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When Honest Tea took on Coca-Cola as an investor in 2008, many skeptics were concerned that Coke would force us to follow the same strategy that so much of the Big Food industry employs –strip out as much cost as possible, and then put all the money into marketing.

In fact, since Coke's investment, Honest Tea has taken several steps that increased our costs – we've increased our number of Fair Trade certified tea varieties from three to more than fifteen.  We've introduced our Honest Kombucha line, which is an expensive and costly drink to produce, store and ship.  We did manage to cut some costs out with respect to our plastic bottles by developing our lighterweight bottle (see blog from October 2009), but that was an environmental win that we would have hoped to achieve even if it cost us more money.

So I was delighted to visit the newest Honest Tea production facility last month -- a Coke bottling plant where I saw a new tea filtration system that Coke installed with Honest Tea's help and expertise.  There's no more visible way to communicate the level of commitment Coke is making in our brand's future than to show a picture (see the bottom of the page) of the Big Brewer  – not only because it is a financially significant investment (more than $1 million) but because it takes up such a large piece of real estate in the middle of a production plant where space is limited and quite expensive.

We had to digitally alter some of the specifics of the photo (to prevent competitors from seeing how we do it), but the scale is accurate – three stories of tea brewing gadgetry (that's me and our VP of Operations, Ed Castro at the top)...a long, long way from the bad old days when our brewmaster George and I used to dunk big filter bags into boiling water, hoping the bags wouldn't burst and clog the filters (which they always seemed to do – and then we had to clean tea leaves off the ceiling).

The Big Brewer says several important things about Coke's long-term commitment to Honest Tea and our organic beverages – it means they are investing in brewing real tea leaves (as opposed to the cheaper tea powder which most (i.e. almost all) tea-flavored drink makers do). The payback on such an expensive system is at least three years, far beyond the investment timeframe that Honest Tea could make on its own – we're rarely in a position to make capital investments beyond the next two months.  It also means no shortcuts – Honest Tea will continue to make our teas the way tea is supposed to be made.  Yes, there's more technology and computers involved to ensure consistency but the essential notion of putting tea leaves in boiled water and then filtering the leaves out remains as authentic as the basic tea steeping basket.

And most importantly, the tea from the Big Brewer is as good, or better, than any we've made – a clear, clean taste and a beautiful look with a lot less sediment.

 

Last updated: Apr 21, 2010

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.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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