“CASE STUDY: HONEST TEA”
SPRING 2013 (IX)
SIR AHMED BUTT
20TH APRIL, 2013
Savvy Entrepreneurial Firm
Honest Tea: Accelerating its Growth and Mission through Being Acquired by Coca-Cola
In 2008 when Honest Tea announced that it had sold a large number of its stake to Coca-Cola. Most of Honest Tea’s loyal customers were angry. Honest Tea was the first company that had created the organic bottled tea. They were the pioneers. There customers relied on their integrity, pioneering spirit and independence from corporate America to provide them a number wholesome, pure organic beverages. Now Seth Goldman, Honest Tea co-founder was selling out. Honest Tea’s founders and investors were abandoning their principles and independence in exchange for a big pay day. Was it true???
Seth Goldman say no…. He sees this new affiliation with Coca-Cola as a way of accelerating its growth and to make availability of its organic beverages to as many people that could be done by company by its own. Coca-Cola purchased its 40 percent shares which make them the largest shareholder of Honest Tea. But Honest Tea made an agreement that they would keep their current management team, maintain its brand of wholesome beverages and will have three board member seats out of five, which will make them autonomous and free in decision making.
Seth Goldman modeled this acquisition by Coca-Cola after a success and progressed partnership of Groupe Danone, a large European food company and Stonyfield Farm. Stoneyfield Farm’s mission was organic yogurt, ice-cream and milk. It was similar in many ways to Honest Tea. Groupe Danone purchased 80 percent of Stonyfield’s shares, but the company had remained independent and committed to its mission and its entrepreneurial spirit stayed alive. One major difference between Honest Tea and Stonyfield is that after three years...
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