Seth Goldman: On Selling Honest Tea to Coca-Cola And New Challenges

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LONDON, United Kingdom   Sold in the US for almost 20 years, Honest Tea’s organic bottled teas can be found in more than 100,000 stores across the country.

Employing 39 members of staff and generating $178 million in sales in 2015, for co-founders Seth Goldman and Barry Nalebuff, the business has grown exponentially since its launch out of Goldman’s home in Maryland, in 1998.

Acquired by Coca-Cola in 2011, Under Goldman’s continued leadership, Honest Tea has sold over 1 trillion beverages, while maintaining its original commitment to building

honest relationships with its customers, suppliers and the environment.

Launching the brand in the UK last month, despite Goldman scaling back his day-to-day involvement with the company, his unwavering passion for the business and enthusiasm for entering a new market is evident.

Today, in addition to helping shape strategic plans for Honest, Goldman analyses new consumer trends and scouts emerging brands for Coca-Cola. The entrepreneur also acts as the Executive Chairman for Beyond Meat, a leading and innovative plant-based protein food company in the US.

A self-confessed business mentor who prefers to do things differently, we sat down with Goldman to find out how he transformed his vision into a reality, why handing over control can be a positive business move, and how he maintained Honest Tea’s ethos while working with Coca-Cola.

Honest Tea

Image: Honest Tea

On developing a 100% organic brand…

When we started in my house in 1998, the original idea was just about creating a less sweet bottled tea.

All the drinks that were available at that time either had 100 calories per serving or zero calories per serving, and we wanted to fill that gap.

We started off with only a few organic ingredients, but as we began to learn more about the supply chain and how tea was grown we discovered one important insight. Unlike almost every other agricultural product, tea leaves are never rinsed, which means, if chemicals are sprayed on a tea leaf they stay on the leaf until it is brewed. These chemicals are then washed into the drinks we consume.

After realising this, we began to think, wouldn’t it be great if we could have tea leaves that were organic? They would be better for the ecosystems where the leaves are grown, for the people picking the tea leaves and of course for the consumers.

And so, in 1999 we launched the world’s first bottled organic tea, and over the next 5 years we worked with our suppliers to convert the rest of our products to organic.

We became the best selling tea in the natural foods channel in the United States, but although we were continuing to grow, we were having trouble crossing over into mainstream accounts.

On accelerating growth and hitting the mainstream market….

In 2008 we took investment from Coca-Cola which really helped accelerate our growth.

We were in around 15,000 stores before the Coke investment and then over the next few years we found ourselves stocked in over 100,000 stores.

Before the Coke investment we were selling healthy drinks to healthy people and that’s a nice and noble thing to do, but our goal was to democratise organics, and to bring our products to a much wider audience, and that’s what happened.

Now, Honest Tea is stocked in several national chains of restaurants in the US including Wendy’s and Chick-fil-A, and we’re really available wherever beverages are sold, not just where healthy beverages are sold to healthy people.

On strategic marketing tactics….

One of the biggest challenges with organic products in the US is that people have a low level of understanding about what organic means.

In addition, people tend to think that organic doesn’t taste good and is expensive, and so for us, although everything we sell is organic we don’t push organic as the highest level of what we’re offering.

We try to sell on taste, and we try to sell on the health aspects of our products. For us organic and Fair Trade are intrinsic to what we do, they’re proof points, but they aren’t the first part of our sales pitch.

On maintaining our Honest ethos……

One of the really beneficial aspects of the way we built the Honest brand is that all of our claims, all of the aspects of the brand that are core to what we do, are defined by a third party – with organic being at the center of it. Because of this, there’s never been any pressure from Coca-Cola to compromise our ingredients, and if there was we’re basically able to say this isn’t an option.

However, the best offensive that we’ve had has been our growth.

We’ve been consistently growing at roughly 30% per year since Coca-Cola acquired the business, and when you can continue to grow like that there’s really no pressure to change what you’re doing.

For example, when the Western European division of Coca-Cola looked at the growth of Honest in the US they realised there was an opportunity to bring some of that growth here to this market – that wouldn’t have happened had we not been growing so well.

On handing over control….

When Coca-Cola acquired Honest ultimately that was about me losing control.

As much as I’m a control freak and have put a tremendous amount of passion and belief into the business, if it’s really going to scale I understand that I have to be able to pass it on to people who are going to be stewards of it.

With the UK launch I’m not going to be able to control it the way I did with Honest for the first 10 years, but I’m confident that the product we’re launching here will have the same core values.

At Honest we talk about mission in a bottle – it’s brewed into the product because of the guard rails we’ve created – and I know that Coca-Cola understands the intention behind the brand.

Yes, this will be an interesting step for us all, but it’s great to be the first organic product Coca-Cola is launching in the UK.

On championing innovation….

Innovation is core to what we do and continue to do. We’re always challenging ourselves because we never want to feel like we’ve achieved our mission.

We’re always thinking about the next opportunity, and so in the US we’re currently focusing on our organic, low-calorie kids drinks, which are seeing explosive growth.

We see the Honest name as a master brand. It started with tea but it’s really more about authentic and organic products. It’s a wellness brand, so whenever we can find occasions where we can create more of the Honest experience we try to do that.

On new opportunities in the food and beverage industry….

We’re currently experiencing an unprecedented moment in the food and beverage system – it’s ready for change and consumers are demanding it.

There’s so much opportunity for growth, but also to make a real impact, so for me, I look at where the greatest needs are and where the greatest impact is possible.

With Honest, we feel really gratified that we’ve been able to enjoy the success we’ve had, and now I believe the next big opportunity lies in the ability to help people shift from animal-based protein to plant-based protein diets.

If we could get every family to have one more plant-based meal occasion per week that could have a huge impact on the ecosystem and people’s health, which is something I’m tackling with my role as Executive Chairman at Beyond Meat.

There’s a whole proliferation of both opportunity and demand in the food and beverage industry, it really is an exciting moment for innovation.

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