‘Drink Better, Live Wiser’

M.B.A. candidates (from left to right) Daniel Lieberman, Andreas Schneider and John Lee started a business brewing kombucha, a lightly fermented iced tea drink new to the District.
September 05, 2012

Three M.B.A. candidates are brewing up kombucha, the lightly fermented iced tea now available in 15 businesses in the District and Maryland.

The fermented iced tea drink called kombucha is making a splash in D.C., courtesy of a trio of George Washington University School of Business students.

Andreas Schneider and John Lee, both second-year M.B.A. candidates, and Daniel Lieberman, a fourth-year J.D./M.B.A candidate, are the masterminds behind the ancient yet new-to-the-District drink, having started Capital Kombucha just last year. Now, the students’ glass bottles sit in 15 locations around D.C. and Maryland. Their mission? To get their customers to “drink better, live wiser.”

The men behind the operation recently discussed their business and how GW has played an integral role in it.

Q: First things first. What is kombucha?

Mr. Schneider: Kombucha is a lightly fermented iced tea popular in Asia and Eastern Europe for more than 2,000 years. It’s made by brewing tea—we use our own proprietary blends—then adding sugar and the kombucha culture. This culture is similar to the type that is used to produce vinegar. Over a period ranging from one week to one month, the culture metabolizes sugar and caffeine in the tea into beneficial acids, probiotics and electrolytes. Small amounts of carbon dioxide are a byproduct of this process, which adds a soft carbonation to the finished product. What’s left is an effervescent, crisp tonic that is low in sugar and caffeine yet non-alcoholic. Or as D.C. food writer Ashley Lusk said, “Imagine a tart fruit drink that is lighter than juice, but sweeter than water.”

Q: Tell the Capital Kombucha story. Why did you choose kombucha specifically?

Mr. Lee: I approached Andreas very early last year and asked him if he had any interest in entrepreneurship—the underlying intention being starting some sort of business together. He immediately said no, that it was too risky and that he was interested in working with an established real estate firm. I was disappointed because we got along well and because I was impressed with the business prowess he displayed in class. Weeks later, Dan and I began getting together at lunch every week, talking, brainstorming, dreaming up products that could address a problem. To get a feel for our working relationship, we entered the Pitch George Elevator Competition with a business idea separate from kombucha. We did well, won some prize money, and all of a sudden, like magic, Andreas was interested—no talk of risk or real estate.

Mr. Schneider: We were drawn to the idea of a wellness product that didn’t sacrifice taste. Too often people think these things can’t go together. Kombucha came up because we were all completely unsatisfied with what was sold commercially and because I had been brewing it a while for personal use after my father—he’s an organic farmer—introduced me to it. Dan added flavor expertise from his bartending days and soon we had a formula that was better than anything else we tried before—and we’ve tried everything. John’s operations focus as a civil engineer instantly honed everything we did and grounded our business with the lean efficiency required of startups.

Mr. Lieberman: We also chose kombucha because, unlike other parts of the country where kombucha can be found on tap in supermarkets, nobody was making the drink here. Being the first kombucha producer in D.C., we have the added responsibility of educating consumers, which of course makes things more fun.

Q: Where and how do you prepare it? How much do you prepare and distribute each week?

Mr. Lee: At the moment, we brew out of a commercial kitchen in D.C. Right now there are four of us who manage the entire process—everything from brewing, bottling, distribution and sales. It’s hard to say how much we distribute in a given week because, happily, our demand has grown each month we’ve been on the market. All we can say is that we are ecstatic that the response in D.C. has been so positive and that we are doing everything we humanly can to serve the growing health-conscious community here.

Q: How is your business financed?

Mr. Lee: We are self-financed, but will likely turn to outside investment in the future.

Q: How did you get businesses on board?

Mr. Schneider: Initially, we targeted establishments in D.C. doing great things, not only with food and beverage, but socially as well. We wanted to be a part of Bourbon Coffee, which works with Rwandan coffee growers, and Smucker Farms, which brings Pennsylvania farming traditions to our D.C. doorsteps. Basically, we showed up with samples and had to prove ourselves to beverage buyers. Once we were accepted by a few respected places, there was a snowball effect shortly after.

