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True Buch Kombucha Business Analysis

Info: 4531 words (18 pages) Essay
Published: 23rd Sep 2019 in Business

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  1. Description of the Venture

a)      Products and services (and where/how operated. i.e. online, physical location), identify its strengths and weaknesses

True Buch Kombucha was started from the home and was first experimented on families’ members and other relatives and as the demand existed in the market, they opened their production system in Cochrane, where they shared the kitchen with another company. But as the demand of the product increased then it became struggle for them to meet the demands in that small kitchen, so they moved in a new warehouse bay that was in Northeast Calgary. They distribute their products from there to suppliers. Currently they have just over 300 retail partners across Canada. (“Meet our local suppliers, True Buch Kombucha products | SPUD.ca”, 2019)

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Strengths: True Buch possess lots of strengths that includes the benefits for this towards the health, organic ingredients, high quality, very less effect on the environment from raw materials to delivery, strong donations. Beside this the thing that connect the people towards the True Buch is the story behind it. It has a great story that people get attached to it. More over for the health-conscious people this drink is the best as it has the benefits like improving immune system, detoxify blood, improve digestion and strengthen kidneys and liver. Moreover, as it is well-known in almost every province of Canada, so they can expand the business. Also, as it is an ancient product, people believe in the ancient products and recipe more so at every turn they have chance to make more customers on the bases of values and benefits and flavors too.

Weakness: The main weakness of the True Buch Company is the capital. They don’t have enough investment for further expanding their business. Secondly, they have problem in completing the orders. They have less production as compared to the orders. They don’t have proper technology that can work efficiently and complete orders before time. This can be a big trouble for the company to meet the everyday deadlines. Secondly, they don’t have any plan or strategy for further business. As they have changed their hobby into business but it a business requires a proper plan and strategy that they don’t have. It matters for the company to stick to same quality as it was in the beginning, but there are lot more other things that one business requires. A proper plan and a strategy is must for the business and they both lack in this.

b)     Size of business

The global Kombucha market size was valued in year 2015 in Canada was only 2.3 million, and it had grown by 30 percent as well as expected to reach $6.0 million by 2021. Kombucha is a very small business with very few competitors in Canadian market which reveals that it has full of opportunities to expand their business.

This market is anticipated to be driven by rising item advancements, season experimentation, and purchaser mindfulness about medical advantages related with the item. Kombucha is a organic drink which is expected to uplift in demand over the period of time and most of the customers are prefer to buy this organic drink because of refreshing taste.

Kombucha manufacturers have tie up with different distribution hubs such as supermarkets, online stores, and health stores to boost the product availability in the market. Most of the manufacturers prefer supermarkets as a distribution partner for the sale of their products but on the other side online stores are also expected to gain a strong presence in near future. Online stores are also expected to have an important factor to increase the online purchases of kombucha beverages.

Some of the factors that determine the size of the business

First one is the capital, Kombucha drink fall under category of small business because this business was started by Conrad and Louisa from their personal savings. The capital come from their personal savings which they had been used to bought essential equipment to produce true kombucha in massive quantities. They also have limited capital as well as very few vendors such as local farmers and small food retailers where they can sell their organic drink in kegs. In Kombucha company, only four employees are working including Conrad and Louisa and also two part-time employees. (Moody & Ambrose, 2019)

c)      Background of the entrepreneur/management team

Conrad and Louisa Ferrel, both are chartered accountant and both of them have successful career in corporate. Both of them they did not have business background. They just started brewing kombucha organic drink at home for his wife because she did not drink any other drinks that are available in market because she gets infected from other drinks except organic drink. So, the Conrad Ferrel decided to make an organic drink at home which mixture of “SCOBY”. With the background of accounting, Conrad wanted to create a company that they did more for their customers. After many years brewing at home, Conrad with his wife Louisa, reject his accounting career and make a jump to brewing kombucha. Today, he is just as active as ever in the operations and strategic planning of True Buch. Since beginning True Buch, she is focused on guaranteeing True Buch Kombucha is an association that helps the planet, the network and the creatures. Today, Louisa works eagerly to develop True Buch with inventive thoughts with an astute mission.

