Honest Tea founder Seth Goldman described it as a “gut punch.” This week, the Coca-Cola Co. announced it is killing the brand he created back in 1998.
That’s quite a twist in a story that had long seemed like a case study in how a mission-driven brand built around ethical principles—organic ingredients, Fair Trade Certified partners—could capture a changing consumer zeitgeist, connect with an audience, and go big.
Instead, the brand will be “phased out” of the Coca-Cola Co.’s beverage portfolio at the end of 2022. (It’s keeping a spin-off line of organic juice products called Honest Kids.)
Since selling Honest Tea in a multimillion-dollar deal, Goldman has moved on to help found ethical-food startups Eat the Change and PLNT Burger, and serve as the chair of Beyond Meat’s board. He took to LinkedIn to pay tribute to “the sweat, tears, and incredible passion that went into building our beloved brand.”
Perhaps Honest Tea will still live on as a case study: How an apparently successful mission-driven brand can beat the odds, transcend its niche, find a backer who believes in it, make the transition to the mainstream—and still end up dying.
Coca-Cola assumed full ownership eventually. Goldman stayed involved, and Honest Tea remained in its Bethesda, Maryland, home base. The product itself was never watered down, and as late as 2018 Goldman still saw it as poised for “global growth.” Sales had reportedly risen from $71 million in 2010 to around $600 million.
But the brand’s momentum had slowed. Sales in the first half of 2019 declined 16%, according to Beverage Digest, in the midst of a wider decline in ready-to-drink tea sales.
The market had gotten far more competitive, and shelves were crowded with functional beverages, cold brew coffees, and antioxidant waters. The consumer zeitgeist that helped propel Honest Tea’s success had shifted. At the end of that year, Goldman left the company to pursue new ventures; Honest Tea’s offices were moved to Atlanta.
Coke, meanwhile, appeared to lose enthusiasm for niche-ier brands in general, according to a 2021 Business Insider report. And in its announcement this week, the company explained the move as a straightforward consolidation of its tea strategy, sacrificing Honest Tea to focus on two more successful lines.
Those two would be Gold Peak, a virtuous-looking bottled tea brand that Coke has backed with nationwide marketing, and Peace Tea, a growing regional offering that has “a loyal, Gen Z following.” Neither hits the various mission-y notes that defined the Honest brand.
Honest Tea’s identity, in contrast, seemed less flexible or expansive. And that was fine when the consumer mood was moving in its direction—but feels more limiting now. A sincere mission can help a brand break through to a solid, loyal audience of consumers. But put that mission-centric brand in the middle of a mass-oriented owner’s sprawling portfolio, and that same identity can become a constraint.
Honest Tea really did carve out an authentic, specific space in the consumer landscape: It truly stood for something. And that, in the end, was its downfall.
Source: Fast Company