Honest tea
ACADEMIC ABSTRACT
The Honest Tea case is about an entrepreneur, Seth Goldman, who built a successful social venture in the alternative beverage industry. After building Honest Tea to become an industry leader, Seth faced with the decision of whether to merge with Coca-Cola and how to successfully manage the post-merger transition. Information about the alternative beverage industry and
Seth’s use of social media is presented to help determine how Honest Tea can continue to grow after merging with Coke yet maintain the core principles that their stakeholders value.
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EXECUTIVE SUMMARY
Seth Goldman believed that building a successful brand meant that the company would need to demonstrate that a strong alignment with the core values of their customers. It was through this guiding principle that Goldman built a loyal following to the Honest Tea brand by providing healthy drinks and by satisfying the growing demand among consumers for organic products. However, the Honest Tea case illustrates how the company has grown to a point where
Goldman believes the company should look externally for distribution support. While Honest
Tea’s merger with Coca-Cola will likely enable Honest Tea to expand its distribution capabilities, the partnership could come with a set of costs that Goldman may not have completely accounted for.
The case makes three important contributions to practice. First, the Honest Tea case presents an overview of the way social entrepreneurs can capitalize on opportunities. Second, the case illustrates how entrepreneurs of social ventures can face unique challenges. Indeed, stakeholders often share deeply held ties to social ventures that can become quite weak when stakeholders perceive that the firm is sacrificing its core values. Third, the case highlights how social ventures can leverage social media in two important ways: to create brand awareness of their products and to maintain transparency
The Honest Tea case is about an entrepreneur, Seth Goldman, who built a successful social venture in the alternative beverage industry. After building Honest Tea to become an industry leader, Seth faced with the decision of whether to merge with Coca-Cola and how to successfully manage the post-merger transition. Information about the alternative beverage industry and
Seth’s use of social media is presented to help determine how Honest Tea can continue to grow after merging with Coke yet maintain the core principles that their stakeholders value.
USASBE_2011_Proceedings-Page0108
EXECUTIVE SUMMARY
Seth Goldman believed that building a successful brand meant that the company would need to demonstrate that a strong alignment with the core values of their customers. It was through this guiding principle that Goldman built a loyal following to the Honest Tea brand by providing healthy drinks and by satisfying the growing demand among consumers for organic products. However, the Honest Tea case illustrates how the company has grown to a point where
Goldman believes the company should look externally for distribution support. While Honest
Tea’s merger with Coca-Cola will likely enable Honest Tea to expand its distribution capabilities, the partnership could come with a set of costs that Goldman may not have completely accounted for.
The case makes three important contributions to practice. First, the Honest Tea case presents an overview of the way social entrepreneurs can capitalize on opportunities. Second, the case illustrates how entrepreneurs of social ventures can face unique challenges. Indeed, stakeholders often share deeply held ties to social ventures that can become quite weak when stakeholders perceive that the firm is sacrificing its core values. Third, the case highlights how social ventures can leverage social media in two important ways: to create brand awareness of their products and to maintain transparency
References: Business Week (2008). Expanding Honest Tea Without Diluting Its Brand. Retrieved from http://www.businessweek.com/smallbiz/content/ dec2008/sb 20081218_592881.htm. Chaudhuri, S. (2008). Coca-Cola Acquires a Stake in Honest Tea. FC Member Blog. Retrieved from http://www.fastcompany.com/blog/saabira-chaudhuri/itinerant-mind/coca-cola-acquiresstake-honest-tea. Food & Drink Weekly (2005). American Beverage Association Reports decline in Soda sales at schools; critics not satisfied Fromartz, S. (2008). Seth, Why’d you Sell Honest Tea to Freaking Coke? Chewswise: Digesting the Sustainable Food Chain blog Goldman, S. (1998). Honest Tea Business Plan for 1999. Retrieved from http://honesttea.com /objects/pdf/Honest_Tea_Business_Plan_98.pdf/. Howard, T. (2009). Honest Tea stays True to its Roots as it Grows. USA Today. Retrieved from http://www.usatoday.com/money/advertising/2009-03-29-honest-tea-grows_N.htm. Organic Consumer Association (2003). Market Research Shows Rapid Growth of Organic Food. Organic Trade Association (2008). Industry Statistics and Projected Growth. Retrieved from http://www.ota.com/organic/mt/business.html. Zmuda, N. (2008). Honest Tea: A Marketing 50 Case Study. Advertising Age. Retrieved from http://adage.com/article?article_id=132404.