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GT Dave started brewing kombucha in his bedroom and turned it into a nearly $1 billion empire

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How kombucha became a near $500 million fermented tea empire

With the typical discarded sports gear and left over snacks in a teenager's bedroom, one might not be surprised to find bacteria growing. But in the mid 1990s, 15-year-old George Thomas "GT" Dave, was purposely growing fermented bacteria in 5-gallon glass jugs around his room to brew his own kombucha – and it spawned a nearly billion-dollar business.

Dave, now 42, is the founder and CEO of GT's Living Foods. He's credited with being the first person to put kombucha (a fermented, carbonated "health" beverage) on American grocery shelves, and he now runs the country's top-selling kombucha company, estimated to be worth well over $900 million, Dave confirmed to CNBC Make It. Celebrities like Goop founder Gwyneth Paltrow, Madonna and Reese Witherspoon have reportedly been spotted drinking his kombucha.

The company (which was still called GT's Kombucha until a few years ago) has a roughly 40% share of what is now a booming market. The U.S. kombucha market grew more than 38% per year between 2015 and 2019, topping $480 million last year, according to Nielsen. Some researchers believe could top $4.7 billion in global sales by 2025.

Dave owns 100% of the nearly billion-dollar company, but he says he didn't start brewing his own kombucha to attain fortune or fame.

"It really was to make something that I love [and] that I hope will help others," Dave says.

George Thomas "GT" Dave is the founder and CEO of GT's Living Foods.
Source: GT's Living Foods

It started with a home-brew

Kombucha is a fermented, carbonated drink with living micro-organisms that dates back more than 2,000 years in Eastern Asia and has been long associated with a variety of health benefits (some more dubious than others).

But "the word 'kombucha' didn't really exist" in Americans' vocabulary when Dave first started his home-brewing operation 25 years ago, he tells CNBC Make It.

Growing up in the wealthy Bel Air neighborhood of Los Angeles, Dave's dad (a lawyer) and mom (who worked at department store I. Magnin) were heavily influenced by Eastern philosophies and spirituality, with the family even taking spiritual vacations to Indian ashrams. They were also dedicated health nuts with a penchant for introducing their children to new age foods.

"I had tofu and wheat grass and ... noni juice and ... all that stuff as part of my everyday diet" even back then, Dave says.

His parents, Laraine and Michael Dave, were introduced to kombucha by friends who gave them a Scoby acquired on a trip to the Himalayas. (A Scoby is "a colony of bacteria," according to Dave. It's a gelatinous blob that resembles the top of a mushroom, forms when bacteria and yeast are fermented and serves as the key ingredient in any batch of kombucha.)

Laraine and Michael soon started brewing their own kombucha, a process that involves a combination of tea (green, black or both), plus sugar and the Scoby culture, which brewers often recycle from batch to batch — in some cases using the same Scoby for years.

At first, Dave found the drink too vinegary and tart for his teenaged tastes. But Dave's parents' brewed batch after batch, convinced it improved their energy, sleep and digestive health. (While there is little or no scientific research to prove that kombucha can boost drinkers' energy, kombucha that is rich in probiotics can benefit your digestive system, according to the Cleveland Clinic.)

"They were just kind of enamored with how it made them feel," he says.

Then Dave's opinion about kombucha "completely shifted" in 1994 after his mother was diagnosed with an aggressive form of breast cancer. According to GT's Living Foods lore, Laraine Dave's doctors were surprised to find that her cancer had not spread, putting her on the path to a full recovery. When the doctors asked if she had been consuming anything out of the ordinary, Dave says his mother told them about kombucha.

"I became curious and certainly motivated to understand what this bizarre tea was — because in my mind, it didn't cure my mom and I've never said it cured her, but it certainly helped her," he tells CNBC Make It.

(The story of Laraine's survival was once on the company's kombucha labels, but it was removed after a series of 2010 class action lawsuits alleging deceptive claims about the beverage's health benefits. Scientists note that there is little to no evidence that kombucha could help fight various cancers, and some experts advise that people with compromised immune systems should avoid the drink.)

Whatever the case, Dave was intrigued enough to start drinking kombucha, but he felt his father's recipe over-fermented the drink, making it a little too vinegary. So he started brewing his own.

Within a year, Dave was bottling his home-brewed kombucha with the intention of introducing more people to the drink that he felt was "something that the world needs," he says.

Building a business

By 1995, Dave had left high school early, obtained his GED and was ready to focus on kombucha full-time.

Dave says he racked up a "couple of thousand dollars" on his father's credit card and used his parents' kitchen to brew tea in two-gallon pots. His parents also gave him domain over the family's dining room, which he filled with jugs of fermenting kombucha.

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"I started to go to sleep at 4 in the afternoon and I'd get up at midnight" so he could have control over the kitchen while his family slept, Dave tells CNBC Make It.

When it came to pitching his bottled kombucha to a few local health food stores, Dave's parents helped there too. Laraine became his first employee, serving as an in-store spokesperson to sell customers on trying their first sip, often telling the story of how she survived cancer. She also helped spread the word by offering kombucha samples to her customers at I. Magnin.

Laraine Dave, GT's mother, poses with an early version of the GT's Kombucha bottle label in the mid-1990s. Photo courtesy 

As a lawyer, Dave's dad sometimes tagged along on sales pitches so stores would not dismiss the teen entrepreneur out of hand. He also gave his son free legal advice and "taught me how to manage my books," Dave says.

In 1995, Los Angeles' Erewhon Natural Foods (a small independent grocery store that now has five locations and is known for pricey food and celeb-spotting) became Dave's first order, buying two cases (24 16-ounce bottles) of GT's Kombucha.

