Products Mission Community News Seth's Blog

The Next Stage of Growth — An Honest Deal

Today Honest Tea and Coca-Cola announced that the world’s largest beverage company is buying a 40% stake in our much smaller enterprise [press release]. While Coke is now our largest shareholder, the agreement was negotiated to ensure that Honest Tea will not be managed or controlled by Coke. We will continue to operate as an independent business with the same leadership and mission. Here are some thoughts on the decision. Please excuse the length, but the deal took months to put together and even longer to think about:

When Barry and I launched Honest Tea in February 1998 the only assets we had were the name “Honest Tea”, a Snapple bottle with a label pasted on it, and five thermoses (and the thermoses were on loan!). Our beginnings were modest but our vision was bold – we wanted to create a delicious, healthier drink with a consciousness about the way the ingredients are grown. We always hoped that the “Honest” brand would stand for a different way of doing business – a product that is what it says it is, a company that strives for authenticity in the way it treats its customers and stakeholders.

Despite our 66% annual compound growth rate (70% in 2007), we still aren’t reaching all the people we want to reach. Our business has inspired many, (most recently we were delighted to see Kraft join our Terracycle Drink Pouch Brigade), but we also want to see Honest be a change agent through our own actions. When we buy 2.5 million pounds of organic ingredients, as we did in 2007, we help create demand for a more sustainable system of agriculture, one that doesn’t rely on chemical pesticides and fertilizers. But when we buy ten times that amount, we help create a market that multiplies far beyond our own purchases. When we sell 32 million bottles and drink pouches with less than half the calories of mainstream alternatives, as we did in 2007, we help displace 2,400,000,000 empty calories. That’s important, but when we sell ten times that number, we help lead a national shift toward healthier diets.

So what does it take to get to the next level of impact – to see Honest products sold wherever beverages are sold?…. schools, colleges, restaurants, and all the other places Coke is found…? Certainly access to capital plays a role in making that happen, and we are fortunate that our 100+ private investors have never failed to support our ambitions and growth plans. But money on its own doesn’t make distribution happen – (I note with caution the story of my friends at Jones Soda, who last year saw their market value grow fivefold without a comparable rise in sales).

I have the same passion and drive for building Honest Tea that I had in1998 but I want to focus less on raising money, managing production and distribution challenges and more on building the brand and our mission. If we could find an investor who will help us build our business while still honoring our style of business, then that seems like an ideal scenario.

So how do we move from the ideal to the real without screwing up what we’ve created? The world of mission-driven business is littered with entrepreneurs whose companies lost their soul or at least lost their leadership. Whether you talk to Ben Cohen from Ben & Jerry’s or Steve Demos from Silk, they will tell you that if they could do it over again, they would have done it differently. I am determined to make sure that never happens with Honest Tea. Our challenge is to find a partner who wants to “buy in” to our mission, rather than one who wants us to “sell out”. Any partner that we consider must understand that the “Honest” brand stands for great-tasting, healthier beverages that are produced in a more sustainable manner. As long as that partner buys into our approach, we welcome the opportunity to expand the scale and reach of Honest Tea.

It can work – I’ve seen it firsthand with my board member, Gary Hirshberg at Stonyfield Farm yogurt. In 2001 Groupe Danone purchased 40% of the company and now owns 80%, with an option to buy the remainder in the future. Stonyfield continues to be on a growth tear (more than $300 million in sales 2007, limited more by capacity than demand) and Gary continues to lead the enterprise and the organic food movement with all the fire and wisdom he had when the deal was put together. They continue to innovate on packaging (they were the first to eliminate plastic lids) and just this year converted their entire line to organic. (read more in Gary’s new book Stirring It Up, How to Make Money and Save the World)

That’s one of the reasons we are glad Gary will continue to serve on Honest Tea’s board, along with Barry, me and two Coke representatives. Of course there are risks to this deal:

  • Things may not work out with Coke’s investment
  • Our customers may revolt against the notion of our brand being associated to a much larger company (though I hope they give us a chance)
  • I may get hit by a bus…

