Honest Tea growing into an industry player
Coca-Cola deal has extended Bethesda company's reach
Honest Tea was not only the first beverage company in the U.S. to make fully organic bottled tea, but the first to market a Fair Trade-certified product, Seth Goldman said.
"I think we have been able to influence larger beverage companies," said Goldman, president of the Bethesda company.
Another indication of the company's influence is Goldman's appointment this year as a board member of the American Beverage Association, the main industry trade group that dates to 1919. Goldman admits it is "pretty weird" to be sitting in meetings with top executives from Coca-Cola, Pepsi and Dr Pepper.
"We don't agree about everything," he said. "The beverage industry is a notoriously tough one to work in, especially for emerging brands."
Goldman noted industry changes, such as the giant beverage companies having their own juice companies and lower-calorie drinks, as well as lighter-weight bottles.
The biggest aid for his company in its partnership with Coca-Cola has been in distribution, Goldman said. "You can't ship beverages through the mail."
Without Coke's help, Honest Tea products would not be getting into CVS, convenience and other stores, he said. Before the Coke deal in 2008, the company had 54 employees. As of July, Honest Tea was up to 120 employees, with some 50 in Maryland and the Washington, D.C. area. Honest Tea is also welcoming 47 interns this summer nationwide.
Coca-Cola has an option to buy all of Honest Tea that it can exercise next year, and senior executives of the Atlanta beverage giant are considering that, said Scott Williamson, a Coca-Cola North America spokesman. "We continue to be pleased with our minority investment in Honest Tea," he said.
If Coke does exercise that option, Goldman said, he doesn't see Honest Tea being "shipped off to Atlanta." He wants to remain in Bethesda, where he and his wife, Julie Farkas, raise their three sons.
"We've been building a brand with our own identity," he said.
The larger company's marketing reach makes it easier for Honest Tea to "sell in" to Coca-Cola because it can supply that many more customers with a more healthful beverage, said Honest Tea co-founder Barry Nalebuff. "The more tea we sell, the more good we do in terms of changing the American diet," he said.
While Calvert Group's commitment to social responsibility inspired Goldman, he was also influenced by other businesses that connect their products to their values, such as Ben and Jerry's, the ice cream maker founded in Burlington, Vt., in 1978. But he wanted to be the next "wave" of Ben and Jerry's type of companies, and really was inspired by companies such as Stonyfield Farm, a Londonderry, N.H., yogurt maker whose president and "CE-Yo," Gary Hirshberg, joined Honest Tea's board.
"We aspire to take it a step farther by connecting our values not just to the way we run the business, but by the products we are selling," Goldman said. "Organic, healthier beverages, fair trade those commitments are embedded in our products."
The commitment extends to partnering with organizations such as the environmental group Sierra Club and City Year, a community development nonprofit. Regular customers include President Barack Obama, who reportedly stocks the White House and presidential helicopter with the antioxidant-strong Honest Tea drinks.
Honest Tea has had a big influence in inspiring other green and organic companies in turn, executives said. Hirshberg cites Sweetgreen, a natural foods restaurant chain that has a location in Bethesda, and Happy Baby Foods, a company selling organic baby food, among "a long list of other emerging natural products companies."