Honest Tea Case

Honest Tea was founded in 1998 by Seth Goldman and Barry Nalebuff. Their main goal was to bring beverages that were organic and not heavily sweetened to the market. In order to make this idea work both Goldman and Nalebuff raised $500,000 to start the company up. The start-up was a success getting their first bulk order for Honest Tea from Fresh Fields (a grocery store acquired by Whole Foods). Eight years into the market Honest Tea was making $13.5 million in revenue and was selling around 1.5 million cases per year. In early 2008, Coca- Cola invested in 40 percent of the Bethesda, Maryland based income. The reason why Coke bought a minority share of Honest Tea was because they were trying to meet consumer’s demand for lower calorie drinks. …show more content…
Meanwhile while inspecting the packaging Coke noticed the bottles had lettering that said ‘no high-fructose corn syrup.’ Coca Cola’s executives felt this was a scold to their products which contain the factory made corn syrup. So Coke made a request to Goldman and Nalebuff to change the wording on the bottles. With Coke only owning a minority share of the company the decision still came down to the original founders. According to New York Times, Goldman felt that drawing attention to the absence of the highly scrutinized corn syrup was critical to being true to their brand. Honest Kid’s that year was expected to account for one-third of the start-up’s projected sales that year so dropping the kid’s tea was not even a question that would be brought up. In addition, Coke soft drink sales were declining which is why they were investing other beverage companies. Goldman went to Atlanta, Georgia to visit Coke’s headquarters hoping the two sides would come to an agreement. Some of the options Coke threw out to Goldman were to eliminate the banner that said no high-fructose corn syrup, substitute corn syrup for sweetened with organic cane sugar, or just add the phrase no fake