Revive kombucha, Rustic Bakery plan Petaluma expansions

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Editor's note: This story was published Dec. 1, 2014, but the web version was lost because of a technical problem.

PETALUMA — Rising sales for a Windsor-based Revive Brands, maker of probiotic kombucha beverages, and for Rustic Bakery of Marin County have convinced each to expand to fill a 50,000-square-foot vacant production bakery in Petaluma in the first half of next year.

They are the latest of a string of expansions by food and beverage companies to and in Sonoma County’s second-largest city, an industry cluster that alone was recently figured to have a $1.3 billion impact on the local economy.

Revive has been needing to move for some time, passing on large orders because of production constraints. The craft brewery of a sort has flowed over into nine industrial incubator spaces totaling 9,000 square feet off Shiloh Road, forcing founder Sean Lovett and his crew to run forklifts through a parking lot in Shiloh Business Center. Now with 30,600 square feet of the former Barbara’s Bakery building at 3900 Cypress Dr., the 4-year-old company will be able to expand and automate production to slake the thirst of a growing distribution network.

“It was smart that we turned down those orders, because if we had taken them on, it could have been the end of us,” Mr. Lovett said. Two such big orders this year would have been supplying 175 stores each for grocers Safeway and Sprouts Farmers Market. The company learned about the sweet and sour of success last year when new hibiscus and coffee flavors sold so fast the crew was working 100-hour weeks to keep up, and a similar situation recurred this year with the release of the yerbe mate ginger flavor.

Sales this year are around $2 million. The crew of 20 is expected to double after moving into the new facility.

Meanwhile, the original dreams of Carol LeValley and Josh Harris to create a cracker company have had to remain somewhat on the shelf for nine years because of breakfast and lunch demand at the three rapidly growing cafés. Now, Rustic prepares to move wholesale operations from the cafés to 20,000 square feet of the Petaluma building, which the married couple has been eying for nearly a year.

“Wholesale has been hampered by the runaway success of the cafés,” Ms. LeValley said.

Sales this year are expected to be about $12 million, mostly from retail at the three locations: two in Larkspur and one in Novato. The company employs 180. The wholesale bakery is expected to have two shifts, with 30 during the day and 20 at night.

ROLLING IN RETAIL DOUGH

Ms. LeValley and Mr. Harris started Rustic in 2005 by buying a failed café for $40,000, wanting to crack into growing consumer interest in artisan cheese with a line of handmade toasted flatbreads. The business expanded after a year into Larkspur.

Rustic’s rising revenue caught fire in 2006 with the introduction of a private label flatbread for fellow Marin artisan producer Cowgirl Creamery of Pt. Reyes Station. Soon, Rustic will be making products down the street from Cowgirl’s Petaluma production facility.

That led to a wholesale business distributed through Cheeseworks, an Alameda-based specialty food distributor. That has taken Rustic products to all Whole Foods Market stores in Northern California, including the one to open this month in Novato and likely the second Mill Valley store in June. Other points of sale are Paradise Foods in Corte Madera, Woodlands Market in Kentfield, Mill Valley Market, The Oakville Markets and The Pasta Shops in Berkeley and Oakland.

The cafes each have been expanded into adjoining spaces, and sales have roared by at least double digits afterward.

SCOBY SNACK RETURNS

Revive makes a premium kombucha drink. Though called “mushroom tea” in some Asian countries, the key creators aren’t fungi at all but a SCOBY, short for “symbiotic culture of bacteria and yeast.” Kombucha often is made with sweetened black or green tea, and the culture feasts on the sugar, leaving behind probiotics and enzymes.

Modern kombucha has gone further, with craft brewers using fruit and spices in their recipes. Revive goes for smooth-drinking brews and developed a special culture to work on coffee instead of tea or juice.

But Revive’s differentiator ­— and its logistics and distribution challenge — is its aggressive resource-reduction strategy, most visibly in its bottle-return program. The company puts at least a $2-a-bottle deposit on growth.

PETALUMA'S FOOD BASKET GROWS

Petaluma’s Economic Development Program has focused on the growth and development of natural and specialty food products. A city-commissioned study in March that found that Petaluma’s food processing businesses have a $1.3 billion economic impact on the regional economy annually through direct employment, as well as processing locally sourced raw materials.

“Revive and Rustic Bakery embody the kind of companies Petaluma envisioned attracting when it completed its Economic Development Strategy in late 2010,” said Ingrid Alverde, city economic development manager. “They are both manufacturing companies focused on high quality products, utilizing local labor, and sustainable business practices. Then occupying a formerly vacant building without having to build new a new facility is a win-win-win for everyone.”

SCARCE FOOD-MAKING SPACE

Healdsburg-based Next Investments and San Francisco-based Harrigan Weidenmuller Co. purchased the empty 3900 Cypress building in May 2013. At the time, Next co-principal Scott Schadlich told the Business Journal that they bought the building that Barbara’s Bakery vacated in January 2012 because of demand from specialty food and beverage companies for specially tailored industrial space to grow.

“We had other opportunities to lease the building to distribution and warehouse users, but we stuck to our plan and waited for food or beverage producers who would value the floor drains and other attributes in the building,” Mr. Schadlich said.

Jeffrey Wilmore of Keegan & Coppin Co., Inc./ONCOR International represented Revive in the Petaluma lease, inked in early October. Trevor Buck of Cassidy Turley represented Rustic in its lease there, signed in late November. Nathan Ballard, Chris Castellucci and Theo Banks of Keegan & Coppin represented the building owner, 3900 Cypress Petaluma, LLC.

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