Distributing Wellness To Businesses and Homes

Deanne Gustafson along with her husband co-founded Kombucha On Tap a Southern California full-service keg distributor of premium on tap products including kombucha, nitro cold brew coffee, tea, and more, representing the best brands on the market. They are now in year six.

They worked around the clock and had only one full time employee to start. They now have 10 employees and two warehouses and they are hanging in there through this pandemic by constantly getting creative and keeping expenses low.

Was it a lightbulb moment or gradual moment to start Kombucha On Tap?

It was a lightbulb moment. I was in Bend, Oregon on a trip with Jared who was my boyfriend at the time. We saw Kombucha on Tap everywhere. It was August 2013 and I had no idea it could be on tap, I only had seen it in bottles before.

I asked Jared why it wasn’t on tap in Southern California and from there our company began with us researching the market first and then launching Kombucha On Tap in 2014.

How did you get your first customer?

Our first customer was someone Jared knew from commuting to work. The guy worked at an eatery in Temecula called EAT Marketplace. Six years later, they are still our client!

Did you have any experience/expertise in the area?

We had zero background in beverages or beverage distribution. In fact, we both came from media backgrounds. We did a 360 in our careers and learned as we went.

What regulatory approvals did you have to go through?

Fortunately, not too many regulatory approvals were needed to launch as we were not brewing the kombucha ourselves. It’s one of the reasons we decided early on we never wanted to brew our own products. We also knew there was plenty of competition in the market among brands of kombucha but no one was distributing those brands on tap in our area at the time.

Who is your target demographic?

Our target demographic are healthy eateries, coffee shops, businesses that offer work perks, grocery stores and more.

We also deliver to people’s homes and that target demographic is made up of people in Southern California who live a healthy lifestyle.

What is the funniest/most strange customer request you’ve had?

We get a lot of requests to send products all over the world. While we can’t ship kegs worldwide, we have shipped tap handles all over the world. Also, I posted something once on instagram that included a sticker and for weeks we got lots of free sticker requests.

How did you fund the idea initially?

We launched our company with $5,000 of our own money and haven’t taken a single dime from investors. We have grown organically. The first couple of years, as owners we didn’t take a salary and lived off our savings.

Where did you meet your co-founder/founding team?

Jared and I met through a mutual friend. Our business is older than our marriage by 8 months!

Any tips for finding first employees?

We met our first employee at an entrepreneur meetup group. It was a good place to find someone excited to be part of growing a start-up with an entrepreneurial mindset.

Did you run any companies prior? What motivated you to start your own business?

Jared’s company he worked for was relocating to Denver and he always wanted to start his own company that matched his healthy, active lifestyle. We were also getting serious at the time dating so it was another incentive for him to not have to relocate.

What were your family and friends first thoughts on your company?

Everyone was very supportive. For a year or so, our parents didn’t really understand kombucha, but now my parents have it on tap at their house and Jared’s drink it regularly too!

What motivates you when things go wrong? What is the end goal?

Jared: There is no problem too big for a solution. We are goal and solution oriented, not cause and effect oriented.

Do you have any advice for someone just starting out?

There are going to be really tough times, so look for the good. Also, make sure you really want to own your own company, it’s a ton of work and you will likely not be making a salary you love for a long time. My other advice is to be careful about who you go into business with. We have seen families and marriages torn apart from going into businesses together.

I will say working with your husband or significant other can be really tough. There are lots of wins too and if we didn’t launch the company together I would never have understood why he spent so many hours working on the business. I’m glad we did it together but after the second year in business, I took a huge step back and have since worked more of a part-time role. It’s been way better on our relationship.

What has driven the most sales?

Having a salesperson in the field or ourselves doing sales in person or over email has driven the most sales. Reputation and referrals are also a large source of sales for us.

What is stopping you being 3x the size you are now?

This pandemic certainly changed things a lot for us, but we are getting creative and finding more products to bring on and opening other sales channels. We hope to 3x! Right now we are 60% down from last year in sales, but see this as a challenge we are facing head on.

How do you protect yourself from competition? Do you have any trademarks/IP/patents?

We don’t post our client list online, since we learned early on it’s like giving the competition a rolodex of sales leads. We also outdo them in customer service so our clients stay loyal. Our name is trademarked.

What are the top 3-5 apps your business could not run without? Why are they essential?

We use a routing software called Badger, an inventory software called Fishbowl and Quickbooks online for all accounting. We definitely couldn’t run as well without them but we are also always open to new technologies.

What are your favourite books? What are your favourite podcasts?

We love “2-Second Lean” and have tried to implement many of the practices into our business. I actually have a podcast called “In Happier News” that does a roundup of the positive, good news stories in the world. For business inspiration, “How I Built This” is great as well as “Freakanomics.”

What are the next products you’re working on? Are there any releases you can tell us about?

We are always looking at new innovations and products we can add to our portfolio. We just released subscription wellness boxes. Right now they are only available in Southern California but we are working on one that can be shipped nationwide with both kombucha and cold brew. The wellness box has a variety of our favorite healthy drinks and snacks in it.

Where do you see the company in 5 years?

Anytime I get asked a question of where do you see yourself or the company in five years I think of the joke, if you want to make God laugh, tell him your 5 year plan. Our goals is to be a $20 million company so I definitely see that as happening in five years.

What is current revenue? If you don’t mind sharing..

In 2019 we did about $2.3 million in sales.

Would you ever sell?

Yes, if it was the right fit and move for the company.