 

In the course of negotiating this transaction, there were safer alternatives – an outright sale would have locked in the gains versus the continued risks that come with this kind of investment. I’m sure there will still be cause for cold sweats at 3 a.m. – I don’t know a beverage entrepreneur who doesn’t have them but I’ve lived with risk ever since Barry and I started brewing tea in my kitchen, and while there have clearly been moments I would love to forget, I wouldn’t trade this experience for all the tea in….well, for all the tea we will sell together with the Coca-Cola Company. As we see the U.S. shift toward healthier and greener living, it doesn’t seem like the right time to take our cards off the table.

Ten years after starting Honest Tea, we can be proud that:

  • We were the first company to introduce a certified organic bottled tea
  • We were the first company to introduce a certified Fair Trade bottled tea
  • We have won awards and top rankings from national consumer publications and organizations for creating great-tasting, healthier products.
  • We continue to be on the leading edge (sometimes bleeding edge) of innovation in terms of new ingredients, packaging and packaging re-use.
  • We have assembled a team of 60+ wonderful people, winning awards for our employee-friendly practices, sharing stock options and bikes with them.
  • We have become a leader in our local community, launching the Bethesda Green initiative to develop a model sustainable business community.

 

And yet the best reward has been the support and loyalty of customers who care as much about what we’re doing as we do. As we enter a new phase of our business, I hope you will help keep us Honest as we try to balance the challenge of building a sustainable enterprise in a consumer economy. Please don’t hesitate to contact us either by responding to this blog or emailing sethandbarry@honesttea.com (or both) with suggestions or feedback, especially if you see us backing away from our commitment to organics, healthier products and sustainability.

32 Responses to “The Next Stage of Growth — An Honest Deal”
  1. Katie of Sac, CA and NYC Says:

    Seth and Barry,

    I don’t normally write to companies about their product, but your Honest Tea is a new awakening for me. I am an avid tea drinker and try every thing in the market that is tea-related. Your tea blend is the first I’ve found not to upset my stomach in any way and not too sugary or artificially sugared to trigger my bladder, so I love to have this during long exams or study time when I need something a bit sweeter than water but won’t waste time emptying my bladder constantly.

    I do have a suggestion on your future product evolution. For the Honey Green Tea, I think it needs to be filtered a bit better so the excess tea leaves isn’t in your bottled teas as it tend to ferment and get a bit more bitter. As for the Pomegranate White Tea, I think less sugar and a bit more tardiness of the natural fruit and tea flavors would give this a bit more distinct flavor differing from other flavors. When I buy a flavor I would expect it to taste more like that flavor even if it means more tardiness. These are two examples of what I have tasted, which basically boils down to having more distinction between flavors and giving more taste that reflects the flavor.

    Also, I wish your teas would be sold in more places within Sacramento, CA. So far I could only find it in special gourmet or natural food stores, and once in a while at a Safeway supermarket. As much as I enjoy having your tea, tracking down a place that sells it regularly near by me has been difficult. Something for your marketing or distribution team to figure out. I’m not a business major, so I can’t give you much in that area. Good luck, and hope to see you grow.

  2. Steven Jack Says:

    I love your tea. We sell it in our hotel lobby cafe. It is funny that Coke as invested in your companI.I have some mixed emotions about Honest Tea being swallowed up by Coke, but I can understand the reasoning behind this decision.Thanks a lot……
    http://www.goldenteahouse.com/

  3. Patricia Evans Says:

    Just bumbed into the Coke controversy while looking for places to buy HT beverages so tho’t I’d put in my 2 cents worth. Noticed in your statement you say “Things may not work out with Coke’s investment.” Sounds like they may have an “opt-out of the deal clause” in case the profits are not to their liking. I certainly hope you also have an “opt-out” clause if they renig on their promise to keep your beverages “Honest”!

