Ojai, California-based hard kombucha and hard seltzer-maker Flying Embers has closed a $20 million series C funding round, led by global spirits giant Beam Suntory.
The investment will help fund expanded marketing and sales initiatives, as well as new product launches and the expansion of the company’s beyond beer portfolio, according to founder and CEO Bill Moses and chief strategy officer and general manager Liz Tomic.
Existing investors Power Plant Ventures, Quadrant Capital, Monogram Cap and Beechwood Capital also participated in the round.
“We still have a lot of work to do on our own to build the brand and build the platform, and we want to bring in just really smart patient investors who share a vision on what alcohol could look like in the future as a category,” Tomic told Brewbound. “We have a shared mission of being in the premium space [and] how can you scale brands, but really stay super focused on quality of ingredients and craftsmanship.
“What was really interesting with Beam is they have an amazing portfolio globally, they see a lot of trends, they’re definitely consumer insights driven,” she continued. “They definitely connected with how we thought about servicing a more sophisticated palate flavor profile and pushing trends.”
In a Series B funding round in 2019, Flying Embers raised $25 million, co-led by PowerPlant Ventures and Ecosystem Integrity Fund (EIF) that included participation from ZX Ventures, Anheuser-Busch InBev’s disruptive growth unit. The round was increased to $35 million in 2020 after the company received a $10 million investment from the Santo Domingo Group, advised by Quadrant Capital.
In 2021, Flying Embers grew its total business 93%. Additionally, the company expanded its hard seltzer line – which launched in 2020 – and added a variety 12-pack, growing sales of the brand by 284%. Tomic estimated the hard seltzer line now makes up just under 20% of the company’s total business, but has the potential to grow to 40%.
“When we look to next year, there’s so many new categories coming out,” Tomic said. “Canned cocktail continues to grow, wine-based products continue to grow, and we’re going to keep playing and offering new products that we think we can offer a super premium, no sugar solution that meets a need for consumers.”
Moses added that Flying Embers has the potential to grow between 50-100% in 2022. That growth will be supported by continued beverage innovation, both with new product offerings, as well as new hard kombucha launches, including a Tropical Hops variety 6-pack this spring, inspired by craft beer offerings.
“When we continue to understand who’s coming into the [hard kombucha] category, who our super fans are, there is kind of a classic craft drinker in there who loves to have one or two 16 oz.s at the end of the day, but continues to be pretty mindful of the carbs and sugar count in a double hopped IPA,” Tomic said. “So we said why don’t we work with some hops and see if we can take that kind of tropical fruit profile and hop it out like you do on an IPA.”
The new line features three imperial, 8.5% ABV flavors: Guava Citra, Passionfruit Simcoe and Spicy Mango Mosaic.
“We’re super excited about that pack,” Tomic continued. “It’s a way to really speak directly to craft drinkers and potentially demystify what this thing called kombucha is and connect on a flavor profile that’s pretty familiar.”
Flying Embers will also launch a new botanicals and bitters-inspired line and an Orange Passionfruit Mimosa hard kombucha in the spring. Additionally, Tomic teased another beer collaboration with New Belgium Brewing.
Last year, the two companies launched Oh, Hi!, a 6.5% ABV session sour blended with hard kombucha. Through that partnership, Flying Embers and New Belgium donated $10,000 to Flying Embers’ newly established nonprofit the Embers Foundation, which supports community first responders and fire relief. The foundation raised $400,000 in 2021 through donations, as well as 1% of its profits.
Since its launch in 2017, Flying Embers has expanded its distribution to 42 states and Canada, and added direct-to-consumer shipping in California, Oregon, Vermont, Nevada, Montana, Kentucky, North Dakota, Nebraska, Virginia and Washington, D.C. While the company plans to continue overinvesting in Southern California, Moses and Tomic said they are also expanding marketing efforts in states such as Colorado and North Carolina, where sales within the hard kombucha segment are already growing.
Additionally, the company is exploring adding “one or two” more taprooms in Central or Southern California. Flying Embers operates taprooms in Boston, Santa Barbara, and Los Angeles. Moses said the new locations would likely be an alternating proprietorship with an existing brewery taproom, similar to its current partnership with Figueroa Mountain Brewing Company in Santa Barbara.
“We think that high touch to really explain and communicate what hard kombucha is, is really required,” Moses said. “The beacons of our brand are our taprooms, and then I think these events and partnerships where we sample and can sell is really critical for getting consumers educated and aware so that they could become part of our tribe and buy more product.”
“When we’re in Southern California, hard kombucha seems like an obvious really big established category, but the name of the game nationally is still category awareness and trial,” Tomic added. “Whether we’re showing up at craft beer events, or we’re doing tastings at a grocery store, BevMo or Total Wine, we want to make sure we’re connecting with more consumers because it’s still a tiny population nationally who knows the category.”