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BUSN 5051: Marketing Management
Rise Kombucha
James McCarthy
April 5, 2022
Word count: 3854
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EXECUTIVE SUMMARY
This report studies the strengths of Rise kombucha’s products, and surveys Rise’s
competition to find out how Rise differentiates itself. Rise’s target market is identified to
find out how Rise satisfies their needs. Industry trends are surveyed and a PESTEL
analysis is performed to define the external factors in Rise’s industry. A SWOT analysis
highlights some of the details about Rise’s position in the market. Rise’s marketing
strategy is surveyed to identify areas that could be improved. Lastly, the report makes
recommendations for improving Rise’s marketing efforts, which are:
1) Rise should design and use point-of-purchase displays to help its products
stand out in stores
2) Rise should make the word “organic” on its label more prominent to let
consumers know that their product is healthy, and the production of its
ingredients did not harm the environment
3) Rise should cater to one of its target markets – Millennials – with online
coupons that be exchanged for consumer opinions
COMPANY BACKGROUND
Crudessence Kombucha was founded in a small Quebec kitchen by two friends in 2008
with three flavours (Rise, 2022a). Demand grew, and in 2009, they moved their
operation to a loft in Montreal (Rise, 2022a). In 2010, they became the first kombucha
producer in North America to offer quickly popular 1L bottles (Rise, 2022a). In 2012,
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Crudessence became Rise (Rise, 2022a). In 2014, they acquired a larger production
warehouse (Rise, 2022a). In 2018, they received considerable financial backing from
Lyra Growth Partners to scale their operation (Rise, 2022a). Over the years, Rise has
been adding new flavours to their product line, and in 2020, they launched their 1g of
sugar per serving line with four new flavours (Rise, 2022a).
Product Line Information
Kombucha is a fermented drink made by adding a scoby – a symbiotic culture of yeast
and bacteria – to tea made from the leaves of the tea tree (Nyhan et al., 2022).
Kombucha is associated with improving the immune system, reducing irritable bowel
syndrome, helping with weight loss, and helping reduce blood pressure (Nyhan et al.,
2022). Rise’s flavours contain live kombucha that are each flavoured by other natural
ingredients such as fruit (Rise, 2022b).
Rise's kombucha lines contain only organic ingredients (Rise, 2022b). Rise Kombucha
currently has ten flavours in their classic line: peach and mango, lime and matcha,
lychee and jasmine, orange and turmeric, fresh ginger, hibiscus and rose hips, mint and
chlorophyll, lemongrass, blueberry and maple, and rose and Schisandra (Rise, 2022b).
In the last year, Rise has also developed a 1g per serving line consisting of the flavours
kiwi and pineapple, raspberry and vanilla, mango and papaya, and watermelon and mint
(Rise, 2022b). These lines are available in 414mL bottles and 1L bottles (Rise, 2022b).
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Competition
In the last ten years, there has been a rapid increase in the number of companies
making kombucha-based products (Kim & Adhikari, 2020). Rise's competition is
surveyed in Ontario below. All brands use organic ingredients. Ontario's competition
was chosen so the author could view the bottles of the competition in person in order to
detect the notable packaging and product differentiations.
Brand
Bottle
Clear vs.
Size (mL) Coloured
Bottle
Avg.
Price
Sugar
Content
(g)
Rise
414
Clear
$4
10-14
Rise 1g
Booch
414
473
Clear
Dark
Amber
$4
$5
2
16-22
Brew Dr.
414
Dark
Amber
$5
14-28
KeVita
450
Dark
Amber
$4.29
7.5
Tonica
355
Clear
$4
14-16
Opaque
$4
2
Tonica
355
Low Sugar (Can)
Differentiator Availability
in Ontario
by number
of retailers
Innovative,
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great tasting
flavours
Low sugar
13
Large
100,
variety of
including
flavours (17) small
retailers
Innovative
30,
ingredients
including
like CBD oil small
retailers
Claims to
Unknown
have six
(website
times the
broken)
organic
acids of
other brands
Unclear
30
including
small
retailers
Low sugar
30
including
small
retailers
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Remedy
GT’s
Kombucha
330
(cans
and
bottles)
480
Dark
Amber
$4
0
No sugar
10
Clear
$4
12-18
29 different
flavours;
oldest brand
in North
America
13 (major
retailers
only)
MARKET ANALYSIS
Target Market
Rise defines its target market on its website as forward-looking consumers - meaning
those who are innovation-seeking (Rise, 2022a). Rise entices this segment through an
innovative, extensive product line with various organic, healthy, unique ingredients such
as chlorophyll (Rise, 2022a). Rise's name was chosen in reference to the verb "rise," as
in, "rise above" (Rise, 2022a). Through its beverage, Rise seeks to provide its
consumers with the energy and wellness to accomplish goals (Rise, 2022a). In
summary, the market that Rise seeks to appeal to are those who value organic food,
value innovation, and are high achievers.
