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.
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.