Beverage Industry

Honest Tea Inc.: Social and Environmental Sinceri-tea

April 1, 2005

Honest Tea Inc.: Social and Environmental Sinceri-tea
By Elizabeth Fuhrman
It’s in the tea leaves. Well, some of it is what’s in the tea leaves, and some of it is what’s not for Bethesda, Md.-based Honest Tea Inc. Since the company’s first product launch in 1998, all of Honest Tea’s varieties have evolved to be certified organic by the United States Department of Agriculture.
“Most people don’t realize that tea leaves are never rinsed,” says Seth Goldman, president, co-founder and “TeaEO” of Honest Tea. “The first time any chemicals on the leaves are washed off is when hot water is poured on them to make tea, so the chemicals end up in the tea. With organic tea, there are no chemicals to drink.”
Creating a cleaner beverage product for consumers wasn’t Goldman and Honest Tea’s other co-founder, Barry Nalebuff’s, only motivational factor for starting a tea company: They were thirsty. Goldman, who has been an active person his whole life, says he was constantly in search of a drink to quench his thirst that wasn’t loaded with sugar or additives and still had taste. In 1995, while Goldman was one of Nalebuff’s students at the Yale School of Management, the two started to formulate the idea of lightly sweetened spritzers. A few years later, after continuing to be discouraged by beverage choices, Goldman contacted Nalebuff to see if he was still interested in the idea. Coincidentally, Nalebuff had just returned from India where he had been analyzing the tea industry for a case study.
Among other findings, Nalebuff learned that most tea purchased for bottling by American companies was the lower quality dust and fannings left after quality tea had been produced. Nalebuff came up with a name to describe a bottled tea that was made with real tea leaves and contained healthful attributes – Honest Tea. The first Honest Tea products hit the store shelves of what is now Whole Foods in 1998.
“The amazing thing about tea is that you can offer a drink of the highest quality for pennies a bottle,” Goldman says. “Our hope was that we could create a brand that would develop a strong and loyal following for being honest – something that is what it says it is.”
Honest Tea copacks its own products at its two plants in Pennsylvania and one in California. Breaking out of the norm for an organic beverage product, Honest Tea now offers its teas in 100 percent recyclable plastic bottles. The PET-1 plastic bottle introduced in 2004 allows for a panel-less design, which creates a sleek, eye-catching look similar to glass.
“We wanted to develop an exciting package that complements our glass line while allowing people to enjoy our tea in new places,” Goldman says. “And we wanted to do it in a way that didn’t compromise our brand or our commitment to sustainability.”
While still offering glass, the move to plastic has allowed Honest Tea to enter into convenience and health channels and mass markets such as Target, in which the company launched this year.
“We want Honest Tea to be sold everywhere bottled drinks are sold…” Goldman says. “We see tremendous opportunity to continue our leadership in organics as organics move mainstream into convenience, grocery, foodservice and even mass channels.”
“We have also come to realize that ‘honest’ can be about more than tea – ‘honest’ stands for ‘authentic, organic and healthier’ than most of what is being offered,” he continues. “That’s why we’re launching the Honest Ade line.”
Honest Tea has a cooler shelf full of new products, including Honest Ade Cranberry Lemonade and Honest Ade Limeade, hitting stores this spring. Vanilla Mint White Tea (in plastic), Mango White Tea (in glass) and Pearfect White Tea (in glass) will be the company’s first white tea launches. Heavenly Honey Green Tea joins the new products as a blend of organic green tea with a light touch of organic honey.
All of Honest Tea’s drinks, including its new Honest Ade line, have no more than 40 calories for an 8-ounce serving, making them much less sweet than most bottled drinks, Goldman says. Honest Tea consumers have always typically been health conscious, “but these days we find more and more people are reading labels, in the wake of low-carb diets and calorie-counting,” which makes Honest Tea products appealing to consumers, Goldman says. The company now offers teabags and bottled teas in more than 20 varieties, which includes unsweetened, barely sweetened, or even “a tad sweet,” in stores across the United States.
Possibly, one of the company’s greatest driving forces into growing consumer popularity is its commitment to the environment and the partnerships it has created with the growers and communities behind the teas. Honest Tea was the first company to introduce a Fair Trade bottled tea – its Peach Oolalong Tea – which carries the Fair Trade seal. This quest for creating honest products will carry Honest Tea forward in the market, Goldman says. Honest. BI