In one case, Amy Waldman, the founder of Puree in Bethesda, discovered us because she had been looking for a local kombucha provider for over a year. We loved her concept, so together we installed a keg system at her bar to deliver kombucha on tap as a complement to the fresh juices and health cleanses Puree is known for.

Q: Is sustainability and charity in your business plan then?

Mr. Schneider: Absolutely. As a food company we are acutely aware of the fact that all of us depend on a healthy environment and ecosystem for nutrition. I also grew up on an organic farm in New York. Having an intimate relationship with farming has given me a deep respect for local food systems and grower networks. All of these factors guide our decisions, such as how to source our ingredients. For example, we only use organic, fair-trade tea and sugar for our kombucha. We are also constantly searching out locally grown produce and ways to get involved directly with area farms.

Mr. Lee: From the start we partnered with DC Central Kitchen, who helps us hunt down many of our fresh fruits, herbs and vegetables. Along with feeding the nation’s capital, they do incredible work reintegrating people back into society. So we’re continually trying to expand our partnership there and elsewhere in the community.

Q: Where is it available, and for how much? What flavors are there?

Mr. Lieberman: We’re carried in 15 locations now in D.C. and Maryland. They retail at an average of $3.50 per bottle, which is similar to other kombuchas on the market. Our four current flavors are: peach, mint lime, basil lemongrass and mango chili. We’ll be releasing more in the upcoming year.

Q: What feedback have you gotten?

Mr. Schneider: We meet people every day that have been incredibly turned off by kombucha in the past. The feedback is usually, “Wow, this actually tastes good. I thought kombucha was supposed to taste bad.”

Q: How has the School of Business aided you in this venture?

Mr. Schneider: The accounting and entrepreneurship departments have been so supportive. People there actually mean it when they say, “My door is always open.” The tough love we’ve received from Professors Susan Kulp, Christine Petrovits, George Solomon and Erik Winslow has helped us define our market, hone our concept and actively compete for shelf space. More importantly, their excitement and motivation has just pushed us to do better.

Q: What are the purported health benefits of the drink?

Mr. Lieberman: The benefits associated with kombucha are said to be far ranging, with drinkers claiming that it helps with cancer, AIDS, skin conditions, digestive tract problems, hair re-growth and even hangovers. We are skeptical that kombucha alone is a silver bullet for these problems with everyone. This is likely because all of our digestive systems, to a certain degree, are different. What we can say, however, is that kombucha and other fermented foods are a key part of the formula for health and longevity because they help the body extract nutrients from food.

So much of what Americans consume today is mass produced, processed, laden with preservatives, sugar, artificial colors and flavors—things that are incredibly difficult for your body to process and even worse, create longstanding health issues like diabetes, obesity and heart disease.

Kombucha combats this negative trend by aiding digestion, which is intimately connected to so much of our overall well-being.  

This occurs, in part, because flora in kombucha can bind to other acids and toxins in the body, which are then flushed out of the system. Because of this, kombucha is classified as an alkaline-forming food that helps balance the body’s pH level. Typically, people report a feeling of being more alert and energized. Also, kombucha starts with tea, which is high in antioxidants and often effective in fighting cancer, high cholesterol and heart conditions.

Q: Any suggestions on ways to mix the drink?

Mr. Lieberman: Our latest cocktail is the Indonesian-inspired “Dark & Spicy”:

Ingredients:

3 oz. mango chili kombucha

1.5 oz. dark rum

.5 oz. agave simple syrup

1 thin slice serrano pepper

Directions:

Shake all the ingredients with ice and the slice of serrano pepper.

Q: Are there any plans post-graduation to expand the business?

Mr. Lee: Many. However, we are not waiting until May to get started. For starters, we’ll be on supermarket shelves this fall.

Find Capital Kombucha on Facebook and follow them on Twitter.

GW Research Blog