The Coca-Cola Company, Atlanta, GA, has officially completed the process of acquiring top-selling organic tea maker Honest Tea of Bethesda, MD, bringing to a close a transaction it began three years ago when the beverage giant spent a reported $43 million taking a minority stake in the company via its Venturing and Emerging Brands (VEB) unit. The financial terms of this most recent transaction were not disclosed. 

Seth Goldman, Honest Tea’s co-founder and “TeaEO,” told Nutraceuticals World that Coke’s vast distribution scale and far-reaching resources would enable Honest Tea to “dramatically expand the reach of organic, Fair Trade and low-sugar drinks across the country,” and added that the deal “dramatically enhance[s] the scale and impact of our mission.”
 
To that end, Mr. Goldman has chosen to reinvest most of his proceeds from the sale back into Honest Tea with Coke’s blessing, continuing a track record of making substantial investments in its business. The fruits of past business investments included the introduction of a ground-breaking Honest Tea plastic bottle that used 22% less packaging material, doubling the number of its offerings, as well as the sales of organic, zero-calorie drinks. Additionally, the company has committed to transitioning its entire tea line to Fair Trade Certified by the end of this month.
 
That kind of consistent, forward-looking momentum, as well as its leadership in the natural foods channel, was among the many elements that attracted The Coca-Cola Company to Honest Tea, according to Deryck van Rensburg, president and general manager, Venturing and Emerging Brands, for Coca-Cola North America.
 
“When we made the investment in Honest Tea, we did so because we saw that it had great potential to be a significant brand of the future. Three years after, the brand truly reflects where consumer demand is today and we are excited about being on the verge of still more growth,” he said. “Beyond growth, having the unique vantage point of a minority investee and watching Honest Tea has helped our company in many other ways, from encouraging Coca-Cola to obtain organic certification at three of our facilities, to establishing a state of the art tea brewing and filtration system at a bottling plant. Additionally, it enabled us to participate with Honest in a number of sustainability initiatives on recycling. All of these efforts reflect why VEB has chosen to invest in entrepreneurs like the team at Honest—they provide a source of innovative ideas and energy that enhance our own efforts.”
 
Following the completion of Coke’s acquisition, Mr. Goldman said he and Coca-Cola’s VEB had developed a unique operating model that will enable Honest Tea to operate as a standalone business, thus maintaining its autonomy and entrepreneurial culture under its existing management team. Mr. Goldman’s co-founders, Barry Nalebuff and Gary Hirshberg, CE-YO of Stonyfield Farm, will continue to provide informal guidance to Honest Tea as part of the Advisory Council.
 
The VEB operating unit of Coca-Cola North America was created to identify and develop high-potential growth brands in the North American beverage space for investment or ownership by The Coca-Cola Company. In addition to Honest Tea, VEB currently manages brands such as illy issimo, Cascal, Sokenbicha and has an equity investment in Zico Coconut Water.
 
As part of the VEB team, Honest Tea will also begin to sell current VEB brands to the natural channel. “When we took in Coke’s initial investment in 2008, Honest Tea was in 15,000 accounts,” recalled Mr. Goldman. “Today we are in over 75,000 outlets, and expect to reach more than 100,000 by the end of this year. We have grown from 87 employees in 2008 to 127 employees, currently. And we continue to innovate, as evidenced by our launch of Zero Calorie organic Classic Lemonade and Honest CocoaNova at [the recent] Expo West.”
 
So begins another chapter in the advancement of a brand that humbly began in 1998 when Mr. Goldman and Mr. Nalelbuff brewed samples of tea in Mr. Goldman’s Bethesda, MD, home, pitched them to Fresh Fields (now Whole Foods Market), then quickly rose to become the top-ranked tea brand in the natural foods channel.
 
“We started Honest Tea thirteen years ago with an ambitious mission to create a delicious, healthy beverage alternative produced with the health of our planet and our consumers in mind,” said Mr.  Goldman. “Over the past three years, it has been exciting to see the reach and impact of our mission expand as a result of our partnership with The Coca-Cola Company.”