From Small Batch to Billionaire

An insightful discussion with category and kombucha king, GT Dave.

On this episode of the Conception to Consumption (C to C) podcast, CEO Gary Nowacki welcomes GT Dave, founder and CEO of GT’s Living Foods. In addition to building a successful beverage empire, Dave is credited with introducing kombucha—and all its benefits—to mainstream consumers.

How did a teenager in Southern California tap into arguably the biggest beverage trend of the 21st century? Stream the full episode to hear about the inspiration that led him through brewing small batches with his parents to partnering with Whole Foods and eventually dominating this growing category. Market researchers estimate that the kombucha industry will be worth nearly $10 billion by the end of the decade. And GT’s Living Foods is currently sitting on 47% of the market share.

But that hasn’t make its billionaire leader complacent. Dave’s commitment to innovation remains consistent through his brand’s new lines, flavors, and marketing efforts. We’re honored to have a true CPG pioneer on the podcast.

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GT Dave: This kid walks in with this fermented vinegary smelling and tasting drink with stuff floating in it. People thought I was trying to sell anthrax. [inaudible], so. [laughter] It’s hard.

Gary Nowacki: This is C to C where we cover innovation in the food and CPG business from conception to consumption. Welcome to the podcast, everybody. Today I’m excited that my guest is GT Dave, who is the founder and CEO of GT’s Living Foods, one of the top, if not the top, kombucha companies. GT, welcome to the podcast.

GT Dave: Thank you for having me.

Gary Nowacki: So you’ve got such an interesting story, and what I find is some of the leading brands I’ve seen over the years do have really compelling stories. Dave’s Killer Bread, RXBAR, and now yours. 

We’d love to hear your story, so maybe you can tell us the story of your involvement with kombucha, and it’s also very much a personal and a family story and quite a journey, spiritual and otherwise. Could you tell our listeners about that?

GT Dave: Absolutely. So, I had the pleasure of being exposed to kombucha in 1993 through my parents, who raised me a vegetarian, and through raising me a vegetarian, also exposed me to many different kinds of health and wellness, lifestyle, and diet choices. And so kombucha was one of the many kinds of quirky and out there things that they brought into the household in addition to the tofu, the chia, the wheatgrass, the noni, you name it. 

So naturally, I was about 13 years old at the time, and so when kombucha came into the household, it was very weird. It was honestly one of the weirdest things, I think, my parents brought into the household at the time. It smelled weird. It tasted weird. It looked weird. So I honestly didn’t want anything to do with it, but I did notice that my parents quickly fell in love with it, and they went from making one batch to several batches. And I observed that it literally became an obsession of theirs. 

For those listening that don’t know what kombucha is, kombucha starts off as an organic brewed tea. So that’s nothing unusual about that, but where things change is you have to get your hands on the actual kombucha culture, known as a SCOBY, that ferments the tea over a period of 7 to 10 days, depending on the size of your batch. And during that fermentation, you have a complete transformation of the tea into something that we call kombucha which is kind of naturally effervescent or fizzy, has kind of a vinegary smell and bite to it, and is known to be incredibly healthy.

Collection of different flavors of GT's kombucha

Continue reading the transcript:

GT Dave: So that’s what my parents were drinking. They were drinking just the pure, raw kombucha. No flavor at all. And as I said, they quickly fell in love with it, and then I became intrigued by their affinity for it. But it wasn’t until my mother, two years later, thought she was pregnant. And so she went to the doctors, and unfortunately, she wasn’t pregnant, but the doctors did discover a large tumor in her right breast. 

So that was a pivotal moment, not only in her life, of course, but in my entire family’s life. Now, the good news is, through the two weeks that it took to get the final kind of diagnosis results of her breast cancer, the doctors called her into their office and sat her down and said, “Mrs. Dave, we are speechless.” [laughter] 

They said, “This tumor that you’ve had in your right breast, which is about the size of a golf ball, which we believe that you’ve had for four years, and we have identified as a fast-growing cancer, which at the prediagnosis, we believe it had already metastasized and had spread to your bones. But today, we’re here to tell you that none of that has happened, and that is miraculous, and we want to know if you’ve done anything unusual in your diet. Chinese herbs, Chinese medicines, anything out of the ordinary that have could, potentially, played a role in keeping your body resistant against the cancer.” And so my mother said, “Well, I’m a vegetarian. I exercise every day, and I’ve been drinking this pungent-tasting tea for the last couple of years, and it makes me feel great.” 

So at the time—now, keep in mind, this is now the mid 90s, so you don’t really have a Google. The internet is just kind of happening, but it’s certainly not mainstream. So back then, to get information, you kind of have to go to a library. So that’s what my parents did, is after this kind of experience happened with my mother’s cancer and her diagnosis and the success that her doctor suggested to her, both my mother and my father both went to the local library and started doing some research on kombucha. 

And within their first effort, they even came across a book called Kombucha, and Its Naturally Suppressing Abilities against Metabolic Diseases, Namely Cancer. And I’m not making that up. You could not be more obvious than that. 

So this was the first time that my parents, who had been drinking kombucha for a couple of years, knew that it made them feel great, knew that it was healthy. But that’s really all they knew. They didn’t know to what extent it was healthy and why. But after my mother’s experience and now this newly found information that they came across, it became very obvious that kombucha was something very special.

Gary Nowacki: In your heart and your brain, how certain are you that it cured your mother?

GT Dave: Well, first of all, I’ve never said that it’s cured her, and I would be a fool if I did, because, candidly, there’s no such thing as a cure-all. The body is a fascinating, dynamic living thing, that there is no one singular thing that I can say will help you, will help me, or help anyone. Because our bodies are so dynamic, it takes a lot of things to make us healthy and a lot of things to make us sick. 

So what I believe kombucha did is it clearly didn’t cure my mother. But what it did, and what I think is critical even to today with our bodies and the way we live, is our bodies, unfortunately, are imbalanced. Right? We’re bombarded with toxins. We’re bombarded with impurities, pesticides, stress, all of that. And that can be in our food. That can be in our environment. That could be in our relationship. It could be in the energy that we come across. 