  4. Compelling Marketing Blog » Sustainabili-tea Says:

    […] lately the Honest Tea founders have been lambasted by some in the sustainability arena for a decision to sell a 40% stake in their company to Coca-Cola and […]

  5. To Honest Tea Says:

    K, my turn on the soap box…

    First I would just like to say that I have never had the privilege of trying Honest Tea, but I am definitely going to get some now, partially out of curiousity, and partially out of support. For those of you, especially the once “loyal” supporters, that are no longer going to buy Honest Tea because the owner and founder of the company makes a decision that he thinks is best for everyone involved, you’re being stupid. It takes so much to start and maintain a business, and I respect those that have the guts to do it. I wish all the best to the Honest Tea company. I too hope to start my own business someday.

    Secondly, although I have never personally been fond of the idea of big corporate industries, I think Coke is a little different. If you don’t believe me, check out their website. Conserving the environment and making healthier products for their consumers seem to be two main things that they are very concerned with. I would also like to add that it deeply saddens me to hear about the terrible work conditions that exist in many other countries. But, since we are on the subject, how about we all just stop wearing clothes and stop eating since the majority of the stuff we wear or eat comes from other countries that have horrible work conditions for their “employees”?! I firmly believe that all of these issues can only be solved through Divine means.

    In the meantime, back to the original “issue” of Honest Tea partnering up with Coke, I think we should all sit back, shut-up and let the men who put their blood, sweat and tears into their company decide what they want to do with it. This seems more like an effort to conserve the brand and financial security of Honest Tea, not to throw it all away or give it up.

    So long story short, again I wish Honest Tea all the best and I’m going to purchase my first this weekend!!

    Congrats!

  6. Debbie in New York Says:

    Well, I am bummed to hear the news that Honest Tea’s agreement with Coca Cola. I discovered your wonderful product a couple of years ago and now that CC is part of your organization, sorry, but I’m going to have to go the way as so many of the other people who have responded to your blog entry—I’ll stop buying your product because of your association with CC. I was reminded by several of the commentors about CC’s despicable global reputation and am saddened that you have chosen this particular corporation as a partner to further expand HT’s reach to other markets.

    But I don’t regret having discovered your wonderful, fabulous teas–I just regret that I can no longer enjoy them.

  7. elizabeth bretko Says:

    thanks for the blog post seth. i have been watching honest tea for some time as i have been launching my own beverage company in the pacific northwest. my father, carl, has been really inspired by honest tea and constantly iusing honest tea as a model for our company’s growth. it has been interesting to read here your words and the responses from your customers. my company is 8 years old and still so much smaller than honest tea. we are currently launching our product line outside of our oregon home for the first time, finally embarking on a growth spurt that we intend to continue nationally. i am fascinated to see what becomes of honest tea with two coke board members making decisions. i have been equally fascinated in the past year watching dagoba chocolate’s transition to full ownership by hershey. while i think the chocolate still tastes fantastic, the entire dagoba culture, that which to me made the company so special and enticing, has been destroyed. while i wish you guys the best with this partnership and i understand your motivations, i truly believe you just signed a deal with the devil.

    elizabeth chai mama
    heartsong herbal brewing company
    ashland oregon

  8. Dwight Says:

    Many innovators trying to make the world a better place have stepped onto this slippery slope with the best intentions, yet very few have come out of it with their ethics intact. In my opinion, the issue of whether you will succeed where so many have failed depends on how realistic you are in your understanding of the step you have taken. If you understand that you are taking money from an organization whose entire purpose is limited to turning that money into more money, as much as possible and as quickly as possible, you have a chance. If you understand that Coke will address moral and environmental issues when it’s good business to do so, but ONLY when this mitigates risks to future revenue, then you are armed and ready for the struggles to come. If you have a naive sense that the only thing that distinguishes Coke from you is that they are “bigger” as you say in your post, and you are expecting Coke to uphold some ethical point even if this impact profits, then you should make sure Coke funds your retirement plan well, you will be out on your ear shortly.

  9. Shawn Hayes Says:

    I love your tea. We sell it in our hotel lobby cafe. (www.hotelangeleno.com). It is funny that Coke as invested in your company. I love Coca Cola but stop drinking to be healthier and only drink Honest Tea now. Thanks for making a great health beverage. I try to avoid anything with corn syrup in it so this is great. My favorite is Pearfect White Tea. Please don’t stop making it.

