Should Your Brewery Tap Into The Kombucha Trend?

December 19, 2018

By: Jennifer L. Tsyn

Kombucha is growing in popularity, and more breweries are starting to produce it. But is it an alcoholic beverage? And, if it is, is it considered beer?

While there is variation among kombucha products, according to the Alcohol & Tobacco Tax and Trade Bureau (TTB), the term ‘kombucha’ “generally refers to a fermented beverage produced from a mixture of steeped tea and sugar, combined with a culture of yeast strains and bacteria.” Some kombucha products also have fruit juice or other flavors added during production. Available flavors include raspberry, ginger, and peach, and some commercially available kombuchas include ingredients such as jasmine, coriander, and anise.

Kombucha is thought to date back centuries and may have originated in China. Popularity has risen in recent years because of the belief that the bacteria it contains may have health benefits.

Sugar, Yeast and Fermentation

Some kombuchas are sold as non-alcoholic, juice-like or tea-like beverages. However, the combination of sugar and yeast in kombucha triggers fermentation, which may produce a kombucha with an alcohol content of 0.5% or more alcohol by volume. When this happens, the kombucha is regulated as an alcoholic beverage under federal law and TTB regulations. It is important to note that regardless of the alcohol content of the finished beverage, when kombucha reaches 0.5% alcohol or more by volume at any time during the production process, it must be produced on a TTB-qualified premises and is subject to TTB regulation, even if the finished product is a non-alcoholic beverage (containing less than 0.5% alcohol by volume).

Because “kombucha” does not refer to a recognized classification of alcohol beverage, the classification of alcoholic kombucha under the Internal Revenue Code depends on its formulation and method of production. As such, it can be considered a beer, a wine or even a spirit, depending on how it is produced.

TTB Regulations and .5 Percent Alcohol by Volume

So, then, what is a “beer” and what kind of alcoholic kombucha can be produced by a brewer as a beer? The TTB and New York State both define beer as a product with 0.5% alcohol by volume or higher that is fermented from malted barley or a “substitute” for malt. It’s the malt “substitute” question that becomes key in classifying alcoholic kombucha. The TTB has stated that using sugar, fermented by yeast, in kombucha makes it a beer as the sugar is considered a “substitute” for malt.

If the main fermentable material in the kombucha is sugar, and the kombucha reaches 0.5% alcohol at any point in the production process, it is a beer and can only be produced by licensed brewers. Excise tax should be paid at the beer tax rate. If the kombucha is a beer, brewers must remove it in a container that complies with the marking, branding and labeling requirements applicable to beer. In addition, the kombucha containers must bear the health warning statement, as required by the TTB.

A brewer must file a formula with TTB before producing alcoholic kombucha. If, based on the submitted formula, TTB classifies the kombucha as a malt beverage (as defined by the FAA Act), the kombucha is also subject to the FAA Act, including the labeling and advertising requirements of 27 CFR part 7.

What if, however, cane sugar is not being used as the main fermentable material? If, for example, fruit juice is the fermentable material, the alcoholic kombucha could be a wine (or if the alcoholic content is high enough, a spirit). A brewer would then need a separate license to produce the kombucha.

Complying with AG & Markets

Producers who are unsure of the classification of their kombucha products can submit a written request to TTB’s Advertising, Labeling and Formulation Division. That request should provide a detailed and specific quantitative list of every ingredient used to make the kombucha, as well as a step-by-step description of the entire production process.

Brewers should also be aware that all kombucha produced in New York, even if it is non-alcoholic, must comply with the guidance provided by the NY State Department of Agriculture and Markets. That guidance reminds producers that they must comply with retail food sanitation, food processing requirements, and food labeling and packaging requirements. In addition, kombucha often is not pasteurized and should be stored at or below 41°F. Failure to keep non-alcoholic, unpasteurized kombucha at that temperature may raise alcohol content over time.

This post is meant to inform brewers of first the basic issues regarding kombucha production. Brewers should consult with their legal representative prior to beginning production.