Segmentation
Geographic Segmentation
Rise Kombucha is available at approximately 150 different retailers across Canada,
from smaller retailers like Dad's Organic Market in Saskatchewan, to large retailers like
Walmart with many locations all across Canada (Rise, 2022c).
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Demographic Segmentation
Rise's offerings appeal to several Millennial values. Millennial consumers seek to
embrace healthy lifestyles (Valentine & Powers, 2013), which has included a shift to
non-alcoholic drinks (Fortune Business Insights, 2022). Successful Millennials also
search for status by consuming higher-priced goods that can convey that they have
extra money (Lissitsa & Kol, 2016). Therefore, if they have the money, they probably will
not mind spending it on higher-priced healthy beverages like Rise.
A Statistica study (2019) shows that the largest group of consumers interested in
organic food fits within the Millennial age group. Out of males 18-34 years of age, 31%
actively include buying organic food in their shopping habits, representing the age group
with the highest percentage of interest (Statistica, 2019). Similarly, out of females 18-34
years of age, 40% actively include organic food in their purchases, representing the
highest percentage in the age groups (Statistica, 2019).
Psychographic Segmentation
Rise Kombucha uses only organic ingredients whose healthiness appeals to their target
market’s lifestyle considerations. Nie & Zepeda (2011) surveyed organic consumers and
identified that 24% of their sample who likes organic food are “adventurous” shoppers.
“Adventurous” shoppers love food shopping experience and eating and drinking (Nie &
Zepeda, 2011). They value food that is safe, fresh, and healthy (Nie & Zepeda, 2011).
Rise caters to this market segment by creating many flavours using unique ingredients,
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such as spirulina, for this segment to discover (Rise, 2022b). To attend to their safety
needs, Rise clearly labels that their kombucha is under pressure and the bottle may
break if dropped or not refrigerated.
Another market segment that Nie & Zepeda (2011) identified is those who are “rational”
shoppers, making up 29% of their sample. They are the wealthiest segment that does
not value convenience and seeks healthy food that tastes great (Nie & Zepeda, 2011).
Rise caters to this segment by describing on the bottle for each flavour the high
numbers of the living cultures, polyphenols, and organic acids present in the bottle. This
segment, being wealthy, contains high achievers who have accomplished goals. Rise's
name was chosen because they seek to provide consumers in segments like this one
with the energy and wellness to be high achievers (Rise, 2022c). Rise also makes their
kombucha available in 1L bottles if segments like this one want to consume a lot of
kombucha as they can afford to do so (Rise, 2022b).
Furthermore, Kotler et al. (2013) identified the "LOHAS" market segment, short for
"lifestyles of health and sustainability," who like organic foods and appreciates any other
products that are more environmentally friendly than the norm (p. 153). Kotler et al.
(2013) estimated that in the United States, approximately 20% of the market is LOHAS
(p. 153)). NMI researched the Canadian LOHAS market and found that the Canadian
LOHAS market is comparable with the US LOHAS market, with similar and different
characteristics (Businesswire, 2012). The Canadian LOHAS market is quite serious
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about green, socially ethical activities (Businesswire, 2012), which is why they support
organic products whose farms do not harm the environment with dangerous pesticides.
Behavioral Segmentation
Rise’s ingredients are organic, and behavioural trends show that Canadian consumers
regularly buy organic food from two specific types of retailer (The Canadian Organic
Trade Association, 2020). The Canadian Organic Trade Association (2020) found that
82% of consumers bought organic food bought from regular supermarkets like No Frills,
and 45% of consumers bought organic food bought from mass retailers like Walmart.
Furthermore, Statistica (2019b) found that 50.37% of consumers who purchased
organic food bought from a regular grocery store or supermarket. Therefore, most
organic consumers like to source their organic food from regular supermarkets and not
specialized stores. Rise Kombucha is available at approximately 150 retailers across
Canada, including regular supermarkets like Zehr's and large retailers like Walmart,
which have many locations across Canada (Walmart, 2022).