  10. Tony Says:

    I like the fact that the Coke company will not have a controlling interest in Honest Tea. Raising additional capital is a challenge for anybody.

    I’m hoping this will bring Honest Tea into more stores. Can you imagine buying it at Wal-Mart?
    I also think this may help the small co-ops and organic stores. You see somebody at work with a Honest Tea product. You ask where they bought it and they reply Wal-Mart (Target, Albertson’s, etc…). You then tell them you first discovered it at the local co-op and tell them about the other products available there. This can help everybody.

    TonyM

  11. Leslie Says:

    A number of messages have urged those of us who dislike this partial buyout to continue drinking Honest Tea because its founders now have an opportunity to influence Coca Cola to become a more responsible international corporate citizen. That could happen, and wouldn’t that be great? But Honest Tea’s founders admit they need Coca Cola to grow their business, suggesting that it will represent far too small a percentage of corporate revenues to give it much influence within Coca Cola’s corporate structure. I’d like very much to hear in a year that Coca Cola is selling natural spring water with all its minerals intact instead of tap water with added synthetic minerals (the Dasani brand), that it’s no longer fighting union activists and environmental advocates in foreign countries, and that its switch from high-fructose corn syrup back to sugar is revolutionizing the industry. I don’t pride myself on cynicism, but frankly, this move looks like another example of a conglomerate buying a small respected company to shine up a tarnished repuation rather than to follow its example.

    I could be wrong. If I am, I’ll buy another bottle — then, not now.
    Leslie

  12. J. D. Mack Says:

    I think the deal with Coca Cola has the potential for many benefits. Just think about how many people, pondering their beverage choice, have only Coke, Diet Coke and Sprite as to choose from. Now imagine that they also have an Honest beverage that they can choose.
    I believe that a sizable percentage of these people will choose the Honest beverage, and once they’ve tried it, may never go back to a high fructose corn syrup soda. Coca Cola may or may not be a big evil corporation, but they do respond to the market, and if Honest beverages take off for them, they may be inclined to duplicate the success. Can you imagine a new cola beverage with no coloring and made with organic cane sugar and fair trade cola beans? Regardless of how likely this is, if people want to see Coca Cola ever change it’s ways, now is not the time to abandon Honest beverages.

  13. Laurel Says:

    After reading Seth’s blog I am feeling a little better about this arrangement with Coke, but the NPR story said that Coke has the option to buy the remainder of HT’s stock in 3 years. I will, therefore, remain a loyal consumer of HT for now and will hope for the best in the next 3 years and beyond. I will also continue to read HT contents labels closely. The use of organic contents and minimal sweeteners is of paramount importance to me, and that’s what you guys are good at. If you have to sell the rest of the stock to Coke, could you at least put a clause in the deal that Coke can’t use high fructose corn syrup? :-)

    Best of luck to you, and keep the Decaf Ceylon coming!

  14. delia sullivan Says:

    Seth and Barry,

    I actually tried to use the “contact us” button at the bottom of your site but couldn’t get it to work…..so here are my comments.. I am a super loyal honest tea fan! I have been buying my two favorite flavors (heavenly honey and green dragon) by the case (5-6 per month) from My Organic Market (MOM) in Alexandria, VA for a few years now.. (best price!) Well the last two visits to MOM’s market when I went to purchase the tea it was NOT the real Heavenly Honey i was used to. Very clear looking and the taste is BAD! I think there is a bad batch out there….I then went to St. Elmos a small coffee shop looking to buy a few to hold me over till my special order that i placed at MOMs (for the good batch of Heavenly honey) comes in….well they had the same stuff :(
    Okay, so now i am on the hunt for the GOOD stuff so on to Whole Foods in Springfield, VA and low and behold they have two bottles of the GOOD stuff (more of the amber color that it is supposed to be!) and yes it tastes GREAT! Yeah, i tracked it down! Well the other 10 bottles they had were the BAD ones again….so sadly i only left with two bottles of tea and
    I am still waiting for my special bluk order from MOMS, could take two weeks she said:(
    I do have a case of green dragon left and hope to find more heavenly honey soon.

