Peet’s Coffee invests in Petaluma’s Revive Kombucha

Revive Kombucha announced Thursday that Peet’s Coffee has led a $7.5 million investment in the Petaluma beverage company, allowing it to ramp up operations and expand distribution as the fermented tea category continues to grow rapidly in popularity.

Founded in 2010 by a local couple who began peddling their organic tea at the Santa Rosa farmers market, Revive will now partner with a beloved Bay Area coffee brand that pioneered the production and sales of specialty coffee in the United States.

The deal is the latest sign that Sonoma County has caught the attention of major consumer brands as an emerging food- and drink-production mecca - outside of its signature wine industry. It follows on the heels of Heineken International’s purchase of Lagunitas Brewing Co. of Petaluma, Swiss dairy Emmi AG’s acquisition of Cowgirl Creamery of Petaluma and Hershey Co.’s purchase of Sonoma-based Krave Jerky.

“We are gaining an increasing brand awareness across the nation for these companies,” said Ben Stone, executive director of the Sonoma County Economic Development Board. “It’s another part of our (economic) portfolio.”

Under the deal, Peet’s is the lead investor in a ?$7.5 million financing round with other investors, including Blair Kellison, chief executive officer of Traditional Medicinals Inc. of Rohnert Park. It follows a $2.1 million financing round completed at the end of 2016.

Revive co-founder Sean Lovett said he was attracted to Peet’s culture because it was similar to his business, which produces organic and vegan drinks that are made without genetically modified organisms and sourced under fair-trade practices. He saw that firsthand when he met with Peet’s executives at its Emeryville headquarters during investment discussions.

“I walked in and there was all-gender bathrooms; a (LGBT) pride flag was hanging up. Everybody was actively moving around there with purpose,” Lovett said. “I like that to be a legacy for the future we can learn from.”

Kellison said he was especially proud as he mentored Lovett, who never took a paycheck and had to sell automobiles to make payroll to keep his business afloat. In fact, he said, Lovett could serve as the perfect success story for the North Bay Food Industry Group, which promotes local food business pioneers and has been a crucial resource for many manufacturers looking to build their brand. “He’s kind of a poster child for us,” Kellison said.

Lovett and his wife, Rebekah, and their family will retain majority ownership of the company, which now employs ?50 people and distributes in 48 states. Revive’s sales increased 80 percent last year and it is available in stores such as Trader Joe’s, Whole Foods Market and Oliver’s Market.

The company produces a variety of flavors of kombucha, a non-alcoholic fermented tea. Its products include hibiscus and ginger caffeine-free brews, and other non-tea beverages made with coffee, yerba mate and cacao. Many consumers consider Revive’s kombuchas to be more palatable than rival, vinegary-tasting products on the shelf.

The partnership will open other business opportunities for Revive, such as access to Peet’s suppliers for craft ingredients used to make the Petaluma company’s products, Lovett said.

“We walked away from other opportunities,” Lovett said. “We believe the cultural alignment and the craft alignment is what matters.”

Notably, Revive will now also be distributed under Peet’s chilled distribution network, Coldcraft, which can reach more than 1,600 food service, grocery stores and Peet’s locations throughout California. The unit also has a sales team that can help leverage Revive to be placed on crowded supermarket shelves, where it competes with a wide array of drink selections, Lovett said.

“Our investment reflects our belief in the strength and promise of the Revive brand and our own mission to build an outstanding portfolio with multi-channel reach. In so doing, we will enable Revive to better engage with its customers and accelerate its business,” said Eric Lauterbach, chairman of Coldcraft and president of the consumer division at Peet’s, in a statement. Lauterbach has joined Revive’s board of directors.

The kombucha market in the United States grew by an estimated 41 percent last year to $534 million in wholesale value, according to Beverage Marketing Corp., a New York research and advisory firm.

The drink has moved out of a niche market of homebrewers and natural food connoisseurs to become a mainstream product popular with millennials. It is projected to grow to a $1.2 billion wholesale market by 2021.

Those projections have attracted interest from major beverage companies as Coca-Cola Co. and PepsiCo Inc. have made investments in the market. GT’s Kombucha in Los Angeles still holds more than 80 percent market share.

Kellison said Peet’s investment in Revive should pay dividends in the marketplace as kombucha consumers are health conscious and care about who manufactures the drink.

“Peet’s authenticity and culture versus Coke is night and day,” he said.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com.