternative to sugary juice, sodas and energy drinks.

To Matt Thomas, it’s just another form of tea.

Thomas, 36, founded the Townshend Tea Company in 2006, which now has eight retail outlets, four on Portland’s east side. He started brewing kombucha as a side project in five-gallon batches in 2009. The company’s Brew Dr. Kombucha — a raw, fermented product that is flavored with teas and herbs rather than juices — has proved to be a hit and stands as a brand on its own.

The company’s path to funding and growth are as interesting as Thomas’s personal path to becoming an entrepreneur. The company received a $48,000 local producer loan from Whole Foods in 2009, and a Small Business Administration grant for $2 million in 2013.

The first pushed them beyond brewing in the basement of their teahouse on North Alberta Street and into Whole Foods stores, where Brew Dr. Kombucha has been on tap since 2009. Thomas says they now have 400 kegerators in the Pacific Northwest, but having them hidden behind the counter in a coffee shop is “not ideal.” The drink is going mainstream, however, and can be found on tap on some supermarket floors, where shoppers can fill their growlers.

The Whole Foods loan was low interest and designed to grow food startups in their local area. “The SBA loan took us from tiny to small,” Thomas told the Business Tribune.

The next big loan was $7 million from Bend-based Bank of the Cascades. That bank has developed a strong brewery lending program.

Brew Dr. Kombucha has outgrown its 10,000 square foot plant in the Brooklyn neighborhood, near the Aladdin Theater, and has added a bottling plant in Tualatin at 12241 S.W. Myslony St.

Thomas and his firm have also benefitted from Portland Community College’s Small Business Development Center. (The SBDC is part of PCC’s CLIMB Center for Advancement, which offers both professional training and business development.) There he learned about the Oregon Small Business Development Center Network

(OSBDCN) and its Grow Oregon Program. It is open to Oregon traded-sector companies with $1 million to $50 million in annual gross sales.

They also received 30 hours of pro bono business advising. “The biggest thing though was access to capital. They were like, ‘As a matter of fact you qualify for a new market tax credit,’” which was created by the Oregon legislature in 2013. Their Brooklyn base was in an economically depressed zip code. (Today that’s about as unlikely as finding a cheap fixer upper on Alberta, but Thomas, 36, has been consistently ahead of the curve.)

COURTESY TOWNSHEN TEA COMPANY - Brew Dr. Kombuch boss Matt Thomas, 39, has grown the company to $10 million in revenue and the third largest kombucha brand in the USA.

Canada loves kombucha

Brew Dr. Kombucha was recently awarded Oregon’s Small Business Exporter of the year for its aggressive growth trajectory and expanding into the Canadian market.

Having been there just a year, Canada accounts for 9 percent of the company’s sales.

It ranks as the third-largest kombucha producer in the U.S.

Finding out was a bit of a shock for Thomas.

“I was at a conference in 2014 and they put this Spins report up on the screen, there we were! For so long we had our head down and were making as much product as possible in the Pacific Northwest. I was bowled over, we were the third largest in the country. The other brands are for sale across the country, we had only maximized at home. It was a huge opportunity, so we decided to take on debt and lease a bigger space (in Tualatin).”

The firm grew 150 percent from 2013 to 2014. Thomas projects it will hit 100 percent growth this year. “That’s all thanks to the equipment we got through the SBA loan.”

Part of taking advantage of the SBA, Portland Community College and Business Oregon is agreeing to talk about it, and Thomas has been on several panels talking about entrepreneurism and the maker economy.

COURTESY TOWNSHEND TEA CO. - Brew Dr. Kombucha used its $2 million and $7 million loans to expand from Brooklyn in Southeast Portland to a second plant in Tualatin. Thomas credits the Small Business Adminstration and Portland Community College with helping him with access to capital.

Drink Love

Kombucha can be made in kit form at home, rather like making bread. Brew Dr. Kombucha is marketed as being purer and less sweet than other mass-made kombuchas. The brand has nine flavors, including lemon ginger cayenne, citrus hops and superberry, as well as the more conceptual ones: Love, Clear Mind and Nutritonic.

Thomas stresses the artisanal nature of brewing the drink, which is raw, not heated.

“Making beer is controlled and formulaic, it takes place in a closed vessel. Kombucha is open to the air, it’s susceptible to the law of dynamics activity. Things can go sideways really easily.”

As they grow he would prefer to keep control of the brewing process. This is not like craft brewers letting Anheuser-Busch mass produce their offerings, or a bakery contract out its baking to a cross-country facility.

He also claims that using herbs and teas as flavorings leads to a “cleaner more interesting, taste profile than a juicy, sugary profile.”

Although the drink is said to have its origins 2,000 years ago in Tibet, or perhaps in Russia, it got its U.S. foothold in Southern California in the 1970s with early adopters in the natural food world.

Brew Dr. Kombucha is marketed on the Pacific Northwest/Northern California music festival tour. The cedar wagon has been seen at the Oregon Country Fair, Pickathon and MusicFest Northwest/Project Pabst this summer, selling and sampling.

“The cedar wagon kind of helps communicate the aesthetic of the tea house, who we are. It’s staffed by brewers and people from the bottling line. We’re not some monster company where we put out temps in Starbucks shirts.”

Shelf life

For all the laid back, hippie connotations of kombucha, Thomas knows retail inside out. As a teen he got his first job as a clerk in a Ross IGA, wearing a green bow tie and bagging groceries. His brother got was a sales rep for Nabisco, and got him in as a shelf stacker in Keizer-Salem, where the family is from.

He’d drive around at 4 a.m. making sure Nabisco’s products were on the shelves at Freddy’s and many other supermarkets. While supermarkets have shelf stackers who work all night, packaged goods companies send their reps around to stores all day, where they constantly check stock sell-by dates and plug gaps on shelves.

He is happy to have Brew Dr. Kombucha distributed by Columbia. “We wanted to take a beer approach,” he explains. It makes sense, since if kombucha is not kept chilled — if it sits around in a warm room like a pallet of Pepsi — it can keep carbonating and fizz up crazily when consumed.

Columbia looks after it. “And they’re actively selling it in, which brings in orders of more than one case a week. They have an army of merchandisers, who go in and make sure the shelf is full.”

“When we started it was for early adopters, people looking for cleansing, detoxifying beverage. Now everyone is moving toward that. For instance, I’m raising my kids (boys ages 2, 5 and 7) a lot differently from my parents — we want to know what’s in our food.”

Thomas sees plenty of growth left, and perhaps a national profile, rather than selling out to a big company.

“An exit strategy? We’re still so small, I don’t know. I have a five-year plan but I am not talking to any private equity people or getting any calls from Coca-Cola. Our business in Portland has created 150 jobs, and we have an awesome team environment. It’s a lifestyle endeavor. It’s not something I want to hand over.”

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