    Selfishly, the Coke deal is a good one for me, assuming that I won’t have to drive all over town to find my flavor!! I have been in Bethany Beach, DE and driven miles to the organic market “Good Earth Market” (great place by the way and always have lots of HONEST TEA!)
    To get my fix while i am out of town.
    So yes,I am addicted and so are my kids…..keep up the good work and get those BAD Heavenly honeys off the shelves!!

  15. Celia Shapiro Says:

    Full disclosure—I am a stock holder of Honest Tea. I’ve read the thoughtful responses to Seth’s blog and I want to add a comment that is from a slightly different perspective. As soon as I heard about the Honest Tea/Coca Cola agreement, I was reminded of the Seeds of Change/Mars Incorporated agreement. (http://www.seedsofchange.com/)

    The financial benefits of this type of agreement are easy to see. Raising money is a hard job and it is difficult to produce a tasty, organic, socially thoughtful product at the same time. When Mars took an in interest of Seeds of Change, the economies of scale that came to Seeds of Change were enormous and allowed them to put their emphasis on research and positive agricultural change instead of on such things as trying to minimize shipping costs.

    At the same time – and much more importantly – the Seeds of Change philosophy began to move up the corporate chain at Mars. Now, Mars – or Master Foods – has around-the-world programs in sustainable agriculture. In one case alone, cocoa growers in one African country have implemented sustainable agricultural procedures that increased their profits enough so that they have enough money to send their daughters as well as their sons to school. At the same time, some small growers now employ other adult workers and there has been a decrease in the number of children doing dangerous work.

    The collaboration between Honest Tea and Coke is a journey. My hope is that Honest Tea can influence Coke in a new way. Maybe Coke is trying to become a more socially responsible company. Maybe Honest Tea can move Coke out of its comfort zone. It’s easy to rush to judgment, but it might be more useful to hold off for a year or so and watch what happens.

    Celia Shapiro

  16. Andy Says:

    I think that it is a great deal and a great opportunity for Honest Tea to be a change agent throughout the country. You “purest”, who will now take your business somewhere else, miss the point. The point is that 99% of the world (like me) has no idea about what you and the green community and the organic community are talking about. But Honest Tea has gotten our attention about organic products. Heck, if organic is good in a drink, maybe it will be good in the rest of the food we ingest (instead of the regular crap that I ingest — see, I’m learning). This is an opportunity to introduce something good on a much greater scale and make a change at a much faster pace than all the home based Honest Teas could do in several decades. If Coke screws it up, then many, many more will answer the call as a result of this deal than would have without it. My call to you is to try to have as much positive impact on your community in terms of service and passion (for organic, green, environmental, or any other cause) as Seth and Honest Tea have had. Get in the trenches and make a difference and quit whining. Or as Teddy Roosevelt said: “It is not the critic who counts, not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man in the arena, whose face is marred by dust and sweat and blood, who strives valianty, who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause, who at best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who have never known neither victory nor defeat.” Keep up the good work.

  17. Peeled Snacks Ian Says:

    A little snippet from my blog about this investment….

    Okay, I appreciate the passion with which people have supported Honest Tea, and I can certainly understand that partnering with Coca-Cola can seem like getting in bed with the devil. But I ask these disillusioned doubters, what’s the point of starting a social conscious company if you only intend to raise the consciousnesses of people with whom you already agree? Are you so stingy with your healthy, tasty beverages that you don’t want our countrymen in Des Moines to be able to by them?

    And why should anyone discourage Coca-Cola from trying to make amends for years of making imperfect products? For 3 generations, American Companies were given a free ride to create environmental or social disasters, providing that the disasters would turn their stock-holders a profit. Now the generation has changed. Should we write off all previous companies and their transgressions? Or should we encourage them to adapt?