Conrad and Louisa continued to make a better their Kombucha recipe by getting suggestions from their family and friends and also more focused on quality of the product, all products are locally grown that are available in the market. By 2012, the couple considered mass creating their fermented tea for the Calgary advertise yet after they understand that it isn’t correct time for fermented tea since this is additionally obscure in the market. But in late 2014, Conrad provided a local business with four 18.16 litre kegs of kombucha and Conrad thought that these four kegs would not last the business from than a month but after 2 days all four kegs were empty, and the business wanted more kegs in demand. So, then Conrad and Louisa think its sign for growth of the company. As their hobbies put into the business and then they quit their corporate jobs and officially started true kombucha company. (Moody & Ambrose, 2019)

Industry Analysis

Industry and market forecast

True Buch Kombucha a well-known product in the market. This product has experienced a significant growth in the market in its initial years. It has been trend in the health food industry as it possesses vast health benefits that are liked by the customers.

Talking about the industry and the market forecast it will essential for the Kombucha to analysis the present market and then predict the future market and analysis. The market and the industry growth depend on the supply and demand of the product and number of potential customers at the present time.

The demand for a True Buch in a market is considerable. Their business is known locally and, in the cities, as well. There was a demand of True Buch in the people and customers. As we can analyze it from the Quantitative data. In 2015, the Kombucha industry in Canada was $2.3 million, but it had grown by over 30% year-over-year for the previous five years and was expected to reach $6.0 million by 2021. Form this data we can analyze that the True Buch have a great future ahead. Talking about the growth of Kombucha in United States, there were only two major competitors wonder drink and high drink. Kombucha was responsible for over 55% of the US $640 million since 2014 and by 2021 it was expected to reach $1.7 billion. It was growing rapidly both in Canada and United States. The market is competitive and was driven by an increase in the trend of “health and wellness” and the growing consumer demand for all-natural ingredients. (Moody & Ambrose, 2019)

As from the above data we can analyze that U.S and Canada have the highest demand for the product. As it is an ancient product, it is used in china and was known as tea of immortality and same as in Asia and Europe and it was popular just because of its health benefits and organic ingredients. Europe was one of the biggest markets for producing Kombucha in year 2016 and also there were many countries those were leading in driving the growth of Kombucha and the countries were UK, Germany and France. During the prediction period the demand for the Kombucha was to be increased in Germany and France as it was giving a positive result in the present time and it was just because the people was more health conscious and the numbers were increasing according to the demand.

As the Kombucha comes with vast intestinal benefits but it also helps in preventing diabetes and cancer. And due to its unique benefits, the popularity of Kombucha grows rapidly in the health and wellness concerned world. Also, the market is expected to grow at the compound annual growth rate (CAGR) of 15%. With the lots of benefits, it also comes in lots of flavors like watermelon lime, grapefruit sage, blueberry, and rooibos which give customers the health benefits with unique taste.

Due to the properties of Kombucha artificial leather can be manufactured and this can give the great opportunity for the manufactures to expand their business in different type. Also, many of the manufactures are using this method. Beside these all these things Kombucha also helps to get relief from stress and provide energy to the mind.

From all these reports it can be analyzed that Kombucha has known almost every part of the world from North America, Europe to Asia pacific. From these major contributing countries are Canada and U.S and it will be increasing day by day according to the popularity and demand of the product. And because of its quality and benefits that are associated with Kombucha and people are addicted to it because of the health-conscious world. (“Kombucha Market Analysis, Regional Trend, Industry Demand, Top Key Players, Current and Future Plans by Forecast to 2023 – Reuters”, 2019)


Future outlooks and trends Of True Kombucha

The global Kombucha market advertise records an income more than USD 1.5 billion out of 2017 and is required to develop at a CAGR of 17.5% amid the conjecture time frame (2018-2023). The market is aggressive and driven by an expansion in the pattern of “wellbeing and health” and the developing buyer interest for every single regular fixing. Kombucha Breweries has been obliging the developing requirement for the item by giving normal assets and testing principles. Distinguishing proof of the liquor substance of fermented tea is basic; for that, the organization utilized an institutionalized technique to test and control.