And so what I believe the role of kombucha played in my mother’s life and plays in my life and others that drink it, is it helps detoxify and cleanse, and through that, restores of balance. And when the body is in balance, the body can actually heal itself. So that’s what I believe. 

And that’s actually what kind of came up in the research that my parents did, is that through the detoxification and alkalinity that kombucha promotes, it creates, one, a stronger body that’s more resilient and can fight off metabolic diseases; and, two, it creates an alkaline environment for the body which, unfortunately, we’re mostly acidic at times because most processed foods, if not all processed foods, make the body very acidic. And doctors have identified that cancer truly thrives in an acidic system. And so the way to create an unfavorable environment for cancer to grow in, you have to help alkalize your body. And kombucha and other kind of fermented foods do that.

Gary Nowacki: I’m going to say you grew up in a non-traditional household, at least for the United States, and you had some early, very personal experiences with kombucha. How did you, then, get involved in the business?

GT Dave: It’s funny. It wasn’t ever really this business idea or this business plan or anything like that, because when all of this was happening, I was just teenager. And I was a teenager. I was kind of an unusual teenager. I was a young gay male growing up in the west side of Los Angeles, and at the time, in the 90s, being gay wasn’t cool. 

And so I very much felt like an outsider. And like most kids, I tried to fit in and realize that didn’t work. And then I spent the rest of my childhood trying to hide or escape. And when all of this was happening with kombucha in my household, I was failing all my classes. I was ditching all my classes because I didn’t want to be in school. And I was kind of like a rebel without a cause. 

But when kombucha came into the household, helped my mother, and then I started to drink it myself because I was inspired by her story. It kind of motivated me to put it out there. I felt that kombucha was something that was so special, that needed to be shared. And I realized at that time that if the only way for people to enjoy kombucha was to make it on their own, then it wouldn’t go anywhere. So I felt that it was my opportunity and my blessing, if you will, to put it out there for the world to enjoy in it’s purest, rawest, most potent form. And that’s what I did. 

I didn’t really see it as a business. I certainly didn’t see it as a financial opportunity. It was really just something that resonated with who I was, how I was raised, and it also got me out of school. 

So, I started my company when I was barely 16, actually 15, and designed my own label, started making it and brewing it at my parents’ house and delivered it to the local health food stores. And it was just that alone that was my fulfillment and my reward.

Gary Nowacki: Wow. And I said it already on this podcast, some of the best products and best companies. The founder has a passion towards the product and is deeply involved in the product. How did you take your next steps in the business?

GT Dave: It’s interesting. I would say almost for the first five to seven years, I ran my company like an overprotective parent. And what I mean by that is, I believe that when you’re giving birth to a company, an idea, what have you, that it really you have to honor it. Kind of like a woman honors her pregnancy, right? Where you have to make lifestyle changes. You have to be careful of who’s around you while you’re pregnant because you really are devoting your life to the life that you want to give birth to. 

And so certainly my situation with raising kombucha lasted a lot longer than nine months. As I said, it was about seven years. And where my consciousness was at the time, as I saw kombucha as a very special thing that I wanted to protect, and I only wanted it to go where it needed to go, where it was wanted, where it was welcome. And I didn’t want to force it into any store or market that the consciousness of the shoppers there didn’t get it. 

So, therefore, it was very slow and steady. I grew from 1 store to 2 stores to 5 stores to 10 stores, but I stayed for the first few years local. I didn’t want my products sold in any store that I couldn’t personally see and touch. And that’s a good and bad thing, I mean. It’s something that I’ve shared with other entrepreneurs that there’s a balance between how much you’re obsessive with your product and how controlling you are. And then there’s also a limitation on how free you can be with what you do because if you go too fast and you let your product run wild, you sometimes run the risk of waking up one day and being like, “Oh, my God. This no longer looks like what I wanted it to be,” or, “Our values have changed,” or, “It’s not being properly represented in this marketplace.

Gary Nowacki: I want to get back to your growth of the in the arc of that in a minute. But for those of our listeners who are not really familiar with the benefits of Kombucha, you mentioned one which was the level of acid in the human body. Are there others that you feel are critical benefits?

GT Dave: Oh, absolutely. Kombucha is relatively new to us here in the US. I mean, I started 25 years ago, but I don’t think kombucha has really reached the more mass appeal as it has in the last five years. Therefore, people are still trying to poke holes in kombucha. 

They’re saying, “Where’s the science?” All of that. And what I always say is, first of all, foods like Kombucha are nothing new. These authentically, traditionally fermented foods have been a staple in other cultures, diets and lifestyle for as long as we know. And there are so many different benefits to them. 

One is, as I said, they’re fermented. And through that fermentation, you create this life force that’s completely absent in cooked or processed foods. So that’s number one. Number two, studies have shown that all fermented foods are predigested because part of the fermentation, the nutrients are broken down. So when we ingest these foods, they almost accumulate immediately, which means the nutrients are more bioavailable to our bodies because our bodies don’t have to spend all the energy breaking them down. 

And then from there, you have the organic acids, which help regulate the body’s pH. You have the natural current probiotics that replenish the gut, the digestive system and the microbiome. You have the natural detoxifying qualities that help rid the body of impurities, which, again, support a healthy immune system, better energy, better sleeping, clear skin, clear eyes. I mean, the list goes on and on. 

When you talk about what happens to the body when it achieves a state of balance, you’re really talking about taking your body back to when it was in its perfect state of health, which usually happens when we’re much younger. Right? Because that’s before the environment and other things have kind of had their way with us.

Gary Nowacki: It’s interesting, the whole food industry, people sometimes maybe who are not familiar with Kombucha would say, “Oh, my goodness, fermentation living organism, SCOBY.” There’s a yuck factor there. But I recently watched Michael Poland’s episode “Earth” from the series Cooked, and fermentation is in tons of our food. We couldn’t have chocolate without fermentation. We couldn’t have cheese. We couldn’t have beer. I’m curious, have you seen that—have you seen that particular show or episode?

GT Dave: I have, and I absolutely love it because I love what he says, that…

We really do need to take a closer look to what goes into our food, not just only the ingredients that are years, but how it’s made and by whom. And we really do need to kind of refamiliarize ourselves with cooking, fermentation and other methods that go into making food because it’s certainly not a one size fits all.