    Honest Tea is a GREAT company, and makes a GREAT product. They can really benefit from Coca-Cola’s help, as can all the shoppers in Topeka. The POINT of being a company like Honest Tea isn’t to only reach the people that already think like you- it’s to change the minds and behavior of those people that DON’T think like you. Honest Tea is an inspiration to my company, and I hope that more companies with missions like theirs try to win over the bigger players like Coke.

    Congrats, Barry & Seth

  18. Megan Says:

    I just emailed this letter to Honest Tea but I wanted to post it online for others to see so that maybe they can understand why some Honest Tea customers will be Honest Tea customers no more. For the record I love Honest Tea and always look for it wherever I go and am quite sad I won’t enjoy my favorite drink anymore.
    Dear Sir,

    I am dismayed and so very disappointed to learn of Honest Tea’s recent agreement with Coca-Cola. As a customer committed to buying only ethically and environmentally sustainable products I have always been pleased to have Honest Tea as a delicious option. While working at a food co-op I worked particularly hard to put your product on our shelves because of Honest Tea’s dedication to good environmental and social practices and its steadfast independence. I repeatedly recommended your products over Tazo because of Starbuck’s acquisition of Tazo. Yet regretfully I must say that Starbucks may in fact have more ethical business practices than your new investment partner.

    In Columbia, Coke is known for its absolute failure to protect their workers and in many cases is implicated as the direct source of the danger. Over the years several union leaders from Coke’s bottling plants have been ruthlessly murdered by paramilitary forces. In other cases, workers associated with union activity and their family members have been kidnapped and tortured. Workers have been forced by these paramilitary forces to sign contracts on Coca-Cola letterhead resigning from the unions.

    In India Coca-Cola has depleted the groundwater that Indian villages depend on for survival. Pesticides have been found contaminating their beverages and Coca-Cola’s plants have repeatedly released discharge laden with cadmium into the surrounding areas.

    These are the routine business practices of the company that Honest Tea has just joined hands with and by extension now supports. With your company’s dedication to fair trade and organic products I find your collaboration with Coca-Cola to be in particularly bad taste. Needless to say I am extremely disappointed by this decision and will change my buying habits accordingly. I am saddened that you are willing to sacrifice the loyal customers that have made your business so successful for those customers that do not take the social and environmental implications of their purchases into consideration. I hear the argument that Honest Tea believes this move will help the company grow and therefore have a better impact. But I think that with your choice of business partner Honest Tea has made it clear that it is willing to sacrifice the workers of Columbia and peasant farmers in India for increased profits. Unfortunately I believe that with this move Honest Tea’s commitment to social responsibility has been abandoned. And with that I predict that many of your most devoted consumers, like myself, will abandon your company.

    A former loyal customer,
    Megan

  19. Leslie Says:

    I’m disappointed to hear of your decision. I buy a bottle of Honest Tea most weekends when I’m grocery shopping, but I won’t do so in the future, because I cannot support a major international corporation like Coca-Cola. My opposition is not based on Coca Cola’s size, but because of the damage its products and methods cause to health, local economies, and the environment world wide. I recognize that entrepreneurial efforts, particularly in food & beverage, face many obstacles, but would much rather support a company that chooses to stay small and fight those obstacles instead of joining the criminal-industrial complex.

    (A note to those who criticized the “sugar” in sodas: if Coke used real sugar, the product would be far better. Instead, it uses high-fructose corn syrup, which causes serious harm to human health, esp in children.)

    Leslie

  20. mary good Says:

    dear seth and barry,

    i have been an enthusiastic fan of your product ever since i found it at our rainbow grocery co-op in san francisco. i have promoted you to my friends and have had high hopes for your distribution, especially as i have found more and more businesses carrying your product. it was such a relief to find not only a tea that was not sweetened, and instead so refreshing, but also owned by folks with excellent business practices and without being a front for one of the large soda companies. ultimately, i buy your product because i vote with my dollar. i will no longer buy honest tea, because even if it means better distribution for you, the onus is that you are now basically a product of coca-cola, a corporation that embodies all the problems with multinational capitalism. i’m sorry you made this decision. but i guess i can do without the convenience of your tea, and just go back to remembering to bring a thermos with a peppermint tea bag in it.

