Honest Tea: Keeping Coca-Cola Honest? Behind the Label

honest tea

Column In the world of all-natural ready-to-drink beverages, Honest Tea is a key player offering simple, low-sugar and sugar-free options. But, the company is now owned by Coca-Cola. How honest does that make them? We go behind the label to find out.

Honest Tea began like many startup operations: to fill a void. Seeking delicious, quenching and clean refreshment, Seth Goldman and Barry Nalebuff began selling Honest Tea in 1998. Not only was there a gap in less sugary options than the standard sodas, sports drinks and juices, but there was also a gap when it came to high quality tea, as Nalebuff found out while in India a few years earlier. People simply didn’t seem to notice or care where their iced teas came from, which, for the most part, was the dusty remnants of the tea industry. Goldman and Nalebuff wanted to change that, and do it honestly with whole leaf teas and organic ingredients. The company now boasts dozens of products including teas, juices, and kids drinks.

Beverages have come a long way since 1998. The RTD (ready-to-drink) market options have ballooned to include all sorts of organic and natural concoctions. Traditional soda sales are slumping because of concerns over high fructose corn syrup and the nation’s rising obesity rates. Even diet soda sales are seeing a dip. Bottled water has also fallen out of favor, with people avoiding plastic BPA bottles and the high price tags that come with what’s more or less just filtered municipal water in most cases. Consumers want healthier, fresher options.

As the RTD category changed, Honest Tea was purchased by Coca-Cola in 2011 after the soft drink giant invested initially in 2008. While Honest Tea’s mission and product offerings were a direct response to the sugary soft drink world dominated by Coca-Cola, it seemed almost inevitable that the two would soon find their common ground. But the buyout still rattled the natural foods industry, and cost Honest Tea some of its die-hard customers who eschewed the corporate affiliation with Coca-Cola. But the support that came from Coca-Cola’s resources has helped catapult the brand into new markets, and make new loyal customers.

In a recent Washington Post profile on Honest Tea’s Seth Goldman, Gary Hirshberg, founder of Stonyfield Yogurt, said that for Goldman, “being inside Coke advocating for less sugar and more organic ingredients is a way to effect change.” And while the merger may have cost Honest Tea some customers, Goldman is excited that the brand has gone from being available in about 15,000 stores to more than 100,000 with Coca-Cola’s influence. Goldman believes, like his pal Hirshberg noted, that Honest Tea’s portfolio is creating a change within the behemoth Coca-Cola enterprise.

But are they still being honest?

Although Coca-Cola gave $1.7 million to help defeat California’s Proposition 37 (a bill that would have required labeling of genetically modified ingredients in the state), Honest Tea says it still supports GMO labeling, and that Coca-Cola won’t be funding efforts to defeat I-522, a similar bill to Prop 37 gaining momentum now in Washington State. But Coca-Cola is a member of a trade organization working to defeat the measure and keep GMO ingredients a mystery to consumers.

Despite Coca-Cola’s pro-GMO stance, as recently as 2012, Honest Tea had ramped up its commitment to Fair Trade and organic farming practices, which have been a huge focus for the brand since the early days. The company claims its teas have created more than $350,000 in Fair Trade premiums for growers since 2003. In 2011, Honest Tea reportedly purchased 4.4 million pounds of organic ingredients.

There have been changes to packaging, too. Known for their glass bottles, many of the Honest Tea products now come in plastic bottles and kids pouches, which are cheaper to produce, and costs less to ship than glass, even though Goldman says the company is committed to sustainability. But being a single-serve product makes the discussion about packaging a difficult one, particularly when sustainable claims are tacked on. In 2011, Honest Tea’s kid’s drinks boasted a reduction in carton sizes and conservation of more than 354,000 pounds of material, as well as decreased fuel costs. But the question over whether or not RTD beverages are ever really sustainable is gaining more public attention, especially for Coca-Cola, which was recently blasted by Denmark for greenwashing efforts to promote its PlantBottle, packaging it claims is made from as much as 30 percent plant-based materials (cane sugar). Denmark found no credible data to support the company’s eco claims.

Coca-Cola has a vested interest in the continued creation of single-serve products. It’s the world’s largest recycler, claiming to collect 35 percent of the bottles it produces. Ensuring a steady stream of recyclable products into the marketplace is big business for Coca-Cola, not just in the ingredients being sold to consumers, but the money to be made on the returned bottles as well.

“Honest” is a relative term. What brought Honest Tea its fan base and industry credibility more than a decade ago is not necessarily relevant anymore. Consumers are opting for reusable bottles and bringing beverages from home to avoid the massive pile up of single-serve bottles, whether they’re recycled eventually or not. Organic and Fair Trade are still highly important values to shoppers, but so is a commitment to being pro-GMO labeling. Is it enough that a small company under the Coca-Cola brand supports GMO labeling? Or is that overshadowed by the majority of Coca-Cola’s portfolio, which is full of genetically modified ingredients? Honestly, it seems, only time will tell.

Keep in touch with Jill on Twitter @jillettinger

Image: Honest Tea

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