The Mission Driven Business
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Feb 28, 2008

Will Honest Tea be Corrupted by Coke?

 

Earlier this month we announced that Coca-Cola was making a 40 percent investment in Honest Tea. Though most of the feedback from consumers has been positive -- "finally, I won't have to drive two hours to get your drinks!" -- we have received heartfelt notes from loyal customers who are disappointed with our new investor. We take these concerns seriously. Over my next few blog posts, I am going to share some of my recent exchanges with a customer, Julie, who agreed to let me post her comments.

Here's the first exchange:

Julie wrote:

I am writing to express my surprise and disappointment upon hearing the recent news that Coca-Cola will acquire a 40% stake in Honest Tea, making it the company's largest stakeholder, and that it will have the option to purchase a majority stake after three years. As a business that has built its reputation over the past decade on a commitment to healthy organic products, environmental quality, and social justice for its producers, Honest Tea's decision to partner with Coca-Cola -- a multinational corporation that has consistently violated all three of these principles in their global business practices -- confounds me.

My response:

I won't try to defend Coca-Cola here -- that's not what this deal is about. However, based on your remarks I think it's fair to say that you believe the world would be better if Coke sold products more like ours. So then the question is whether we believe that Honest Tea will be corrupted by Coke. I'm confident that Honest Tea will continue to sell the products it's been selling -- we painstakingly built our business over ten years in a very deliberate manner. We were constantly presented with the option of making the products cheaper (e.g. using high fructose corn syrup instead of organic cane sugar or honey or without Fair Trade certification) or with more calories but we consistently chose to keep the brand "Honest." Coke found value in what we've created – if they wanted to change our company into one like theirs, they wouldn't have invested in ours.


Seth Goldman is the President and TeaEO of Honest Tea, the company he co-founded in 1998 with Professor Barry Nalebuff of the Yale School of Management. He's preparing the September release of a graphic novel titled Mission in a Bottle. @HonestTea