Changing the Status Quo
It's official. Today I was elected a board member of the American Beverage Association, which means that either we've changed or the Beverage Establishment has changed—and maybe both.
When you start a beverage business out of your home, you are by definition an outsider because distribution—which is key to the business (see blog post "The Customer is Always Powerful") is almost totally controlled by Coca Cola, Pepsi, and Dr. Pepper/Snapple. All beverage upstarts resent the Establishment because its near-stranglehold on distribution makes it difficult for us to get our drinks to customers. We also tended to mock their so-called "innovations," which ten years ago seemed to be variations on vanilla cola, diet vanilla cola, vanilla cherry cola, diet vanilla cherry cola... you get the idea.
So as an entrepreneur, it's very easy to develop an anti-establishment mentality. I was so conscious of being an outsider that sometimes I made things more difficult for myself early on—among other things, Honest Tea avoided hiring people from the beverage industry because they stood for all the things we thought we stood against.
A lot has changed on many fronts. Pepsi and Coke now own juice companies like Naked and Odwalla respectively, as well as lower-calorie drinks such as Vitaminwater. Companies like Nestlé Waters have been leading the charge toward lighter-weight bottles and Coke has launched a recyclable bottle made with renewable plant-based material. And the trade group that used to operate as the National Soft Drink Association evolved too—it rebranded itself as the American Beverage Association. Instead of being a group that used to fight attempts to engage in discussion about the role of drinks in our society, the ABA joined with the American Heart Association and the Clinton Foundation in 2006 to create nutritional guidelines that led to the voluntary withdrawal of sugary drinks from most schools. The result of the initiative was an 88 percent decrease in the amount of beverage calories sold in American schools.
So who changed: Honest Tea or the Beverage Establishment? Well, it's true we now occasionally hire people from the beverage industry, and we do work with the Coke distribution system, but Honest Tea is still making organic, Fair Trade-certified tea, and we still offer drinks with less than half the sugar of most beverages. It's also worth noting that over the 12 years since we've been in business, the average calorie profile of bottled teas has moved from 100 calories per 8-ounce serving to 60. The average calorie profile of kids' pouch drinks has move from 100 calories per pouch to 75.
There's still a lot of work to be done around helping America's beverage companies become more sustainable. National recycling rates are still below 40 percent and I'm sure more can be done to promote healthier beverages. It feels a bit surreal to think of myself as part of the Establishment, but unlike 12 years ago when it felt like it was Big Soda against everyone else, the industry has definitely evolved and embraced entrepreneurial innovation. If this is the New Establishment, I'm proud to have a seat at the table.
SETH GOLDMAN | Columnist | Co-founder of Honest Tea
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.