Even though Honest Tea has enjoyed an annual compound growth rate of 66% for the past ten years, there's never been a day or a week where I've walked in and said, "Wow! We're growing." Until now.

Continue reading "Ring The Gong!"

Last month I had the chance to visit one of the tea gardens that supplies us with our chun mee (translation: "spring's eyebrows"), a variety used in most of our green tea blends, including our new Citrus Green Energy Tea and Jasmine Green Energy Tea.

After the international flight, a long drive, a short flight, and then another long drive through the countryside of Anhui Province, historically one of China's poorest areas, our one-lane road got bumpier and eventually ended. So we set out on foot until the path ended as we came to a 20-foot wide river. As my hosts pointed to the tea bushes on the other side, I asked, "So, where's the bridge?"

But my hosts told me, "There is no bridge." The entrepreneur in me immediately identified a problem waiting to be solved. But my hosts looked at it a different way. "Aside from the fact that a bridge is expensive to build, the river overflows during the rainy season, so how would we know what height to build the bridge? A bridge would mean roads, and roads mean cars, and cars mean more pollution and traffic. And besides, we have our own way to get across." Then they pointed to a bamboo raft on the river bed. We were ferried across three at a time on the raft. Our feet got a bit wet, but otherwise no one fell in.

Because this is an organic tea garden, they don't have to worry about bringing over heavy bags of chemicals. And the finished product, tea leaves, is light and easy to transport. The lack of a bridge was a way for the garden to protect its own pristine surroundings, which can be a challenging thing to do, especially in China, where much of the country is on a rampage to develop infrastructure and industry.

Entrepreneurs are inclined to solve problems, but as I learned in Anhui, some problems are their own solution.

Here's a very legitimate question I got from a reader named Renee in response to my recent exchange with Julie about Honest Tea's recent deal with Coke:

I found the arguments on both sides of this debate to be both interesting and valid. However, I have to underscore Julie's question that I don't believe was directly addressed -- that being, is partnering with Coca-Cola the only way to accomplish a wider distribution and increased availability of Honest Tea's wonderful products?

Continue reading "Was Partnering with Coke the only Option?"

Here's my last exchange with Julie, the Honest Tea customer who is disappointed that we made a deal with Coke.

Julie wrote:

Hi Seth,

I very much appreciate your articulate and personal response, and I have a lot of respect for the opinions and information that you've shared. The arguments that you make are thoughtful, compelling, and obviously genuine.

But in the end, I still feel that supporting Honest Tea now forces me to indirectly support Coca-Cola, which is something that I've made a conscious decision and effort not to do. That decision may change in time, but that will depend more on Coca-Cola than it does on Honest Tea.

Continue reading ""I Hope Your Values and Integrity Inspire Coke""

Here's another exchange with Julie, the Honest Tea customer who is disappointed that we made a deal with Coke.

Julie wrote:

I have no doubt that you have already asked yourself some of these very difficult questions. Unfortunately, it appears that we have come to different conclusions because Honest Tea has chosen to continue its growth with the monies and connections of a corporation that has done much to harm human health and the environment, at home and abroad. Like you, I want to see an increase in healthy, environmentally sound, and socially just products in the market. But in the end, even after considering the positive health, environmental, and social outcomes of mass-market distribution of your healthy, organic, Fair Trade-certified product, I still cannot condone your partnership with Coca-Cola as a means to this end. As a consequence, I will no longer consume or purchase Honest Tea products. I will also be informing my family and friends, who I originally introduced to your product, of this decision.

I hope that time will prove me wrong. For now, however, I feel personally obligated to part ways with Honest Tea.

Respectfully Yours,
Julie

My response:

For the past ten years, we have built the Honest brand with passion, effort, and a great deal of sleepless nights. Whether it's not knowing how we'll pay bills or personally guaranteeing bank loans far in excess of my net worth, I have built this company with its mission ingrained in its product. If I am still running the business (which I am) and Honest Tea is still selling the same kind of products (which we are), I believe we have earned the opportunity to prove ourselves. We have the chance to make change happen in a powerful way. Of course, there's the risk that we won't succeed, but I've lived with risk for ten years and can live with the odds.

