Case study: What really killed Honest Tea—and what it means for mission-driven brands: The demise of Honest Tea shows ho

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Case study: What really killed Honest Tea—and what it means for
mission-driven brands:
The demise of Honest Tea shows how even a successful mission-based
brand can fall apart.
“Branded” is a new weekly column devoted to the intersection of
marketing, business, design, and culture.
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.
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.
The origin story is a classic entrepreneurial tale. A young Goldman
thirsted for a bottled tea that was flavorful without being overly
sweet. It was an era when consumer demand seemed to be trending
both healthier and more virtuous, and he hit on the idea of making
his product organic. With borrowed money and a lot of hustle,
Honest Tea became a solid business. Its vaguely pious name and
slightly crunchy brand connected with mindful shoppers in venues
like Whole Foods.
When I interviewed Goldman in 2005, the brand had even
experimented with tying some of its offerings to specific causes or
nonprofits, with mixed results. Instead, the business was
refocusing on creating broadly appealing, “accessible” flavors.
(Peach Oo-La-Long was a hit, for instance.) “We’ve probably had
periods where we kind of overemphasized the mission,” he told me.
At the time, the company was working to reach a wider array of
customers.
Still, some observers were startled—and skeptical—when, in 2008,
Honest Tea sold a 40% stake to Coca-Cola for $43 million. Samuel
Fromartz, author of Organic Inc. and other books, at the time wrote
on his blog that while the deal presumably opened up new
distribution opportunities, it meant “getting into bed with the
people who put high fructose corn syrup on the map. You’re selling
equity to the same people you want to displace.”
Goldman countered that he believed his company’s mission and
product were good for the entire ecosystem it was part of: workers,
consumers, the environment. “If you believe that, then you have a
responsibility to sell as much of it as you can,” he said, and the
Coke deal would help achieve precisely that goal.
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, during a wider
decline in ready-to-drink tea sales.
“Tea was once at the leading edge of the consumer shift to
healthier, lower-sugar beverages, offering functional ingredients
such as antioxidants,” the publication reported. “Honest Tea was
among the brands that capitalized on that trend.”
But 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: 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.
This seems like an outcome Fromartz was worried about way back in
2008, and plenty of observers on social media have reacted with
some version of: What did you expect?
But of course, some mission-driven brands do survive being absorbed
into bigger entities. Ben & Jerry’s is probably the best-known
example: Unilever has famously allowed the brand to stick to its
mission-heavy vibe, taking outspoken stands on social justice and
other issues. It’s worth remembering, however, that this does not
necessarily limit the Ben & Jerry’s brand: Plenty of consumers
just think of it as slightly fancy, often cheeky, and very tasty
ice cream, and couldn’t care less about its politics.
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 breakthrough 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.
Question : “Honest Tea” is a dying brand. Analyse the
causes of this failure after becoming such a brand.