Jul 2008

Honest Tea to Get Wider Distribution through Coke
NEW YORK - Coca-Cola Co.'s biggest bottler said Thursday it would begin distributing Honest Tea in certain West Coast markets, the first step to give the brand nationwide distribution at more mainstream grocery stores, gas stations and other outlets.

Coca-Cola (nyse: KO - news - people ) bought a 40 percent stake in Honest Tea in February for $43 million, putting the total value of the organic tea maker at about $110 million.

Initially, the bottler, a Los Angeles-based unit of Coca-Cola Enterprises Inc. (nyse: CCE - news - people ), will have rights to distribute Honest Tea and Honest Ade in Northern California, Arizona, Las Vegas, Washington and Oregon. It will begin in late September.

Honest Tea co-founder Seth Goldman had built a patchwork of distributors for the brand, even sending out tea through distributors of cheese, corned beef and charcoal, before being able to tap into Coca-Cola's valuable distribution network.

Coca-Cola's investment in Honest Tea is part of an overall strategy by the world's biggest soft drink maker to sell more non-cola drinks such as enhanced or sparkling water and energy drinks to appeal to consumers looking for healthier drinks. Coca-Cola's $4.1 billion purchase of Glaceau's VitaminWater in June 2007 sent ripples throughout the industry.

Rival PepsiCo Inc. (nyse: PEP - news - people ), based in Purchase, N.Y., has brands such as Gatorade, SoBe Life Water and Lipton-brand ready-to-drink teas.

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