    another one bites the dust,
    mary

  21. Ken Says:

    Despite the assertion that Honest Tea will retain control over the operations of their business, this sale means that every purchase of an Honest Tea product supports the Coca-Cola Corp. The list of Coca-Cola’s environmental, ethical, and corporate offenses are far far too numerous to list here. I am sure that this deal will succeed in the sense that the sales of Honest Tea products will increase, however this deal has already failed by ignoring the spirit embodied in organic production. I will no longer purchase any Honest Tea products and I will endeavor others to do the same.

    Disappointedly,
    Ken

  22. Anne Says:

    Seth and Barry -

    As I was driving to work this morning I heard on Public Radio that you were teaming up with Coca-Cola. I have to say, I was disappointed. I immediately called up my boyfriend and told him the “bad news.” He assured me that although I was unhappy with the news, it couldn’t be all bad. After reading this blog entry I am starting to understand.

    We found your teas at our local Whole Foods and have been raving about you ever since. I bring them into work. We stock our fridge at home with only tea. No soda. No beer. Just Honest Tea. WE love it.

    So although I’m rambling a bit, I just want to say that I’m nervous. I want to support your company as far as I can. I really hope that Coke is buying shares so that they can get a piece of the health food market and not any ulterior motives. I agree with Jeff’s comment above, I hope you do not give up on glass bottles, as we do not buy beverages packaged in plastic. I hope that you continue to develop amazing products that set the standard for a sustainable environment and a healthy lifestyle. We need you. The U.S. needs you. Please don’t let us down, we’re counting on your continued “honest tea.”

    Your Supporter and Consumer -

    Anne

  23. Niki Says:

    Seth and gang-

    Congratulations! Sounds like a smart move and I am happy to see that you will have a chance to spread the Honest Tea flavor and mission even further than ever before. As a former Honest Tea employee, I can attest that it is a great place to work and that there are more good things to come for Honest Tea!

    All my best,
    Niki

  24. Hopton Says:

    I hope the contract was favorable for selling, values not value wise! As much as I admire mission-driven companies, is it done for the payday or the mission? As you rightly admit this is a spiritual question, not business strategy one. http://blog.inc.com/the-mission-driven-business/2007/12/as_the_year_draws_to.html (I am assuming a bit about your current ownership structure, as I do not know.) The inner charactor to start and run a business is far different than that required to make a business decision inspired by a spiritual self-awareness. I loved the quote by Chouinard:

    “I have enough stuff.”

    I’m sure Coke looked at the opportunity for an amazing ROIC with a quick rollout with “Honest Tea,” plus it’s a hedge on “sugar water” (and its image as a soda company).

    Several years ago I met an old-time portfolio in growth companies. He had a favorate saying, “Growth is a false god.” He was talking about how ROIC and capital allocation often suffer with rapid growth. I like to consider this saying from an personal moral and spiritual dimension. Or, from an Socially Responsible-ROIC perspective: a small company brand with deep roots might endure better than selling out for a growth rollout. Unfortunately, this may means going it alone, risk of failure, trusting that deep brand roots will develop with your customers and being motivated from a spiritual abundance. This is a lot of courage to expect of any leader, let alone a modern businessman.

    Good Luck.

  25. GreenDiva Megan Says:

    as a mission-based business owner, i completely relate to the passion and the drive that sparks the whole mess and then the struggle to do what you set out to do when production, sales, distribution, and fund-raising are crushing, but necessary to make it happen.

    we’ll be at the event in NY w/ terracycle. we’re a small, independent, green, triple-bottom-line media - first regional green mag in NYC.

    good luck with the big changes. keep those coca-cola people honest!
    :)

  26. Andrea Says:

    I am disappointed in hearing about you joining in with Coke. I read the bottle cap on one of my Honest teas last week that talked about the number of bottles sold in a year of Honest Tea equals the number of coke products sold in 9 minutes.