Trends / Expected Growth
Organic food consumption is a growing trend (Nie & Zepeda, 2011; Massey et al.,
2018). As well, global organic kombucha consumption is projected to grow even more
significant (Fortune Business Insights, 2020) mainly due to kombucha's health benefits
(Jayabalan, & Waisundara, 2019) The global kombucha market was measured to be
worth 1.84 billion USD in 2019 and is projected to be worth 10.45 billion by 2027
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(Fortune Business Insights, 2020). Part of this growth is related to the consumer need
for healthier beverages (Fortune Business Insights, 2020). Many consumers know the
dangers of consuming too much alcohol, as the World Health Organization reported in
2018 that consuming too much alcohol kills three million people every year,
representing 5.3% of deaths worldwide. Kombucha, being fermented like alcohol, has a
similar complexity of taste and contains trace amounts of alcohol, making it a good
substitute.
SWOT Analysis
Strengths
Rise's main strength is the beautiful natural colours that their variety of flavours has
which are highlighted in clear glass bottles. Four of Rise's seven competitors – Booch,
Brew Dr., Kevita, and Remedy - do not use clear glass bottles. It is possible that these
competitors use dark amber bottles because the colour of the products are not
appealing, or the colours of the different flavours are too similar. Either way, the
competitors' choice to not showcase the natural colour of their beverages while Rise's
beverages are amazingly beautifully differing shades highlights the devotion to the
research and development of Rise's flavours. Therefore, the natural colorings of their
kombucha line differentiate them from the majority of their competitors.
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Weaknesses
One of Rise's weaknesses is that its line of classic flavours has a fair amount of sugar.
Their classic line has 10-14g of sugar per bottle depending on flavour (Rise, 2022b).
This is not as much as GT's Kombucha, a leading competitors with 12-18g per bottle
(GT’s Living Foods, 2022). However, the American Heart Association has linked sugar
consumption with obesity and heart disease and is recommending that consumers put
much effort into consuming less daily sugar (The Nutrition Source, 2022). Per day, they
recommend 24g of sugar for women and 36g of sugar for men (The Nutrition Source,
2022). Therefore, one bottle of Rise's classic line equates to approximately half of the
daily sugar recommended for women and approximately one-third of the daily sugar
recommended for men. Rise does recommend that one of the 414mL bottles be spread
out over two servings, but it is not known if this recommendation is followed. Even
though when compared with a 355mL can of Coca-Cola Classic that has 39g of sugar
(The Coca-Cola Company, 2022), 10-14g is not a lot – especially since a bottle of Rise
is larger – Rise should probably not concoct any new flavours with more than 10g of
sugar.
Opportunities
One of Rise's most exciting opportunities is that they have started a low-sugar line in the
last two years that could be quite popular (Rise, 2022b). Rise has a new line that has 1g
of sugar per serving that is sweetened with stevia (Rise, 2022b). As stated above, Rise
puts energy into research and development. They have the technical skill and capacity
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to make more new low sugar flavours taste and look great that will resonate with
consumers who seek low sugar beverages.
Threats
One of Rise's most serious threats is the rising competition from large beverage
companies. For example, the Kevita brand is owned by beverage conglomerate
PepsiCo (PepsiCo, 2016). Furthermore, in 2017, Coca-Cola finished developing its first
line of kombucha products by subsidiary Organic & Raw called MOJO (The Coca-Cola
Company, 2018). Rise is not a public company, so it is impossible to see its financial
statements, but companies like PepsiCo and Coca-Cola have more experience in the
beverage industry than Rise and more available capital to develop new products
(McKenna, 2021; The Coca-Cola Company, 2022). While the MOJO brand of
kombucha has not entered Canada yet, if they do, it will probably become one of Rise's
main competitors based on Coca-Cola's past success and experience.
PESTEL Analysis
Political Factors
Rise kombucha uses only organic ingredients (Rise, 2022b). Canadian organic farms
and products are subject to industry regulations (Canada Organic Trade Association,
2022). Rise's organic ingredients come from farms that must be verified by companies
designated by the Canadian Food Inspection Agency (Canada Organic Trade
Association, 2022). Regulation is one of the reasons that organic food is between 20%
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to 60% more costly than non-organic food (The Canadian Press, 2018). Rise does not
disclose their financial information, but it would be interesting to know what their profit
margins are given the high cost of organic food.