Soon Dave was selling kombucha to a handful of health food stores around the city, where it typically sat on the shelf next to juice or teas like Snapple. He charged stores roughly $3.75 per bottle and it retailed for about $4.99.

From there it was some "very, very passionate" consumers who helped Dave's kombucha got off the ground. They would try the product and spread the word to anyone who would listen "because they genuinely were excited by it," he says.

"That's how the market slowly grew," he says.

Soon the teenager started receiving orders from people in high places. He would make personal deliveries to wealthy residences in places like Malibu, and even to film and TV production sets around town.

One particularly devoted early customer was action movie star Steven Seagal.

"[Seagal's] team contacted my consumer hotline — which, by the way, was just an answering machine in my bedroom — and said that they wanted to buy cases of this because Steven was a huge fan," Dave tells CNBC Make It. Soon, Dave was regularly delivering cases of kombucha to Seagal's home. (A representative for Seagal did not respond to CNBC Make It's request for comment.)

Actor Steven Seagal at Planet Hollywood.
The LIFE Picture Collection via Getty Images

Of course, not everyone loved Dave's kombucha. Some "people would like spit it out in your face and say, 'This is disgusting!'" Dave says.

Dave also had to overcome the obstacle of his own young age and lack of business experience.

Not wanting to appear to potential clients like he was just a teenager in over his head, Dave invented multiple staff personas. For example, there was "GT," the owner of the company and "George," an employee who made phone calls to stores to replenish their orders. Another personality was "the delivery guy," who in some cases would actually show up to deliver the product.

"I really wanted to be taken seriously," says Dave.

It worked. A year after launching the business from his bedroom, Dave's fledgling kombucha company was reportedly seeing roughly $150,000 in sales, prompting him to rent a commercial kitchen in Los Angeles to increase output.

More money, more problems

In 1999, word about Dave's kombucha had spread to Whole Foods — which at the time had roughly 100 stores scattered across the country — and the gourmet grocery chain started stocking GT's Living Foods kombucha on its shelves, though the product was still mostly only available on the West Coast.

Dave rented larger facilities to continue increasing his company's output and he was eventually able to produce enough kombucha to take the GT's brand national by 2005. By the end of the decade, Forbes reports, his company had reached roughly $35 million in annual sales.

However, the company also faced its share of legal obstacles, including a series of class action lawsuits between 2010 and 2017 accusing the company of making false claims about the drinks' purported benefits. GT's Living Foods agreed to remove statements from its bottle labels — which the company tells CNBC Make It "were based on testimonials GT received from real life consumers" — claiming the kombucha helped drinkers with "weight control," "anti-aging," and "healthy skin."

Dave's company also survived a scare that saw Whole Foods briefly pull all kombucha products from shelves in 2010 over concerns that the drink contained more alcohol than advertised (due to the fermentation process, kombucha manufacturers warn the drink can contain "trace amounts" of alcohol.) Dave tweaked the production process to ensure that the drink's alcohol content is below the FDA's legal limit of 0.5%, both companies were also later forced to settle a class action lawsuit for over $8 million. The suit alleged that GT's Kombucha had mislabeled its products as "non-alcoholic" and as containing antioxidants that were not present.

"The company agreed to remove these claims from the bottles but did not admit to any wrongdoing or allegations made in the lawsuits," a company spokesperson told CNBC Make It in a statement regarding those past lawsuits.

Today, GT's Living Foods kombucha is again sold in Whole Foods locations across the country, where a 16-ounce bottle of the brand's kombucha typically retails for $3.49. It's expanded to other national grocery chains such as Safeway, Kroger, Target and Walmart in the past decade, and GT's Kombucha is now sold in over 30,000 U.S. stores, the company tells CNBC Make It.

The company also said last year it's eyeing expansion overseas in countries like the U.K., the Netherlands and Iceland.

The company now churns out more than 1 million bottles of kombucha each year. Dave does not disclose revenue figures for his private company. But Forbes reported in 2019 that the company sees an estimated $275 million in annual sales.

Success brews competition

Americans' drinking tastes have shifted away from sugary soda to healthier options like flavored seltzers, as well as kombucha. Those trends, along with GT's success as a market pioneer, helped open the door for rivals.

After controlling the vast majority of the American kombucha market in the early 2000s, GT's Living Foods remains the market leader but now has to share space with fellow start-ups like Health-Ade. Also based in Los Angeles, Health-Ade was founded in 2012 and now sells its products in more than 26,000 stores.

Meanwhile, beverage giant PepsiCo is also in the kombucha market, having acquired the brand KeVita in 2016 for around $200 million. Coca-Cola also acquired Australian kombucha-maker Organic & Raw Trading Co. in 2018 for an undisclosed amount.

One way Dave looks to stay ahead of his competition is by branching out into additional product areas, as he changed the company name to GT's Living Foods a few years ago to reflect the fact that he's now selling products like sparkling, caffeinated water, kefir and non-dairy coconut yogurt.

But Dave also claims not to worry too much about the competition. He says his main concern is to "make the best kombucha," which he calls "a labor of love."

If anything, Dave's love of kombucha has only grown — Dave says he personally drinks up to 1.5 to 2 gallon a day. (The Centers for Disease Control recommend that you only drink up to 12 ounces of kombucha per day, though there isn't much research available.)

And GT's Living Foods still uses that original Scoby his parents received from their friends to brew its kombucha.

"Kombucha does have a beautiful story. You know, it's been made a certain way for centuries. It existed before I was born and will certainly exist after I leave this planet."

— Additional reporting by Noah Higgins-Dunn

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