Two weeks after Coca-Cola announced plans to phase out HONEST Tea (a brand it acquired from Goldman and Nalebuff in 2011), Goldman says his Bethesda-based company, Eat the Change (which makes organic mushroom jerky and Cosmic Carrot Chews), will “launch a line of just-sweet-enough organic bottled teas” following a surge of support from fans of the products, which use organic and fairtrade ingredients.
'We have numerous friends across the whole supply chain'
So how will this work in practice?
The HONEST Tea products “are primarily being made at Coca-Cola facilities or partners,” Goldman told FoodNavigator-USA. “But we have numerous friends across the whole supply chain and are confident in our ability to scale quickly.”
So as the HONEST Tea brand is not for sale (Coca-Cola is retaining rights to the HONEST brand and keeping the HONEST Kids products), will Goldman create a new brand for the teas, or bring them under the Eat the Change umbrella?
According to Goldman, “They will be under the Eat the Change umbrella, but the line of teas will have their own name.” He added that he “doesn’t anticipate” that the Yerba Mate teas in cans, launched under the HONEST brand in spring 2021, will be part of the initial lineup.
'It will be starting a bit from scratch but not entirely'
While the trade obviously knows Goldman’s credentials and history with organic ready-to-drink tea, the consumers he is targeting with a new brand probably won’t make that connection, so to what extent will this be like starting from scratch with shoppers?
“It will be starting a bit from scratch, but not entirely,” claimed Goldman, who said he felt both a responsibility to organic tea growers with whom the HONEST brand had spent two decades cultivating relationships, and a strong belief that there is a market for organic and Fair Trade offerings in the category, despite the fact that sales of the teas were presumably not meeting Coke’s expectations.
He told us: “There was a significant market for HONEST Tea. It was the top-selling tea brand in the natural category, and that is an enviable position to hold. We believe that opportunity on its own is a great place to capture and then to innovate from there.”
'A way to keep the HONEST spirit alive...'
In a linkedin post penned Monday, Goldman said key colleagues, including HONEST Tea board member Gary Hirshberg, had “encouraged us to find a way to keep the HONEST spirit alive, possibly in partnership with another company.
“And then my Eat the Change co-founder Spike Mendelsohn and I realized this is our task – the core team that built Honest Tea in the natural channel – amazing leaders like Melanie Knitzer, Richard Tidrow and Kelly Cardamone – are part of Eat the Change, and my wonderful HONEST Tea co-founder, Barry Nalebuff, is a board member.”
'We want to try to continue the effort and fight the suggestion that this was all a failed experiment'
Goldman and Mendelsohn are now “busy in the kitchen brewing up new (and old) tea blends” he added.
“The response to Coke’s announcement helped me appreciate that for millions of people HONEST Tea is more than ‘just a tad sweet’ bottled teas. It is a different approach to ingredients, to the planet and to people: employees, farmers and tea drinkers.
“Our tea growers worried that Coke’s action could be seen as a loss of confidence in organic and Fair Trade USA agriculture, a decision that could dampen the global desire to invest in these higher standards. As one of our suppliers wrote to me, ‘We have been so inspired to be part of the journey that you led, and want to try to continue the effort and fight the suggestion that this was all a failed experiment.’”
Euromonitor Intl: 'Perhaps HONEST Tea was caught in the middle in terms of category segmentation?'
In a May 23 press release announcing its plans to phase out the HONEST Tea brand by the end of this year, Coca-Cola said its ‘mainstream’ brands such as Gold Peak and Peace Tea were driving growth in the RTD tea category, and would henceforth be the ‘anchor’ of it tea business in North America, although the HONEST Kids brand would remain part of the portfolio.
Howard Telford, head of soft drinks at Euromonitor International, told FoodNavigator-USA: "Given the higher price point for organics and tough trading environment generally in terms of price, this isn’t completely surprising – although it hasn’t been a stellar year for the wider ready-to-drink tea category either.
“HONEST Kids seems to have developed and maintained a niche as the better-for-you option within mass kids juice drinks," added Telford, "whereas perhaps HONEST Tea was caught in the middle in terms of category segmentation."
More recently, he speculated, HONEST Tea may have found itself "competing with Coke’s own Gold Peak or PepsiCo’s Pure Leaf as the more natural option in conventional, but also with a much wider variety of more premium independent options and more function-forward teas (gut health, energy) in natural/specialty channels today," which he said was "not the case when Coke first acquired its stake in 2008."
'Transparency, health of the planet, health of the consumer'
Goldman - who stepped away from day-to-day operations at the brand in late 2015 after moving into the executive chairman role at Beyond Meat – disputed the notion that HONEST Tea had lost relevance, telling us: "I believe that HONEST Tea and what it represents was about future forward thinking, thinking about where the world is going, around transparency, around health of the planet, around health of the consumer."
While Gold Peak has a premium positioning, he added, "I certainly felt there was enough space between them [Gold Peak vs HONEST Tea, which is organic and Fairtrade] in terms of the sweetness profile, the ingredients, and the sourcing."