Economic Factors
Current economic trends are hurting average Canadians' food budgets (Otis, 2022).
Costs of living are rising in Canada (Otis, 2022), inflation is rising (Statistics Canada,
2022), and food prices are forecasted to go up five to seven percent in 2022 (Agri-Food
Analytics Lab, 2022). Furthermore, rent prices have gone up 6.2% in just the last year
(Rentals.ca, 2022). Rising costs make it harder for average Canadians to spend money
on food and drink that they may feel is unnecessary (Otis, 2022). For some consumers,
the $4 cost of Rise may be out of their price range.
Sociological Factors
A current trend is that consumers are looking to get more value for their money. Ernst &
Young (2021) reported that 64% of their surveyed market were interested in getting
more benefits, signaling that products should emphasize their value propositions more.
One of Rise's main value propositions is that healthier organic ingredients are used
(Rise, 2022b). Rise puts "organic" on its label, but it is small and does not stand out. If
Rise made the word "organic" on their label larger, it might entice more new consumers
to try their product because its health benefits.
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Technological Factors
Rise Kombucha (2022d) has been developing its fermentation process for over ten
years and does not make its process public to make sure that Rise's flavour is unique.
Almendarez (2020) reports that BI Nutraceuticals have developed a method where tea
ferments in large volumes. Next, the live bacteria is removed, and the liquid is dried into
powder which will not ferment into alcohol, does not have to be refrigerated, and is
cheaper to store (Almendarez, 2020). If it is advantageous for Rise to produce lower
cost kombucha line to reach a wider part of the market, using this technology from BI
Nutraceuticals might be a start, as long as Rise can be confident that the complexity of
taste in the cheaper product is up to Rise's standards. Rise could potentially a new
market using this technology.
Legal Factors
As seen on the bottle, Rise Kombucha contains raw, fermented tea that contains < 0.5
% alcohol by volume. Inspection Canada (2020) states that although kombucha drinks
are not brewed to have high alcohol levels, their alcohol levels depend directly on the
process used for fermentation, the method of transport to retailers, and the way they are
stored. According to Rise (2022c), kombucha must be refrigerated, or it will continue to
ferment. Continuous fermentation can cause two problems: first, the bottle could
explode due to the carbon dioxide gas buildup from the fermentation process, and
second, the alcohol level will rise (Rise, 2022e). Under the Canadian Food and Drugs
Act, drinks with 1.1% alcohol by volume Health Canada must declare their alcohol level
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on the label (Inspection Canada, 2020). Inspection Canada (2020) states that any
company selling fermented beverages must ensure that their drinks have labels that
show the alcohol level. Therefore, Rise must ensure that the product does not break the
law and contains less than 0.5 % alcohol.
Environmental Factors
Rise Kombucha uses organic ingredients. Only natural pesticides are used in organic
farming (Organic Alberta, 2019). Therefore, organic farming is considered by many to
be much more sustainable than non-organic farming (Varanasi, 2019). Organic farming
also incorporates more variations of plants which improves biodiversity and increases
soil quality (Varanasi, 2019). As well, organic farming produces less pollution from
pesticide run-off and fertilizer (Varanasi, 2019). Rise's use of organic ingredients
therefore contributes to a healthier ecosystem.
EXISTING MARKETING STRATEGY
Positioning of the Product
Rise's website banner says about Rise's classic kombucha line: "great taste never felt
so good" (Rise, 2022a). Therefore, Rise is positioning its classic line as a great-tasting
beverage that makes consumers feel better – through its healthiness – than any other
beverage. This effort seeks to differentiate Rise's kombucha from good tasting but
unhealthy beverages like Coca-Cola. One 355mL can of Coca-Cola Classic has 39g of
sugar (The Coca-Cola Company, 2022) and therefore tastes good but contributes to
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disease. Even Coca-Cola's artificially sweetened drinks have been associated with
health problems: a recent study with the European population found that both sugary
and artificially sweetened soft drinks are connected to increased mortality (Kim &
Adhikari, 2020). On the other hand, many have associated kombucha with improving
the immune system, aiding the reduction of irritable bowel syndrome, helping with
weight loss, and helping reduce blood pressure (Nyhan et al., 2022). Rise's kombucha
is healthy, tastes great, and makes most consumers feel great, and Rise wants their
prospective consumers to know this.
