The brewer of a popular iced tea has called for Victoria to bring its liquor rules into line with the national standard so he can continue to sell the drink.
Kombucha tea has been drunk in China for centuries and is made from live bacteria, yeast and sugar.
It has long been lauded by alternative health practitioners as a gut-friendly probiotic and has recently gone mainstream, with flavoured varieties being stocked in hip cafes, restaurants and supermarkets.
But the traces of alcohol produced when the drink ferments has put it in regulators' sights.
The Victorian Commission for Gambling and Liquor Regulation wrote to a number of businesses last week warning they might need a licence to sell kombucha.
And one manufacturer has had to withdraw its drink from more than 700 stockists across Australia.
The Yarra Ranges Council last month ordered The Good Brew to stop selling its Healesville-made kombucha because it was "non-compliant with labelling and alcohol content" and was not following the appropriate class of safety procedures.
The liquor regulator also warned The Good Brew's owner, Dean O'Callaghan, about his kombucha, which can vary in potency because it is bottled "live".
"I refuse to kill the probiotic, and so it continues to metabolise the sugars into alcohol and the alcohol into acetic acids that are very good for us in the bottle," O'Callaghan said.
"If we wanted to make it completely foolproof and shelf-stable, then we would have to kill it and it would no longer be kombucha."
O'Callaghan started The Good Brew in 2007 and has seen his drink's popularity skyrocket in the past 12 months.
He said the alcohol content usually sat around 1 per cent, which is under the Australia Food Standards Code's limit of 1.15 per cent for soft drinks but breaches the 0.5 per cent limit imposed in Victoria and Queensland.
O'Callaghan said the state government should adopt the national standard.
"If you think about it, 1.15 per cent alcohol content in a 330-millilitre bottle is less than 0.3 of a standard drink," he said.
"So it's a very low alcohol content – you just cannot get drunk on it.
"It's unfortunate that bureaucratic hurdles are stopping this industry from thriving and stopping us from being able to provide a genuinely healthy alternative to synthetic drinks."
O'Callaghan said he had lost about $1000 a day since putting his business on hold while frantically trying to produce a drink that was under 0.5 per cent.
He said he would soon start to again sell the stronger brew in other states and relabel it for sale in licensed venues in Victoria and Queensland.
A spokesman for the Minister for Liquor Regulation Jane Garrett said the government had no intention of changing the rules.
"Brewed soft drinks contain enough alcohol that may make them attractive to minors and they should not be available other than in licensed premises," he said.
One third of the Victorian cafes that O'Callaghan supplies are in Garrett's electorate of Brunswick.