« Back to Home Page

Sign up for the 3p daily dispatch:

Honest Tea Trying to Stay Honest

Dale Wannen
Dale Wannen | Wednesday July 21st, 2010 | 2 Comments

Just as we do in our personal lives, companies go through growing pains.  One organic beverage company, Honest Tea,  now faces its own growing pains.  From brewing batches of tea in his kitchen in 1998, Seth Goldman and his colleagues have now created one of the best-selling organic teas in the country. The business model was so successful that in early 2008, Coke purchased a minority stake in the company for a tea-tipping $43 million.

The dilemma rests in the fact that Honest Tea is trying to maintain its status as a truly organic, ecologically aware and low-calorie beverage company. Coca-Cola sees cost cutting measures and expansion of product portfolio as primary drivers.  To add to this drama, Coke has the option to buy the whole company, come 2011. 

Tea-Time

As a recent Wall Street Journal article Can Honest Tea Say No to Coke Its Biggest Investor explains, new financial ties to such a large company as Coke would definitely compromise the integrity of the socially responsible firm.  Currently, Honest Tea visually banners the “no high-fructose corn syrup” label.  Executives at Coke presented the option to eliminate this label.  Mr. Goldman argues that he does not want any highly processed products involved with Honest Tea adversely stating, “I met with various people [at Coca-Cola] who explained their belief that high-fructose corn syrup is comparable to sugar in its health impact.”  Keep in mind, most of Coke’s soft drinks contain corn syrup and numerous health concerns are linked to this product.

One catch phrase option that Coke recommended placing on the bottles was “No fake stuff.”  This was quickly rejected by Honest Tea due to its subjectivity and lack of definition.  A Coca-Cola spokesman states that “sugar is sugar is sugar.”  Clearly, there are differences of opinion here.

Chief executive of the organic dairy company Stonyfield Farm, Gary Hirshberg has stuck it out with his own company after being acquired by conglomerate Dannon.  He states “My advice to C.E.O. Seth Goldman: Stick to your knitting. Keep the honest in Honest Tea. If you don’t, you’ll regret it. And so will Coke. I would argue that Honest Tea is providing more value to Coke by blazing its own trail than by adapting to Coke’s.”

In terms of companies trying to maintain their true sustainable mission, it becomes difficult to actually quantify or measure brand value.  What is the value of Honest Tea’s commitment to not adding artificial ingredients to its product?  As Ed Cotton of influx insights states in his recent post, there is not one tangible scoring place or discipline to determine value.  Coca-Cola will soon be answering this question and let’s hope consumers don’t have to question the honesty in Honest Tea.


▼▼▼      2 Comments     ▼▼▼

Newsletter Signup
  • http://justin-ccf.myopenid.com/ Consumer Freedom

    I have to agree with Coke on this one. A sugar is a sugar. High fructose corn syrup and refined sugar are indistinguishable to the human body. But consumers distinguish anyway, because of the fear-mongering surrounding high fructose corn syrup. Companies know this and slapping a label on the packaging that doesn’t actually make the product any more or less healthy. It’s a great marketing tactic, but doesn’t make anyone healthier.

  • http://www.cheap-dunks.com Zhanchunmei00

    Michael Jordan is the best player in NBA history, Nike Sneaker but to folks who were there and covered his entire career, NFL Jerseys it was a bit laughable to hear Jordan ridiculing LeBron NHL Jerseys James over the weekend for joining up with MLB Jerseys All-Stars Dwyane Wade and Chris Bosh to help him Brand Belt win a title in Miami rather than taking some stand by staying in Cleveland and Men Suit trying to win one on his own Men Short Jeans . When it comes to taking stands, Men Long Sleeve Jordan is not the NBA’s Women Shoes leader in the clubhouse. Men Jeans Not even close. Men Shoes
    Jordan was Men Hoody notoriously hard on his Bulls teammates during Men Jacket his career, Handabags treating many of them as Women Apparel his inferiors (“my supporting cast”) Brand Glasses or in one case, Brand Hats punching teammate Brand Wallet Steve Kerr in the nose Brand Jewelry after some beef. Brand Scarf
    Watches Watches
    Kids Series Kids Series

  • Pingback: Honest Tea Ramps Up Commitment to Fair Trade()