Gary Nowacki: So when you created over a series of years, your particular kombucha, and started marketing it, as you said, starting with one store, then five, then 10. What was your R&D process? What were all the blood, sweat and tears that went into your formulation?

GT Dave: Well, the R&D really was just commitment. And when you make something as natural and as raw and as pure something like kombucha, all you really have to be is a steward to nature. Right. I did not invent kombucha. I certainly didn’t create it. It existed before me, and of course, it’ll exist after me. 

So really what my responsibility is, which is the closest that I can call an R&D process, is just to make sure that I’m honoring and protecting the authentic traditional recipe of Kombucha. And the reason why some people listening might be like, “Well, that that’s a no-brainer. I mean, why would you not do that?” But the reality is, is that when it comes to business, and this is something that I learned about 5 years into it, maybe 10, where in this world and certainly in this modern-day Western society that we live in, as soon as you want to turn something into a commercial opportunity, it’s almost like 9 out of 10 times, quality and integrity are thrown out the window. And it’s all about profit, it’s all about scale, it’s all about mass production. 

And so I encountered a lot of resistance and a lot of bad advice early on because, naturally, when you’re in a business and you’re in an industry, you interact with others and they give you their opinion. And I was blown away by a lot of these opinions that was being given, was how to cut corners, is how to cut costs. And I remember early on saying to myself that I don’t care if I’m only selling one bottle of kombucha, but it has to be the best bottle ever, and it has to be the highest quality with the highest potency, because if I can’t say that with confidence, I’d rather not do it. And that remains true to today.

Gary Nowacki: And your philosophy also seems to be don’t mess with Mother Nature.

GT Dave: Absolutely. Science is great when it comes to your iPhone or when it comes to the latest and greatest electronical device that you’re working on, but when it comes to our food, our food should be pure.

Gary Nowacki: So when you started to move beyond 10 stores and you started to tiptoe into sort of national distribution, what were some of your first or the first business deal that really caused your product to take off in the market?

GT Dave: Well, I would say, probably, I bottled my first bottle of kombucha in 1995. And I would say it was in 1998 is when Whole Foods came knocking on my door. And that was a big deal because when I first started, there was no such thing as Whole Foods. And the only natural food grocer that you had access to was local ones. 

There were very few chains, if at all. But then Whole Foods came into Southern California, they acquired a chain of stores called Mrs. Gooch’s, reskinned them as Whole Foods, and then virtually overnight became like the destination for health and wellness in Southern California. 

And so I approached them in 1996 or ’97, and they turned me down. And I was pretty heartbroken, to be honest. But about a year and a half later, maybe two years, I received a phone call from Whole Foods, and what they said to me is, “We heard you make a product called kombucha. All our customers are asking for it. We want to start selling it. Can we link you up with our distributors so we can get you in our stores?”

Gary Nowacki: What caused them to turn you down? Sorry to interrupt, but what caused them to turn you down and then do a 180 two years later?

GT Dave: To be honest, it’s the quintessential dilemma when it comes to growing a new category.

When you’re growing something new, you have a lot of doubters, a lot of naysayers, a lot of people that will dismiss and discount you because they think, ‘Well, if this is so great, why isn’t it already big?’

But then you have to have that kind of uncomfortable conversations like, “Well, not everything happens overnight, right? Some of the greatest ideas took a while for them to take off.” And so that’s honestly what happened with Whole Foods. 

They didn’t know about kombucha. They could tell that it was fermented. They could tell because you obviously have to submit samples. So I submitted my samples, and I obviously wasn’t there when they did the review, but I can almost guarantee that they’re like, “Oh, this smells weird. This looks weird. No, thanks.”

Gary Nowacki: It’s amazing.

GT Dave: But through popularity and consumer demand is ultimately why they came calling, which is really interesting that you really need the consumer support to win over retail support at times.

Gary Nowacki: So, was that your key inflection point for the business when you started to team up with Whole Foods in ’98?

GT Dave: It was. I mean, I would say over the course of 25 years, we’ve had several of those critical, pivotal moments, and that was certainly one of my first, where I was now playing—I felt like my business is being legitimized through my relationship with them. And so it was definitely kind of a game changer.

Gary Nowacki: So, what was it like in the early days of the business? What were the biggest challenges going from 1 or 5 or 10 stores to suddenly regional distribution at Whole Foods?

GT Dave: So, I mean there’s a lot of challenges with making kombucha. One is to scale it. To make a lot of it, you need a lot of space because making kombucha is a lot like growing agriculture than it is making a drink, because in the more traditional environment of soda and juice, if you want to make more, you just juice more oranges, you just run your machines longer, you just hire more people, but when it comes to making kombucha, you literally need more land. 

So I was always finding myself in a dilemma of running out of product because we at least ferment our batches for 30 days. So that means you’re producing and you’re planning on what you’re going to harvest 30 days from now, but you may not have that demand. So there’s a little bit of guessing that comes into play. And I take a conservative position. So I would tend to run out of product at times. So that’s, number one, just a pure supply and demand dilemma. 

But the other on the business side, was trying to educate people. When I would approach certain health stores—and these are health stores that were pretty sophisticated with the kind of products that they sold. But there were a couple of buyers that were just so incredibly ignorant that they would walk up to me and say, “Listen, I think your product sucks. I think it tastes horrible. I think it’s going to hurt people, and I’ll never sell it.”

Gary Nowacki: Why were they so hardened against it? Was it just change or what was it?

GT Dave: Well, it’s a combination of things. People fear what they don’t know and people fear what they don’t understand. And at the time, again, this is the nineties, right? So in the nineties, what was considered cutting edge in the beverage section was Vitamin Water, SoBe, Snapple. I mean, this is what people were saying. It was like the Holy Grail of functional beverages. 

So here this kid walks in with this fermented, vinegar-smelling, and tasting drink with stuff floating in it. People thought I was trying to sell anthrax or something. It’s hard. But you know what? Again, I embraced the challenge because I felt that this is, again, my role to play and my story to share. 

