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How I Beat the Distribution System

Honest Tea founder Seth Goldman faced major challenges getting his healthy tea on shelves. Here's how he got around the problem.
FOOD AND BEVERAGE
Honest Tea CEO Seth Goldman speaking during his Thirsty for Change general session at the Inc. 500 conference.
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Honest Tea began with its founder, Seth Goldman, taking a thermos of brewed tea to a local Whole Foods distributor. Whole Foods loved it, and Honest Tea found its first shelf space. It was a logical initial step: The tea came from natural ingredients. Whole Foods sells only natural goods.

Goldman faced a problem though when he took the tea to other distributors. They hated it.

"They said it wasn't sweet enough. They said it tasted like grass," he said at the Inc. 500|5000 Conference.

So to get the product to new stores, in front of more customers, Goldman broke down the supply chain. To get to gourmet stores, he contracted with a cheese distributor, who would bring Honest Tea on his truck along with his cheddars and mozzarellas. To reach delis, he contacted a corned-beef distributor. For grocery stores: a charcoal distributor.

"And eventually we got enough space on the shelf that beverage distributors said, 'Ah, ok, we’ll give your product a try,'" he said. "And for us, that was a way to work around a problem to eventually solve it."

Even now, he still has trouble with distributors. At the conference, he played a voicemail that a distributor's agent left for a Honest Tea salesman. It was a 27-second, expletive-ridden tirade that included mention of where Goldman's salesman could put his bottle of tea. And no, it wasn't on a store shelf.

IMAGE: Inc.
Last updated: Oct 6, 2011




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