The market has been portioned by strain type (microscopic organisms, yeast, form), type (unique, seasoned herbs and flavors, natural products, blossoms, others), application (drinks, heated merchandise, ice cream parlor, dairy items, handled nourishments) and area. The inclination for natural refreshments has affected the development of fermented tea advertise. This is because of increment in shopper’s inclination towards natural matured beverages. Shoppers comprehensively favor seasoned fermented tea drinks, and the section represented around 80% of the piece of the overall industry in 2017. Enhanced beverages are the significant section of the fermented tea advertise, which has seen enormous development from the previous 3-4 years, as the organizations have created conventional beverages with included colorful flavors, to pull in purchasers. In addition, organic products are relied upon to command in the coming years, because of their additional medical advantages. (“Kombucha Market (2018-2023)”, 2019)

Kombucha Market just as the one with the sort with the quickest development direction alongside their point by point investigation. The sorts in the Global Kombucha Market are to a great extent subject to the applications in the Kombucha Industry. Thus, the report further covers the applications in the Kombucha Market as pursues:

• Age beneath 20

• Age between 20 to 40

• Age over 40 (“Kombucha Market | Size | Trends | Analysis | Forecast (2018-2023)”, 2019)

Analysis of competitors

True Buch Kombucha is the healthy drinks made with the help of the fermenting tea and sugar which helps in digestion. True Buch Kombucha have direct as well as indirect competition with the other healthy drinks like wonder drink, high country, rise Kombucha and Tonica. These are the drinks which strongly compete with the true Buch Kombucha. Basically, according to our case study these drinks have direct competition with GT’S Kombucha in the US. But, GT’S Kombucha have very good figures as compare to the other healthy drinks. In 2021, the GT’S Kombucha business was expected to reach at $1.7 billion. Further, there were many other healthy drinks which were giving direct as well as indirect competition to the true Buch Kombucha but, these two drinks have a heavy impact of competition on the true Buch Kombucha. Also, true Buch Kombucha is made up of the natural organic ingredients so, many people show interest in the true Buch Kombucha rather than the other healthy drinks. Other indirect competitors were wine, soda, juice, beer and etcetera but true Buch Kombucha is a very strong part of the competition. (Moody & Ambrose, 2019)

Market segmentation

True Buch

Illustrating the market segmentation of True Buch is divided into four parts which are: –

  • Geographic: – Looking at the geographical factors True Buch is a Calgary based kombucha brewing company which is owned by Louisa and Conard. As both Louisa and Conard was living in Calgary, so the couple considered mass of their production from the market of Calgary. The kombucha’s business was immensely changing which states as a result of increasing the demand existed kombucha.
  • Psychographic: – This factor considers local farmers and some health food retailers. People who are health conscious or the one who cares about their diet and the local farmers who were operating their own business they purchase kombucha from True Buch. Physical environment and the people who can’t intake other beverages like juice, soda, beer, wine etcetera. Patients can uptake kombucha because they don’t have negative impact on health as they are produced with the organic ingredients.
  • Demographic: – Considering the population of Calgary which is the fifth-largest census metropolitan area. (2019) It was a big scope for Ture Buch to grow their business overall looking at the demand of kombucha tremendously thriving in Calgary, True Buch was targeting the Calgarians for their business. People were getting attracted to this drink because it was made up of all organic ingredients and is very helpful for the digestion, which brings more and more customers to their business. There was nothing that they were focusing on an ethnicity or a tribe, but they wanted to grow their business over Canada.
  • Behavioral: – Focusing on the behavioral factor True Buch’s customers are looking for something which would increase their health gastrointestinal. Looking at the core values of the company which includes the deliciousness and the sustainability of the product. In order to have their loyal customers True Buch is committed to handcrafting taste, with very little impact on environment as they only use organic ingredients which ultimately attract the customers and made them loyal towards their product. The goal of the company was always for their Kombucha to have a positive influence on their client’s digestive system and their lives. The company seeks the best response of their customers toward their product.

Problems faced by the True Buch business

  1. Financial problems: True Buch was facing many financial problems like for instance True Buch was not having any financial support from outside. Louisa and Conrad were simply investing all their profits in the company to run their business. So, reinvesting their profit into the business would no longer be enough and it would affect the growth of the company.
  1. Shortage of labor: True Buch was also facing the labor problem. There were only four of them which are working in the warehouse, Louisa and Conrad were taking care of the administrative work and there were two part time workers who were helping them in the deliveries in the warehouse. Due to the shortage of labor true Buch were unable to increase their production properly.
  1. No proper equipment’s: True Buch have very less equipment that can give more output and meet the demands. This is the big issue for them to meet the requirements of business and for the new setup they need some investment money and that was hard for them to manage from their profits.
  1. Lack of planning and strategy: There was huge lack of planning and strategy in their business. So, they need to have a proper plan and strategy to make their business successful. They don’t have any future plans for marketing or new products or to maintain the growth.