Here's another exchange with Julie, the Honest Tea customer who is disappointed that we made a deal with Coke.

Julie wrote:

Optimists within your company have asserted that Honest Tea is not selling out. Rather, they say, Coca-Cola is "buying in." Only time will reveal whether this is the case, or if this "buy in" is simply the corporation's latest foray in corporate green-washing and beverage market monopolization. After all, they're the ones who now have two of five seats on the board of Honest Tea -- not the other way around.

My response:

I agree with you here, and I encourage you to keep a close eye on what we sell and how we sell it. If we change our fidelity to the Honest brand, please let me know and I'll respect your right to take your business elsewhere. If we stay Honest, I believe we deserve your business. We still maintain governance control, and last week when the president of Coke North America was receiving an award from the National Recycling Coalition, he said, "We want Coca-Cola to be more like Honest Tea than the other way round."

Here's another exchange with Julie, the Honest Tea customer who is disappointed that we made a deal with Coke.

Julie wrote:

By partnering with Coca-Cola, you may gain a net increase of customers at mainstream retail outlets, but you will alienate those who previously valued your commitment to social and environmental responsibility. Even if the end result for Honest Tea is increased consumption of a healthy, organic, Fair Trade-certified beverage, loyal customers will find themselves confronted with the dilemma of supporting a multinational corporation that has a history of violating global, social, and environmental rights, and that already owns more than a fair share of the beverage market.

My response:

Here I think it is important to avoid creating a sense of economic exclusivity. Organics need to be democratized. I love Whole Foods and independent natural food stores – we wouldn't be in business without them. But if we're really serious about making an impact on the environment and on the American diet, we have to expand the reach of organics and healthier products to regions and populations where they are not widely available. I would understand if our core consumers were alienated because we changed our product, but if they become alienated just because more people can buy our product, then that's a trade-off I’m willing to make.

Here's another exchange with Julie, the disappointed Honest Tea customer who is critical of the deal we made with Coke.

Julie wrote:

Coca-Cola’s extensive business network and far-reaching marketing capabilities have been built upon a foundation of worker and farmer exploitation and environmental degradation, particularly in developing countries. The idea that a partnership with Coca-Cola will help Honest Tea to expand its so-called health, environmental, and social mission seems naively optimistic, if not grossly misguided. For a company that was founded on a vision of long-term sustainability, I find your new business affiliation with Coca-Cola to be surprisingly short-sighted.

My response:

I believe that every time we sell a bottle of Honest Tea we are doing a positive thing for the people picking /processing the leaves, the ecosystem, and the consumer. If you accept this first assumption, as I do, then I believe it is my responsibility to make Honest Tea as powerful as I can. The more we sell -- provided it is the same product we have been selling for the past ten years -- the more good we do. And the more we convince the larger beverage companies that there is a market for a product like ours.

Earlier this month we announced that Coca-Cola was making a 40 percent investment in Honest Tea. Though most of the feedback from consumers has been positive -- "finally, I won't have to drive two hours to get your drinks!" -- we have received heartfelt notes from loyal customers who are disappointed with our new investor. We take these concerns seriously. Over my next few blog posts, I am going to share some of my recent exchanges with a customer, Julie, who agreed to let me post her comments.

Here's the first exchange:

Continue reading "Will Honest Tea be Corrupted by Coke?"

Today, Honest Tea and Coca-Cola announced that the world's largest beverage company is buying a 40 percent stake in our much smaller enterprise. While Coke is now our largest shareholder, the agreement was negotiated to ensure that Honest Tea will not be managed or controlled by Coke. We will continue to operate as an independent business with the same leadership and mission. Here are some thoughts on the decision. Please excuse the length, but the deal took months to put together and even longer to think about:

Continue reading "Why We Sold a Stake to Coke"