Beverage Industry

Honest Tea joins Coca-Cola family

March 1, 2011

Honest Tea and The Coca-Cola Co. announced today that Coca-Cola has exercised its option to acquire the remaining portion of Honest Tea. The move completes a transaction that began three years ago when Coca-Cola, led by the Venturing and Emerging Brands (VEB) unit of Coca-Cola North America, purchased a minority stake in the company. Financial terms of the transaction were not disclosed.
 
Honest Tea, a leading organic bottled tea company, will continue to be based out of Bethesda, Md. It will maintain operations as a stand-alone business under current President, Co-founder and TeaEO Seth Goldman, his management team and current Honest Tea employees. Goldman and VEB have developed a unique operating model that allows Honest Tea autonomy to continue to run its day-to-day operations while accessing the scale benefits of the Coca-Cola system in various areas, including manufacturing and distribution. As part of the VEB team, Honest Tea also will begin to sell current VEB brands to the natural channel.
 
Under an arrangement with Coca-Cola, Goldman has chosen to reinvest most of his proceeds from the sale back into Honest Tea. Honest Tea Co-founder Barry Nalebuff and Gary Hirshberg, CE-YO of Stonyfield Farm, will continue to provide informal guidance to Honest Tea as part of the advisory council.
 
“We started Honest Tea 13 years ago with an ambitious mission to create a delicious, healthy beverage alternative produced with the health of our planet and our consumers in mind,” Goldman said, in a statement. “Over the past three years, it has been exciting to see the reach and impact of our mission expand as a result of our partnership with The Coca-Cola Co.”
 
Since receiving an investment from Coca-Cola, Honest Tea has expanded distribution from approximately 15,000 outlets in 2008 to more than 75,000 and doubled the number of offerings as well as the sales of organic zero-calorie drinks. Additionally, Honest Tea has committed to transitioning its entire tea line of Honest Teas to Fair Trade certified by the end of this month.
 
"When we made the investment in Honest Tea, we did so because we saw that it had great potential to be a significant brand of the future,” said Deryck van Rensburg, VEB’s president and general manager, in a statement. “Three years after, the brand truly reflects where consumer demand is today, and we are excited about being on the verge of still more growth. Beyond growth, having the unique vantage point of a minority investee and watching Honest Tea has helped our company in many other ways, from encouraging Coca-Cola to obtain organic certification at three of our facilities, to establishing a state of the art tea brewing and filtration system at a bottling plant. Additionally, it enabled us to participate with Honest in a number of sustainability initiatives on recycling. All of these efforts reflect why VEB has chosen to invest in entrepreneurs like the team at Honest – they provide a source of innovative ideas and energy that enhance our own efforts."