And so I would tell people because they would say things like, “If it’s raw, it’s dangerous, and if it smells like that, it can hurt me” And I said, “Wait, wait, you guys sell yogurt, you sell kimchi, you sell miso, you sell sauerkraut, you sell raw apple cider vinegar. Do you think any of these things are that much different than what I’m doing? No. The only difference is these are categories that have existed for a while, so you have embraced them.” 

Every category has to start somewhere. And kombucha is nothing new. It’s been made for centuries in other parts of the world, but it’s just new to here in the US. And I kept on pounding that message home, and eventually people got it. I got on the shelves.

And then with consumers, honestly, it wasn’t even that hard to convince consumers, because once you got a bottle in their hand and a few sips in their mouth, people could feel a difference virtually immediately. And that was really the selling point. And so, for the first ten years of my company’s history, it was all and only word of mouth.

Gary Nowacki: Big challenges. But it must have been so exciting to be out there on the vanguard and educating people and leading this movement.

GT Dave: It really was. I mean, the most exciting part was getting it into people’s hands and getting them to drink it and then hearing their feedback, whether it was right then and there, or later on via email or voicemail, where they would say, “Listen, I was shopping today. I wasn’t feeling too good. I had an upset stomach. I had a headache. I was feeling out of swords. Gave it a try. And you know what? After that bottle, I feel better. My headache went away. My stomachache went away. I feel more energy. I feel more centered.” 

And that’s completely unsolicited. And that’s what really kind of gave me my sense of purpose and certainly my drive and reaffirmed that what I was doing, that I was on to something.

Gary Nowacki: That must have been awesome. So it’s the late 90s now, and you’re starting to really grow at an accelerated pace. And so this is your baby, and you’ve really figured out the recipes and the formulas and the technical aspects of culturing kombucha and all of these things. 

Now you got scale problems, and you’ve got to really expand, as you said. And did you get nervous at the time? “I’m going to give away all my secrets, or maybe I can’t trust some of the people that are working for me.”

GT Dave: Yeah, absolutely. I would say, I mean, there’s always that feeling of uncertainty and that they could all end, or that something bad could happen because again, in the first 5 to 10 years of new business and certainly a new category, you just feel like it could come to an end overnight. 

So there was always that uncertainty that I had to deal with, which in many ways encouraged me to keep things very close to the chest. I was definitely coddling the kombucha and making sure that I didn’t talk about it too much, too loud, that it could be perceived as a snake oil or getting to trouble with like, the FDA or something like that.

But what was interesting is what my biggest challenge or my highest degree of stress in the early years was actually in 2005. And in 2005 I was tasked with the opportunity to go nationwide because for the first 10 years it was only really west coast, west of the Mississippi. And in order for me to go nationwide, I had to move out of my current commercial facility, which at the time was only 8,000 sq. ft. in Gardena, California, and moved to a 50,000 sq. ft. facility in Vernon, California. And that was a big deal. 

And my reach was going to literally almost quadruple, and there was this nervousness of this could make or break me. And I’ve seen a lot of companies—I mean, at the time, Odwalla had just gone from 0 to 60. They were the small Northern California juice company that in the mid 90s had their first recall because they grew too quickly. And so that experience really—

Gary Nowacki: I remember that. 

GT Dave: Yeah, a lot of people remember, and it’s certainly left of an impression on me because my takeaway from that experience was see this is what happens when you make something special and unique that you try to mass produce it. You take your eye off the quality and something bad happens. 

And whether it’s just a bad quality product or worse, it’s a bad quality product that’s also not safe. And so I was so concerned about falling into that trap, which I had seen Odwalla and other brands do. So I was super conservative and call it cautiously optimistic about everything that I did. It was really that big leap from the smaller facility to the bigger one that was a game changer for me.

Gary Nowacki: So how did you get through that period of agita? Was it just learn from the mistakes of others and don’t repeat them?

GT Dave: Yes.

It was definitely crawl before you walk, walk before you run and everything. And therefore, when you go to test a new idea or trial a new market or do anything that’s new, you do it in a very isolated, limited environment.

So if it blows up in your face, it’s not catastrophic. And so that really shields me and my business from any kind of catastrophic mistake, which in this day and age you see happen more and more often where these brands get access to so much money, and they blow up overnight. And they spend all that money, and they realize that they made some bad decisions, and now they’re at a point of no return.

Gary Nowacki: Yeah, yeah. So a lot of our listeners are in new product development, R&D brand management in food, beverage, CPG. And as I was doing some research GT for the podcast today, I came across a statistic on your company which just leaped off the page at me, which is, your company has grown explosively all these years, and you’ve spent $0 on advertising. Our listeners definitely want to hear about that.

GT Dave: Well, that’s true, and it’s something that I’m honestly very, very proud of. And the reason why we’ve been able to do that is kind of goes back to what I was saying earlier about starting a company and launching a product from your heart. And making sure that everything you do is focused on making a high-quality, high-integrity product that the consumers will benefit from and feel it. 

Because when you have that and consumers resonate with what you’re doing, whether it’s the packaging, whether it’s the messaging, whether it’s the product inside the bottle or all of the above, what they do is they naturally on their own talk about it. And they go to a family member, they go to a friend, they go to a loved one, and they said, “Have you tried this? Oh, my God, I’ve been drinking it and XYZ happened.” 

And I’m telling you, no amount of money, not the most brilliant marketing campaign, can get you that because that’s unsolicited positive word of mouth that’s coming from a trusted friend. And so again, think of yourself. If one of your good friends came up to you and said, “Oh my God, you got to try this,” or “You got to see that movie,” or “You got to watch that show, “you best believe it, that’s going to be the next thing that you do because you trust your friend and it’s a trusted source. 

That’s really has become the backbone of our brand, is that we have a close, intimate relationship with our consumers, who have a close and intimate relationship with the products we make. It’s become part of their lifestyle. It’s far from a trend. It’s far from a fad. It’s far from just a new diet thing that people are doing.

Kombucha in many ways is a staple in a lot of people’s health and diet and lifestyle, and no advertising can do that. And so we’re actually concerned with when we need to start advertising is we don’t want to alienate or disrupt that chemistry and relationship that we have with our consumers. 