    I know people who basically are addicted to the Coke products and now you are supporting them. Not exactly, but you are a part of them and that makes me an unhappy consumer. Let’s be honest…money is the issue…which I appreciate and understand. I just won’t buy a Coke product.

    My husband mentioned that I should make my own tea from organic tea bags sold at the same store as your product…but I always enjoyed the convenience of your product. I guess I now will make my own tea.

  27. Erik Says:

    Many congratulations to Seth, Barry and the Honest team on this deal! It’s a win-win. Honest Beverages gets a strategic investor that will allow them to expand their socially-conscious brand, and Coke gets an increase in market share through an inspirational company. If Coke meddles too much, their investment will be for naught, so I imagine they’ll manage the relationship accordingly.

    Keep up the great work!

    Best regards,
    Erik-

    P.S. Sam, I’m starting a healthy-living/environmentally-conscious concept if you are looking for an investment :) My e-mail is info@theparamountgroup.com if you’d like to know more. Hey, Seth and Barry were a start-up at one point too!

  28. Daniel Says:

    This sounds like a terrific deal — a perfect marriage of using big business reach to deliver much more social good than would be possible without it. There is nothing unethical about partnering for one common goal, even when other goals aren’t shared. Saying that you shouldn’t work with Coca-Cola because of what they do in India is the business equivalent of saying we shouldn’t work with evangelicals on alleviating poverty because they are opposed to gay marriage. Keep up the good work!

  29. Mark Albion Says:

    You’ve done a great job for the first 10 years, Seth and HT team.
    No reason that won’t continue. You are a brand leader precious
    to the socially responsible movement and people-centered business.

    And Seth, please no getting hit by a bus, as you said.
    Ride that bike carefully. You already had truck problems
    in the early Honest Tea days. No upsetting Julie again!

  30. Sam Says:

    Seth and Barry,

    I think many of us will have the gut reaction of “well, there goes another great company with great products that will be destroyed by the machine,” but I am optimistic. You guys have continued to innovate your products and I hope this arrangement with Coke will give you the freedom to continue that mission with greater reach.

    In the interest of full disclosure, I am a Coke stock holder…sodas have their place if you drink them in moderation and they can be darn delicious with a good Five Guys’ burger, but a number of years ago like you, I begin searching for a more adult tasting and diet-responsible drink as my main beverage. I too discovered that almost all of the bottled teas on the market (including those from Coke) either had as much sugar in them as a Coke or had fake sugars in them which I can not stand. If you hadn’t started Honest Tea, I might have. In fact, I am constantly bugging my local Whole Foods market to stock more “Just Green Tea” in their cold case as your tea is so good, I don’t need any sugar in it and prefer it that way.

    Anyway, as long as you guys focus on things and don’t let Coke mess with your great products, I think you (and us!!!!) will be alright. And please don’t let Coke get anywhere near your offices with a shipment of high fructose corn syrup! : )

    Good luck and keep the tea coming!
    Sam

    P.S. Shoot…if I had known you guys were looking for investors, I would have written you a check on the spot!

  31. Honest Tea & Coca Cola at Clutch Cargo Lips Says:

    […] their blog post, Seth and Barry admit that it might not work out. They also hope to be a “change agent” […]

  32. Jeff Woelker Says:

    Hi All,
    I love Honest Tea and have ever since I discovered them 3 years ago at a local market in Chicago (New Leaf Natural Grocery). Although I have some mixed emotions about Honest Tea being swallowed up by Coke, but I can understand the reasoning behind this decision. It would be great to be able to buy Honest Tea everywhere and help support the organic and sustainable farming movements along with, hopefully, taking some of the high fructose garbage off the shelves in our grocery stores. My only hesitation is that some executive on high will decide it’s more profitable to get rid of those glass bottles and replace them with plastic, or that by adding a little more sugar, “our” marketing tells us, kids will love it. It’s a slippery slope once that happens and I hope Honest Tea can keep the dogs at bay.

    I can’t wait to see what happens,
    Jeff in Chicago