About their new 1g of sugar per serving line, Rise states: "experience the taste of fruit
forward-thinking" (Rise, 2022a) By accompanying the common phrase "forwardthinking" with the word "fruit" in a new way, Rise is attempting to position their 1g of
sugar line in the minds of their consumers as an innovative beverage. Usually,
kombucha has sugar due to the fermentation process needing sugar (Nyhan et al.,
2022). Rise has figured out how to fine-tune its kombucha-making process to remove as
much sugar as possible during fermentation, leaving only 1g per serving.
Marketing Strategy
One of Rise’s key marketing strategies is utilizing social media to reach consumers.
Kotler et al. (2013) state that social media is a vital marketing strategy tool (p. 507).
Rise entices consumers who like their products into using the Instagram hashtag,
#risekombucha, by featuring randomly chosen posts on their website (Rise, 2022a). The
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initiative has been quite successful as there are 6,073 posts on Instagram using the
#risekombucha hashtag (Instagram, 2022). Lithium (2017) states that brands can
strategically use social media to increase success. For example, customers spend more
when they engage with brands’ social media channels (Lithium, 2017). Also, these
customers are more likely to spread positive reviews about the brand through word of
mouth (Lithium, 2017).
Furthermore, Millennials have proven difficult to reach through conventional marketing
methods (Valentine & Power, 2013). However, Millennials respond well to social media
communication (Valentine & Powers, 2013). Therefore, it is a good choice to engage
with Millennials through social media. Rise also regularly posts new promotional photos
on Facebook and Instagram to keep its social media presence "fresh", which is also
important (Lithium, 2017).
RECOMMENDED MARKETING STRATEGIES
The first recommended marketing strategy is to design point-of-purchase displays that
stand out in the stores. These displays should highlight the key value propositions of
Rise Kombucha. The innovativeness of Rise's line through its many distinct flavours in
the classic line can be highlighted by the use of Rise kombucha’s natural colours on the
display. The healthiness of Rise can be communicated by using the word "organic" on
the display. Currently, Walmart in Ontario has no unique display to grab attention for
Rise's products. Point-of-purchase displays can increase sales by generating unplanned
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purchases (Keh et al., 2021). Consumers who have not heard of Rise but are at
Walmart to buy organic food will notice Rise's products more if they are in a unique
display. One concern is that the point-of-purchase displays may not generate a return
on investment (ROI), but Keh et al. (2021) found that the displays foster increased sales
which provide positive ROI. Furthermore, Rise's product development team could work
to design displays that fit inside the cooled food product shelves in supermarkets and
mass retailers so that a special cooler would not be needed, which be cheaper than
stand-alone refrigerated displays.
The second recommended marketing strategy is to make the word "organic" stand out
on the Rise labels. If Rise incorporates point-of-purchase displays that feature the word
organic on them, it is likely that it will take considerable time to design and implement
them in stores. Simply making the word “organic” on their label more visible would be a
cheaper and easier way to start highlighting that desirable feature. The word "organic"
should stand out because studies find that a large number of consumers who buy
organic food do so from regular supermarkets that are mainly made up of non-organic
food. Consumers who are new to kombucha but buy their organic food from regular
supermarkets may not know that Rise kombuchas are organic and might be more
interested in buying Rise if they know it is organic. Highlighting the word "organic" on
the label is also vital because it establishes the product as credibly healthy, which can
justify the consumer paying the higher price (Massey et al., 2018).
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The third recommendation is to draw attention to Rise's kombucha online by offering
coupons. Smith (2011) found that Millennials who seek healthy products like engaging
with brands online. Many Millennials trade their opinions and time for deals on products
they like as long as the survey process is short (Weyland, 2011). As mentioned above,
Rise defines itself through its innovative offerings, and gathering more information from
consumers in exchange for discounts could be beneficial as Rise will be able to design
new products and improve existing products based on their feedback.
CONLCUSION
Since 2008, Rise has become quite successful, developing twelve flavours of kombucha
with unique, delicious, and healthy flavours. They also have expanded the scale of their
manufacturing operation considerably, from a small kitchen to a large manufacturing
plant. Their ability to secure venture capital funding shows that they have a good
business model with a good product. There are things they can do to improve, though.
To achieve a higher level of success, they should look at increasing the visibility of their
products in stores with point of purchase displays that communicate their products’
strengths. They should also increase the visibility of the key word “organic” on their
label, as that word is very important to healthy eaters. Lastly, they should use offer one
of their target markets – Millennials – the opportunity to get coupons for feedback about
current products and new product ideas in order to create better new product offerings
in the future.
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