So it’s a blessing and a curse at times. If you’ve never done any advertising and you’ve got lot of success, at a certain point—you can only ride that wave so long, and, at a certain point, you have to start advertising, but you want to make sure that you don’t turn off your loyal fans. And that’s something that we’re very cognizant and sensitive to.

Gary Nowacki: It’s net promoters and letting the product sell itself.

GT Dave: Exactly.

Gary Nowacki: So when you first put kombucha on the shelf way back in the ’90s, you were basically alone in the segment. Now there’s something like 350 makers of this around the world. What’s your view of your competitive landscape these days?

GT Dave: Well, like with any category, I believe competition is good. I think it gives the consumers lots of choices. It keeps the brands hungry, it avoids brand complacency and all of that. So I think just competition conceptually is a great thing.

Now, unfortunately, that statement can change when you have competitors that don’t focus on making a great product. What they focus on is rather pointing fingers at each other, or worse, slowly trying to change the narrative and the story of what kombucha is. So the challenge that I have, or the concern and frustration that I sometimes have with what I see happening in the marketplace is that, to put it very simply, kombucha should taste, feel, and look like kombucha, and it should be made like kombucha is made. 

It’s not intended to be a sparkling juice. It’s not intended to be a sparkling soda. It’s not intended to be a sparkling water. And if you try to do those things because you’re trying to, call it, dumb down the kombucha to reach a broader audience, you really are removing what makes kombucha special. And we see that more and more. 

I recently went, believe it or not, to a Whole Foods seminar here in California and there were about 500 employees of Whole Foods there. And I said to everybody, “Raise your hand if you’ve heard of kombucha,” everybody raised their hand and said, “Now, keep your hand raised if you know how kombucha is made,” and I’m telling you, only about 5, maybe 10% of the hands stayed up. 

And that’s shocking because if you don’t know what kombucha is, do you really know how or why you should drink it or how or what the benefits are? And that’s, unfortunately, the challenge of the day and age that we’re in right now is because of the social media and the Instagram and all of that, people just go off of how things look. 

They don’t really do their research. They don’t read, they don’t ask, they don’t investigate and do their research. They just kind of follow trends. And if I look cool if I’m carrying that bottle or if that word is on trend right now, then I’ll use it and that’s it even though I don’t really know what I’m doing. And that is no exception when it comes to kombucha.

So you’re seeing this proliferation of these kombucha brands that, to be honest, are really just new age sodas, and they’re being sold for like a 1$ to $2. So not only are they cheapening the story of kombucha, but they’re just straight up cheapening the brand and the category out there which I’m concerned that one day we wake up and kombucha is just going to be a commodity, and it’s going to be sold like a can of Coke® or Pepsi®.

Gary Nowacki: I’m here with GT Dave, an absolute pioneer and leading founder and entrepreneur and head of one of the most successful kombucha companies in the world. 

So I’m going to use an analogy here. I’ve talked to a number of CEOs in the CBD space, and I’ve had some very lengthy conversations with them about their concern about bad actors just making false claims or cutting corners and things like that. And of course, CBD and kombucha have some similarities in terms of health benefits and claims and things of that nature and a lot of passionate users and net promoters. Do bad actors scare you in your business?

GT Dave: Absolutely. I mean, we’re in the CBD category as well. We have a CBD kombucha as well as a sparkling CBD water. And we started to make our way into the CBD world about two years ago and where we’re at now is exactly what I was worried was going to happen, which is unlike kombucha for the most part. 

Until recently, kombucha was really difficult to access because you had to get your hands on a culture, you had to cultivate your culture, so you had many of them to make many batches and all of that. So there was initially a high barrier to entry. With CBD, there’s not really. I mean, you can just buy the ingredient and throw it in your product and just start making outlandish claims.

And so what has that done? That is going to slowly erode consumer trust. You’re going to have regulators that are seeing red, and then what happens out of that, you’re going to have all these weird regulations that are basically coming in to intercept or prohibit this type of behavior, but sometimes it’s almost too late. 

And so that’s my concern with what could potentially happen to CBD are these empty promises, these exaggerations, these cure-all claims, which, like I said, there’s nothing, including kombucha, that is the only thing that can cure you. There’s no such thing as a singular cure.

Gary Nowacki: Yeah. The good actors I know in the CBD space are actually asking for regulations to get rid of the bad actors and force them out.

GT Dave: Exactly.

Gary Nowacki: So as your company grew, and you’ve got more opportunities going for you and a growing legion of fan, what but what makes sense in the food and CBG space is to look at line extensions. And so recently, for example, you launched a new line called ALIVE, which is – and I hope I pronounce the word directly here – adaptogenic. Can you tell our listeners about that?

GT Dave: Absolutely. So, you mentioned a great point. So, in 2017, I renamed my company GT’s Living Foods. And the reason why that was important is I started to sense that the kombucha category could potentially run the risk of being overexposed and bastardized to a point of no return. 

And what I’ve always said is kombucha is something that’s very special, and it certainly brought me and my company to the dance, so to speak, but it is not the only thing out there that is healthy. In many ways, kombucha is a representation of these living, medicinal, healing foods. 

And so what I wanted to do is I wanted to utilize the platform that I’ve been blessed with of now a company and a brand with resources, and I want to use that as a platform to launch other similar health and wellness products that I can say with confidence are the best tasting, most potent, and provide the most efficacy to those who consume it.

So the first thing that I launched—and this was at the middle of last year—is ALIVE, which has adaptogenic ingredients. And adaptogens are in many ways one of the cutting-edge ingredients out there, and there’s a lot of them. And the reason why they earn that kind of name, adaptogenic, is what they do is when you ingest them, they adapt to your body’s needs. 

So again, unlike a prescription drug that you take this and it will do that, an adaptogen has more of an organic quality where it kind of listens to your body, and it finds what ails it, and it helps correct it. So, in doing that, it helps promote homeostasis within the body, which is similar to what I was talking about earlier of a state of balance. 

And so in ALIVE, we utilize these fruiting-body medicinal mushrooms, a trio of them with chaga, reishi, and turkey tail, and these are these almost prehistoric mushrooms that grow on the bark of trees that, when you harvest them—and we harvest ours in the [Pacific] Northwest, and they’re grown wild. And we brew them for nine hours to pull out all the antioxidants and all the nutrients. 

