Coca-Cola Buys 40% Share of Honest Tea

When we first heard the news that Honest Tea and Coke we’re merging we thought “Oh no, Coke will ruin them.” Then we reread the release and were relieved, learning that at least for now, Coke just bought 40%. Furthermore, we thought, who wouldn’t want the opportunity to grow their business with that kind of money.

So unlike the sale of Odwalla, where the Coca-Cola-ians bought the whole company and made it about as exciting as a new latte flavor from Starbucks, this deal is different, a David and Goliath partnership, one that Honest Tea compares to Stonyfield’s efforts with Group Danone. But frankly, the analogy just isn’t worth its weight in oolong tea.

Stonyfield had gained huge market share in conventional channels prior to the Danone deal. Honest Tea is the proverbial pimple on the elephant’s you know what, and thus Coke’s interests in growing a fledgling brand might not be as compatible as Honest Tea’s Seth Goldman would like.

While Coke is no doubt looking to gain a larger share of the growing healthy vending and school market, this partnership seems inherently risky. The fact that Snapple 12-packs sell on promotion for $4.99/12 pack and an honest product like Honest Tea, just never will, might make those folks in Atlanta want to cut corners.

As Snapple madness was growing more potent, and Sobe addiction followed suit, Honest Tea stuck to their guns, grew slow AND steady. Goldman and company didn’t chuck integrity out with the used tea bags. Furthermore, they went the extra mile, sourcing organic and fair trade ingredients with creative persistence and the end result was great tasting products in great looking packages.

We’re hoping this will work, and that the big bad daddy of the soda world might learn something from their new playmate. Or at least that Coke just lets the Honest Tea team work its magic without polluting the mix with too many ideas from Atlanta.

Tags: Coca-Cola, Group Danone, Honest Tea, Snapple, Sobe, Starbucks, Stonyfield