Company Profile

COMPANY:Honest Tea

2011 INC. 5000 RANK: 1336

HEADQUARTERS: Bethesda, MD

YEAR FOUNDED: 1998

2010 REVENUE: $71.7 Million

3-YEAR GROWTH:

We met last week with Sally Greenberg, the new head of the National Consumers League to discuss some ideas about how we could inform and mobilize consumers around issues of social responsibility. It was nice to know that Sally has been a loyal Honest Tea consumer and even convinced the liquor store near her office to carry Honest Tea. As we talked, our conversation helped me realize just how critical active consumers have been to Honest Tea's success.

The first chain to carry our teas in 1998 were the 17 Fresh Fields stores in the DC region (they were later converted to Whole Foods stores, and are still Honest Tea's strongest performing stores). We delivered 15,000 bottles directly to the Fresh Fields warehouse, and they in turn sent the bottles to the stockrooms of the stores, which eventually got around to putting the bottles on the shelves. 

Our two Net Impact MBA interns and I sampled the stores as much as seven times per month and we quickly developed a loyal following. Whenever Honest Tea was out of stock, there was no way the interns and I could be in every store to restock the product but thankfully our consumers insisted on being able to buy Honest Tea, and they (mostly) politely nagged the store to bring out more Honest Tea from the stockroom. This pattern of behavior eventually led to the stores keeping more adequate inventory of Honest Tea in stock. 

This support was especially important because most of the time there was a salesperson from a beverage distributor who would be in the store within 24 hours who spotted the empty space on the shelf and took the opportunity to restock it with a different beverage. But our vocal consumers had trained the store personnel to protect our shelf space.

As we started to develop additional distribution, we created a form that consumers could bring to stores to help them request Honest Tea be delivered to a store. We would often meet with managers of college and office cafeterias who would say they had received requests for organic or Fair Trade offerings, but that they were obligated to work with Coke or Pepsi because they had a contract. But we always pushed them on this logic - was the contract intended to prevent the cafeteria from providing their customers with what they want? Are Coke and Pepsi prohibiting you from selling healthier, organic drinks to your customers? Sometimes this logic actually worked. And then of course there were cases where the senior person in the company or the president of the college would tell the manager that they had to carry Honest Tea, and it was done.

But the most responsive buyers are always the ones running smaller stores, where consumers feel more comfortable making requests and often have a personal relationship with the buyer. Once things catch on with the smaller stores, the larger chains start to pay attention. And we were always delighted to receive a call from a larger chain that invited us to a meeting because they had received a request for Honest Tea from a consumer via email or the store suggestion box.

The bigger stores have very little incentive to take on new products but they are more responsive to consumer request than I had thought they would be. There's no question that Honest Tea, or for that matter, most emerging brands, wouldn't exist without active and engaged consumers. 

As we wrapped up our conversation with Sally, we discussed donating bottles of Honest Tea for their annual dinner. Then Sally said, "Well, I'll have to check with the catering folks at the hotel - sometimes they have rules about which types of beverages they can serve." And I had to remind her, remember who the customer is - you are paying money to the hotel for your event! You have every right to insist that your money be used to create the experience you desire." Sometimes even the most conscious consumer can forget how much power she possesses.

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