And then that liquid is almost as black as a liquid of Coca-Cola, has very little flavor, but the reason why it’s so dark with color is it’s so rich with these antioxidants and phytonutrients that, when ingested, helps strengthen your body on a cellular level, help detox, help fight oxidative stress, which is honestly what we need more than ever in this day and age. So it complements what kombucha does because kombucha helps to detoxify and restore balance in its own way, and so does ALIVE with its adaptogenic ingredients.

Gary Nowacki: So that’s an interesting brand extension. And has that been very successful for you?

GT Dave: It has.

But it’s by no means going to be an overnight success. And I’m fine with that because I believe that the best ideas are the ones that they’re so out there for people that people don’t know that they need it.

And so your opportunity is to educate people so they know that they need it even before they realize it. And so with ALIVE, it’s very, very popular with the cutting-edge health foodies, but for your mainstream shopper—ALIVE’s not going to be in Costco anytime soon. Let’s put it that way.

Gary Nowacki: It almost sounds like it’s Back to the Future with the education you had to do way back in the 90s.

GT Dave: Exactly.

Gary Nowacki: So another line extension that you guys have been very successful with is seasonal batches and different flavors. My daughter gives you a big shout-out, by the way. 

I was talking to her yesterday about this podcast, and she said, “Oh, Dad, you got to tell them I’m a hardcore GT’s Living Foods fan.” Love the seasonal. Love a lot of the flavors you’ve been coming out with. 

So what’s your strategy there with keeping your consumers happy and attracting new consumers?

GT Dave: Well, first of all, thank your daughter for me, and tell her that I love her. 

So, the seasonals are a great topic for me because they do two things. One is I think every company needs to articulate what their cardinal values are, and our seasonals allow us to do that. And so with every season—of course, there’s four of them. We started off the year with Pure Love, which we reference that the definition of pure love is unconditional. Right? It has no age, gender, race, creed, what have you. 

And then from there we move to spring, which is Bloom, which is our way of saying that we believe, just like the butterfly, which is the imagery on the label, transforms from the caterpillar, we believe that every day is an opportunity to personally transform our bodies and our lives. 

And then the third one is Unity, which is our summer edition. And Unity is inspired to celebrate the human connection and humanity and equality and what brings people together, that we believe that there’s more that brings together then pulls us apart. 

And then we round out the year with Living in Gratitude which is, of course, what we’re producing right now, which is just an opportunity to reflect on the year and celebrate the little things in our lives that we sometimes overlook, like a roof over our head or running water or a smile from a stranger. And so it really allows us to talk about these special, call it pillars, that we subscribe to and endorse, our way of living that we think and we know our fans resonate with because it helps them have a more intimate connection with us as people as well as our brand. 

And then the second thing that the seasonals do is, at GT’s, we’re a sizable company and sometimes what that can bring, as a disadvantage, is it can sometimes make you somewhat bloated and slow to move and not very agile. So with our seasonals we literally switch our production and our label and all the flavors every three months aligned with the changes of the season. 

So, it was really important to me as a brand, the seasonals prove to ourselves as well as the people that we do business with and, of course, ultimately our consumers, that we may be big but we still can be small.

And we’re not so big that we can’t leverage seasonal ingredients or seasonal expressions or just seasonality, that we certainly have the opportunity and the resources to act like a small company, because in our heart of hearts we’re still very much a startup small company.

Gary Nowacki: I’m really finding this pretty damn impressive. So you’ve already got passionate consumers, net promoters like we talked about, you don’t have to spend any money on advertising, so you’re obviously deeply connected to your consumers over the health benefits and so on, and the quality of your product. 

And then, what do you do? You up your game with things like seasonal and the ALIVE adaptogenic. Are you finding you’re even taking it to the next level with your customers in terms of how deeply connected you are with them?

GT Dave: Yes, and you have to. Because in this day and age, there’s so much noise in the marketplace and so much noise in the industry of everybody trying to be the next darling, the next unicorn or jewel of the health and wellness industry. You have to be a pioneer; you have to blaze trails to really stand out and be here for the long term. And so that’s something that we remain committed to.

Gary Nowacki: So with so many different products on the marketplace now, what’s your commentary on things that do get some press like sweetness levels and changing consumer tastes and demands? What’s your position on all that? What’s the landscape out there?

GT Dave: Well, I have a couple of opinions. 

So, one is anything that encourages consumers to read the label of what they’re ingesting, I’m a fan of and I will always support, because education is key. We need to know what are the ingredients that we’re consuming, how it’s made, who’s making it, and ultimately, what’s the nutritional profile.

Now, there is a line that you have to draw, though, and we saw it 10 plus years ago with Atkins, which was the low carb, high fat, high protein diet. And now you’re seeing it again with keto. And I’m not saying that these diets are bad explicitly. I just want to exercise or suggest that people be super cautious when they embark on these journeys. 

Because what happens is, and we do it too much here in the States, is we get caught up with macronutrients. And a macronutrient is fat, protein and carbohydrates. And that’s all we look at; we don’t look at nutrients in the form of vitamins and antioxidants and how it’s made and minimal processing. We just look at those three things. And in doing so, you create this imbalance. 

And so even more than ever before, sugar has been demonized to such a severe degree that people have kind of lost touch that nature did create sugars for a certain reason. And our body does use sugar as fuel. Now, I’m not saying go pick up a can of Coke or eat a Dunkin’ Donuts or something, but I’m just saying is that you need balance. 

And I’ve talked to people that have stopped eating fruit because of sugar. And what they don’t realize, they’re depriving their body of that fiber, those antioxidants, the water, the assistance that fruit gives to the body through elimination and detoxification. And they’re doing it just because they’re following keto or they’re following the latest trend that, again, hopefully will go away in the next year or two. So that’s a concern that I have with the modern-day emphasis on certain nutrients, is that you kind of go in the opposite direction and you get out of touch with nature, which is, of course, not a good thing.

Gary Nowacki: And so another area that’s interesting for kombucha is non-alcoholic versus alcoholic. I guess it was about seven or eight years ago you introduced your Classic line. Can you talk to our listeners about that and your position on the market opportunity?

