Why We Sold A Stake To Coke
We first told you about Seth Goldman and Honest Tea back in June 2007.
Tuesday, Honest Tea and Coca-Cola announced that the world’s largest beverage company is buying a 40 percent stake in the much smaller beverage company.
In this blog posting, Goldman explains why they did it.
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 percent annual compound growth rate (70 percent 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, in 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-plus 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).
Read more.
Photo by Honest Tea.
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