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Just A Tad Bittersweet

Growth often has a bittersweet element to it. Last month, we announced plans to switch the distribution of our plastic bottles for most of the West Coast to Coca-Cola Enterprises (CCE), the largest beverage distributor in the world. Because we’ve endured agonizing distribution challenges over the past seven years, there’s an indescribable sweetness to actually be able to have our product distributed in almost every possible account: colleges, convenience stores, restaurants, stadiums, even Disneyland!

And yet, having spent our first seven years begging distributors to carry Honest Tea, it felt very weird to tell the independent distributors who we once idolized and who helped build our brand that we would be terminating our distribution contracts. Some of them congratulated us, some of them were bitter, all of them are being compensated. But as much as money plays a role, there really is more to these relationships than money, and in many cases, just being able to buy someone out of a contract feels a bit hollow. Our sales team worked passionately to get these guys (more than 90% are men) to have the same passion we do, and many of our distributors did drink the Kool Aid, or in this case the Honest Ade.

When I called to tell them of the switch to CCE, many of the owners, who are often second- and even third-generation owners, lamented that every year it’s getting harder to run an independent distribution business. Last year many of these same folks lost Vitaminwater and Fuze to Coke, and before that they lost Snapple to Cadbury and Sobe to Pepsi.

One of the best pieces of advice I’ve ever received came from our former board member Jeff Swartz, CEO of Timberland, who told me to “run the business like you’re going to own it forever.” And though we were mindful to create distribution contracts that anticipated changes in ownership, we have always run it that way. And that mindset has been one of the keys to our success — while other beverage companies were more focused on flipping the company, jumping on fads and trends instead of building an enduring brand.

I expect that once the orders from CCE start rolling in, we will celebrate the new opportunities, but as an entrepreneur at heart, I will always have an appreciation for the folks who got us to this point.

2 Responses to “Just A Tad Bittersweet”
  1. Kera Toe Says:

    Your regret seems a bit dishonest
    In his 2003 book, Barry discussed the process that went into creating Honest Tea and makes it clear that he was planning to sell the company to a larger beverage manufacturer once it grew enough.

  2. Ernie Kellerman Says:

    I appreciate the sincerity of your regret, but it’s not going to change your decision. Nor should it. Business is business.

    But, I respectfully suggest it’s better to recognize that reality and cease with the self-indulgent public angst that may make you feel better, yet serves only to add insult to existing injury.

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