GT Dave: Absolutely. So, first and foremost, I mean, when you’re making a fermented product, a traditionally fermented product, you always will have some form of alcohol in it. And that’s okay. It’s actually a great thing, because alcohol is nature’s way of preserving itself. And it’s also nature’s way of protecting whatever you’re fermenting from getting contaminated and growing bad bacteria. 

So the alcohol in many ways is a preservative. So it’s okay. Now, kombucha has a trivial amount of alcohol. Other fermented foods have a trivial amount of alcohol. And that is it. 

Now, what we’ve learned recently is that with the trend of these hard seltzers that are coming out, so the White Claw, the Truly, and all of that, is that there’s a consumer that is now wanting to drink alcohol again. Which is unusual because for a while there, alcohol was considered dead and buried as far as what people were pursuing because people wanted to be healthier. But now, out of the blue, people want to drink alcohol again, but they just want to drink it without any sugar or anything like that.

And so kombucha is now turned into—there’s a new category within kombucha called hard kombucha. And what it is, is it’s a kombucha that has a higher level of alcohol content that candidly doesn’t occur naturally in the kombucha. And so what you have is two versions of a hard kombucha. 

And I can speak—I can give you my opinion on this. It’s a valid opinion because we at GT’s actually make a hard kombucha. So in my mind, there’s two kinds of hard kombuchas. There’s the one that you make your kombucha like you do in a traditional sense, and then you ferment separate ingredients, whether that’s fruit juice, hops, wine, whatever. And then you pair it up with the kombucha to create a higher ABV. So we have a line of kombucha called our Classic Gold, which has a 3% ABV. So you can taste the alcohol, you can feel it lightly, but it’s not compromising the efficacy or the active qualities of the raw kombucha. 

Now, the other kind of hard kombucha that’s out there starts off as a regular kombucha, but instead they pitch in a lot of additional fermenting agents, which could be any kind of sugar source, and then a lot of beer yeast, because the beer yeast is really what creates the high level of ethanol. 

And so when you pick up a hard kombucha, depending on the alcohol level, because there’s some out there that are hot as high as 7%, what you’ll notice likely is it no longer really tastes or feels like a kombucha. It really just tastes like a beer. And that’s okay. But the frustration that I have is I just hope and pray that that’s not the only impression that consumers have because again, as I said earlier, I don’t want it to change the profile or change the personality of what kombucha is intended to be.

Gary Nowacki: So your view on alcohol is it’s okay to put it in there if consumers know what they’re getting as long as you’re staying true to your original benefits of kombucha.

GT Dave: Yes. And as long as it still is a kombucha product. Because if it’s now, through the addition of other ingredients and other yeast and what have you, if you’ve really tipped the scale to more of out of a beer, you probably should just call it a beer then. 

And you can say it’s a beer with kombucha flavoring or a beer mixed with kombucha or whatever. But I get a little nervous when people are like, “Oh, but it’s still kombucha, and it still has all the health benefits,” because that’s not totally true. And it has a lot of alcohol.

Gary Nowacki: So switching gears a little bit on you. I go to a lot of industry conferences on food and beverage innovation. And right now, in my career—I’ve been in this business for over 25 years—I’ve never seen so much money-chasing, new opportunities, and new ideas, venture money, angel money, etc. 

And so the dream out there for a lot of these entrepreneurs seems to be, “Hey, I’m going to come up with a nifty product. I’m going to scale it. And then the whole end game is to sell this for $100 million or $500 million to Kellogg’s or Coke or somebody else.” And that’s what a lot of people are chasing. That doesn’t seem to be what you’re chasing. What makes your mindset different?

GT Dave: Well, a couple of things. And I’m not trying to toot my own horn, but because I was raised by two very spiritual parents who exposed me to more than Eastern way of thinking and living, I was kind of raised that money is kind of the root of all evil, right? And that, as they say, you can’t buy happiness, but you certainly can buy misery. 

And so I learned early on—because I was fortunate to run my business in a very responsible way that I was able to experience financial success and call it my young adult life. And I recognize really quickly that if I use financial success and the money that I have in my bank account as my identity, that I was going to live a very miserable life. 

And so, what kind of gets me excited and what really gets me up in the morning is the opportunity to make a product that I believe in and that I know is helping people. And to me, there’s nothing sweeter than that.

So yes, I’ve been approached, and yes, I’ve been offered the opportunity to exit and whatever. But honestly, every time that happens, I say to myself, “But what will I do?” I’m not going to retire and hang out on a beach. I’m not going to just travel the world and live a recreational life. 

I’ve been blessed with something that came into my life, blessed my life as well as my family’s life. And I believe it’s helping others. And I want to do this for as long as I can. And because I have seen so many companies who started with that kind of intention but slowly get tempted and intoxicated with the financial success that can come with growing a business and ultimately selling it. 

But when they do sell it, they almost always regret it. And the reason why I see that and the reason why I believe they regret it is that you see your baby kind of lose its identity. You see these big companies who don’t know how to protect and celebrate these unique offerings, and instead, they kind of just try to force them into their massive corporate structure, and so that product, whatever it is, slowly loses what made it special, and honestly, I rather die than see that happen. 

And the truth be told, my name is on the label, so that even forces me to answer to a higher level of integrity because people will know that I’m the guy that sold out and that GT’s Kombucha is now in a plastic bottle, and it’s now pasteurized, and it’s now shelf stable. And I couldn’t look at people in the eye and say, “Yeah. I think that was a great idea, and I’m very proud of it.”

Gary Nowacki: So as long as you’re excited to get out of bed every morning and go to work, you’re going to keep at it?

GT Dave: I am until somebody tells me to stop or until I’m no longer good at it or physically unable to do it. But I’m here for the long term, and to be honest, I feel like I’m just getting started.

Gary Nowacki: Well, speaking of that, you’ve recently launched into a new area which is your new product called Dream Catcher, which is infused with CBD. So, let me ask, GT, what made you want to get into that business, and what are the benefits to your customers by having this blended kombucha and CBD product?

