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Brew Dr Kombucha Prepares to Go Broad via DSD, Even Houses without Cold Trucks; Move Follows Private-Equity Infusion

Townshend's Tea appears to have made considerable headway on big DSD landgrab behind its Brew Dr bottled kombucha line that will slot it into several leading unaligned distributors across US and potentially put it on way to attaining the $50 mil revenue target it's staked out for next year or two as it moves beyond West Coast base. Word on street is that Portland, Ore-based teahouse operator and distiller is weeks away from identifying DSD houses without refrigerated fleets that will be installing cold storage areas in their warehouses to carry bottled product, which can stay on unrefrigerated trucks for 18 hours ahead of delivery to retailers. If successful, ploy would help resolve so-called "last mile" issue that's kept major kombucha brands, which are all refrigerated, outside of DSD houses with the greatest coverage in up-and-down-street accounts where brands are built. It also would do more to level playing field with kombucha leaders GT's and Health-Ade, which by now have staked out the leading refrigerated options in major metros, locking out rivals.

Reached over weekend while on vacation, founder/ceo Matt Thomas demurred on commenting, saying, "It's still coming together and we're not in a place to announce anything yet. Getting close though." He emphasized that co hasn't made any changes to recipe or production process to foster entry into broader DSD. "Not changing any aspect of the bottled kombucha," he said. Distributors similarly told us they haven't signed deals yet and requested they not be identified so as not to complicate their relations with other brands at this time. But several are familiar names in major population centers.

Recall that Thomas started by building network of Townshend's teahouses starting in 2003 in Portland and Bend, Ore, then added bottled kombucha line and, more recently, opened distillery in Portland, all while relying primarily on bank debt (BBI, Jul 29 2016). Early this month, tho, he sold minority equity stake to private-equity shop Castanea Partners, whose other investments on bev side include Essentia Water and The Bruery beerco. At that time, he told BevNet news site he's aiming to hit $50 mil in sales by 2018 or 2019, after closing out 2016 with $12 mil in sales and apparently doubling that last year. The sales exec he brought aboard in late 2016 to mastermind expansion as evp biz dvlpmt, Marty Wall, is intimately familiar with DSD network after long runs at Widmer, Craft Brew Alliance and Stumptown Coffee. So is Castanea's appointee to board, Nantucket Nectars cofounder Tom First.

The move seems significant because, for all their rapid growth, surging refrigerated categories like kombucha, cold-brewed coffee and dairy alternatives have arguably been stunted by lack of a developed cold DSD network. Some brands have extended their shelf lives enough to be viable even in beer houses and other distributors without refrigerated fleets, but that adds risk and complexity. Thus, after experimenting with refrigerated cold-brewed coffee brand, distribution giant Columbia Distributing in Pac NW switched to shelf-stable version of refrigerated Rise cold-brew brand that NY roaster devised specifically for it. Columbia is among several DSD players already employed by Brew Dr out west. Any network assembled by Townshend's for its kombucha might also be offered RTD iced tea brand that Thomas has long indicated he's eyeing. Some might be able to pick up distilled items too. "The reason it works is we allow for up to 18 hours outside of refrigeration for delivery. So they don't have to refrigerate their trucks, only add some refrigerated storage in their warehouse," Matt told us.

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