Honest Tea founder on being owned by Coke: “It’s a dual identity”
Seth Goldman, co-founder of Bethesda, Maryland-based organic beverage company Honest Tea, said his company maintains a small business culture, even though parent Coca-Cola Co increased its minority stake to full ownership in March.
With 2010 sales of $71 million, the company’s teas can now be found in national retail chains such as Kroger and CVS. Goldman, in Washington recently for an SBA National Small Business week event, spoke to Reuters about the transition.
Q: Were you able to maintain the Honest Tea culture after Coke took full ownership?
A: Absolutely. What’s really nice about us is that we still operate as a small business. We still run everything out of this one room office in Bethesda, Maryland. I’m still the Tea-EO. Our senior management team still really has stewardship of the brand and the business. We’re accountable for it. Our paychecks say Honest Tea, so in a way it’s a dual identity. We have a vending machine in our office now; it’s got Coca-Cola on the front and Honest Tea inside.
Q: What was the benefit of Coke’s investment?
A: For us, it wasn’t as much about the Coke money as the Coke resources – the distribution resources. No matter how much we or our consumers love our product, if we can’t find a way to get it into their hands, it’s really just a thought exercise. What the Coke partnership enables us to do is get the product into people’s hands wherever beverages are sold. We have the ability to do it, and that’s really critical. For the first 10 years of our business, distribution was just a bear. All of a sudden we gained access to the most powerful distribution network in the world. We are on a path to be able to launch probably early next year, a bottle made of a new type of resin – plant based. That’s something Coke is helping us with.
Q: What was distribution like before Coke?
Whole Foods on lookout for emerging brands
Got the next great organic food product? Wondering how to get it into your local Whole Foods store? Then Tom Rich is the guy to talk to.
Rich is the grocery coordinator for the 27-store Rocky Mountain region of the Austin, Texas-based supermarket chain. He works in the health-oriented, food-centric city of Boulder, Colorado, where the company’s recently expanded Pearl Street store is considered a rich testing ground for new concepts.
“Part of the responsibility in our position is to find new, emerging brands,” Rich said. “We’re trying to build our bullpen. We’re tasked to do that here.”
He gives two examples of concepts that began in Boulder and were subsequently given national treatment throughout Whole Foods’ 300-store network: all-natural nut butter producer Justin’s and flatbread and burrito bowl maker EVOL.
“If you saw my office, I have 100 products in here that I’m in the midst of tasting and trying,” he said.
The company typically works with manufacturers to ready them for the sharp boost in resources required to go national, including significant increases to production and staffing.
Says Rich: “We’re constantly trying to do that. It’s the favorite part of my job, meeting people, learning about their product, and kind of seeing where we think they can go.”