GT Dave: Well, so again, I’m a big believer in plant-based medicines, right, which is why I love kombucha, which is why I love the adaptogenic ingredients that we talked about a second ago, and certainly why I love the hemp and cannabis plant. 

And I’m a big believer that the hemp and cannabis plant contains so many different nutrients and medicines that really would help our society get off of prescription medicine and help heal and balance, and so CBD is clearly no exception. And what I love about CBD is its anti-inflammation properties, is its cognitive health, especially in this day and age where we are mentally overwhelmed by so many beeping and buzzing and vibrating and news alerts and social media notifications and all of that, that our minds are being overwhelmed. And something like CBD helps restore us to a state of mental balance, which is so critical. 

And so I wanted, just like kombucha, to be one of the first to be a steward of the CBD and make sure that I put it in a product that was a high-quality product, and we used a high-quality CBD, that we didn’t make outlandish claims, and we didn’t use cheap CBD ingredients. 

We used the best of the best. And like everything we do, we put it out there in a responsible way to the marketplace and let the consumers enjoy it. 

Now, of course, we’re being challenged by some of the bad players in the market where that’s tarnishing the reputation of CBD, so it’s easier said than done when it comes to selling a CBD product.

Gary Nowacki: Yeah, that’s a whole different topic, and recently we have had several guests on this podcast just delving into all of those issues because right now, the industry is crying out for regulation from Congress and FDA. 

So moving to a related topic, you just said if we could deliver fantastic plant-based therapies to folks, whether it’s kombucha or CBD or other things, and we could get people off of some of the pharmaceuticals that they take, wouldn’t that be great? 

The next frontier, it seems to me, is in personalized nutrition, where we will all have very specific custom-genetic profiles and recommendations on, specifically, the types of diet that we ought to have, the types of plant-based solutions we ought to be taking. What’s your take on this whole area around personalized nutrition. And what are your plans if you can share any with our listeners?

GT Dave: Well, first of all, I think it’s incredible. I think that this is where technology can be a good thing, that if we can have a deeper understanding of what makes me different from you, and how that plays a role in what I should eat versus what I shouldn’t eat versus what you should eat versus what you shouldn’t eat. 

I’ve always been a big believer in even knowing your blood type. Because I’m, for instance, B negative, which says a lot about my lineage as well as the foods that I can eat or cannot eat. And again, something like a tomato, just picking that as a random example, is generally recognized as a health food or a clean food or whatever. But it may not do well for me, or at least, I may have to watch my consumption of it.

Gary Nowacki: It’s an inflammatory for you?

GT Dave: Yes. And so, that’s the thing, is that people need to understand that when it comes to health and our food, it’s never a one size fits all. So the more information that we can factor into that so we can be more precise with identifying the good and the bad, I’m an absolute supporter of.

Gary Nowacki: So, before we go into wrap-up, GT, you’ve had quite a journey, tremendous success. Could you possibly give two or three business tips to innovators who are out there listening to this podcast, hoping to have a very successful food or CPG business, beverage business? What are the tips you might give them?

GT Dave: Well, it’s quite simple. I mean, I’ll give three basic pieces of advice.

One is do what you love, right? And what I mean by that is you need to do something that you genuinely are enamored by. It’s not just because you think it’s cool or people will like it. It’s something that you live and breathe in. So that’s number one.

Number two is you must make something that makes the world a better place and improves people’s lives. Because gone are the days where people just make somewhat whimsical stuff. I mean, there’s still an opportunity, here and there. But if you want long-term success, and if you want to stand out from the crowd, you need to do something that is significantly changing the world for the better and improving people’s lives. 

And the third, which is in many ways, probably, the best piece of advice is keep it simple, and go down a slow and steady path. And what that really means is that I think in this day and age, with our access to information on the internet and our smartphones and all these other devices and technology that we have access to, we’re now living in a world where everything is instantaneous, and you have instant gratification. 

But when it comes to growing a business and launching an idea and a product, you really don’t want it to be instantaneous. Because you kind of need to pay your dues, and you need to slip and fall and pick yourself back up and all of that. Because that really does build character. And that really does build a foundation, that when that storm, not if, but when that storm comes your way—because it almost always will—every new idea must encounter some kind of challenge. Because if it doesn’t, then other people would have thought of it, right? 

If it was easy, others would have done it by now. So, if you stay on that simple and slow and steady path when those challenges come your way, you have the strength to weather that storm.

Gary Nowacki: I like it. Really good advice. So, yeah. I guess, I’d net it out to do good, and you will do well. And don’t take shortcuts. It may take years, but your inflection point will come.

GT Dave: Exactly.

Gary Nowacki: GT, any other last words of wisdom you’d like to share with our listeners before we close?

GT Dave: I mean, for me, it just really is understanding that the world is changing, right? And our food, in many ways, is changing for the better. But the thing that everybody needs to pay attention to, which is, honestly, the most important thing, more important than any product you can buy, is climate change. And that’s making sure that anything that you put your dollar towards, that you understand the company and the product they make are cognizant of this planet and are doing their part in helping to heal and save and improve this planet.

Gary Nowacki: An educated and a thoughtful consumer.

GT Dave:

Gary Nowacki: I’d like to thank my guest, GT Dave, founder and CEO of GT’s Living Foods, probably the oldest and leading kombucha maker. GT, thank you so much. It’s been a great episode of the podcast.

GT Dave: It’s been a pleasure.

Gary Nowacki: Thanks for listening to CtoC, where we cover innovation in the food and CPG business from Conception to Consumption. Just type the letters C-T-O-C, no spaces, to find us on iTunes, Stitcher, Podbean, and Google Play.

Conclusion: This podcast is produced for informational purposes and does not constitute any scientific, legal, or medical advice. The views and opinions expressed by guests of this podcast are those of the guests alone and do not necessarily reflect the opinions and positions of the host or any other entity or organization. Listeners are encouraged to listen with an open mind and form opinions of their own.

This podcast is produced for informational purposes and does not constitute any scientific, legal, or medical advice.

The views and opinions expressed by guests of this podcast are those of the guest alone and do not necessarily reflect the opinions and positions of the host or any other entity or organization. Listeners are encouraged to listen with an open mind and form opinions of their own.

This podcast originally aired on November 14, 2019.

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