So, all the things like profit, lack of equipment’s, planning and strategy are interlinked if one of the things get inaccurate the others will affected simultaneously. If one of these will problem the others will also stand as an issue to erode the business slowly.

 

SWOT Analysis

Strengths

  • Organic ingredients
  • Vast health benefits (trend in health food industry)
  • Zero waste principle (respect for earth and all people)
  • Well- known and huge success in short time
  • Highest quality (locally grown products)

Weakness

  • Production line (shortage of labour, no proper machines equipment)
  • Don’t have any plan or strategy for future
  • Not enough capital investment
  • Brewing time is long

Opportunities

  • Few competitors
  • Great demand in Calgary and beyond the city of Calgary

Threats

  • Small, regional competitors – try to gain a larger share of rapidly growing market.
  • Maintaining the same growth in future

 

 

Strengths: True Buch Kombucha have number of benefits that are strengths for them. They use all the organic ingredients. All the natural ingredients are grown locally. With the natural ingredients it has a vast health benefit. People like to buy this because of the benefits like improving gastrointestinal health and it is delicious and sustainable endeavor. And people are too much conscious about their health. True Buch Kombucha is environmentally friendly as they have been sticking to the zero-waste principles. Also, the handcrafting, small batch of Kombucha have a very little environmental impact. The company have teamed up with Respect for the Earth and All People too plant trees every year. It is well- known and get huge success in short period of time.

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Weakness: The brewing time for the drink for the drink is too long that is 15 days. This time period is long as it will be time obstacle for the business. There will be a risk to meet deadlines. Also, it will take more time complete order. And moreover, it may lead to discontinuity in fulfilling the line- up. They don’t have enough funds to invest in the company. Like they want to expand the business internally the need money for the production and distribution line as they don’t have enough resources for production and distribution. As they have changed their hobby into business but it a business requires a proper plan and strategy that they don’t have. It matters for the company to stick to same quality as it was in the beginning, but there are lot more other things that one business requires. A proper plan and a strategy are must for the business and they both lack in this.

Threats: True Buch have threat from the small competitors that can make substitute or make any better product so it can be big threat, especially form the local competitors. Secondly, they also must maintain the same growth as the taste and the demand always fluctuates, and it is not easy to understand the market and peoples demand. So, it is not easy to maintain the same growth with same products and same production.

 

Opportunities: True Buch Kombucha don’t have much competitors in the market so they have opportunity to expand their business and it has a great demand in Calgary and also in the other provinces so it will work as a great opportunity for the True Buch to increase their business in different region and more revenues.

Among wellbeing cognizant individuals, green tea moves like hotcakes. In this manner, they are pulled in to Kombucha which is aged with a parasite of the green or dark tea that is known as “advantageous culture of acidic corrosive (vinegar) microbes and yeast,” or “SCOBY.”Aloe Vera, basil, berries, citrus, and ginger are utilized for seasoning the beverage. The worldwide Kombucha advertise has been portioned based on the dispersion channel, bundling, types, and in conclusion, the area. Based on the dissemination channel, this market has been divided into store-based and non-store based. Among these, the store-based dissemination channel is required to hold the significant piece of the pie amid the conjecture time frame. Non-store-based conveyance channels incorporate internet business stages. Considering bundling, the market is sectioned into glass, metal, plastic, and others. Amid the conjecture time frame, the plastic portion is relied upon to hold a noteworthy piece of the overall industry in the market. It is likewise expected to develop at a considerable rate over this period. By the sorts, the market has been sectioned into dark tea, green tea, and others. As per the report, green tea section gives off an impression of being picking up the most elevated development rate amid the gauge time frame.

Latest Industry News: 
 

The espresso fasten Starbucks has declared to move its own line of the in vogue aged tea, Kombucha. Starbucks (SBUX) is putting forth six kinds of Kombucha under its Evolution juice brand. 10 AUG 2018 (“Kombucha Market Global Opportunities, Demand, Latest Development, Growth Estimation, Business Strategies, Upcoming Trend and Forecast Report to 2023”, 2019)

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