Seth Goldman, “TeaEO” of Honest Tea, announced this week that he would reduce his day-to-day involvement with the company he co-founded in 1998 and devote part of his time to serve as executive chairman of Beyond Meat, an early-stage plant protein startup. His new title will be TeaEO Emeritus of Honest Tea. In addition, he will take on a new role as Innovation Catalyst for Coca-Cola North America’s Venturing and Emerging Brands (VEB) unit.
“I am not leaving Honest Tea, but over the next few months the nature of my work will shift,” Goldman explained in a memo to employees. “My personal role may be changing, but my passion for driving the Honest brand is just as intense as it was 18 years ago when I lugged five thermoses of homemade tea to the local Whole Foods purchasing office.”
We caught up with Goldman at Honest Tea’s offices in Bethesda, Md., to learn more about this transition and what it will mean for the future of the nation’s top-selling organic bottled tea brand, which The Coca-Cola Company acquired in 2011.
Why is now the time to make this move?
First, the Honest Tea brand has a great deal of momentum right now. We’ve got the wind at our backs. The dollar amount of our sales increase from 2014 to 2015 is greater than our total sales for all of 2008, the year we first took in an investment from Coca-Cola. It’s the kind of scale and growth we used to daydream about years ago when we were struggling to get anyone to distribute our product. Now we’re in Wendy’s, Chick-fil-A, CVS and other mainstream outlets, which is really exciting. And secondly, the brand continues to migrate into the broader Coca-Cola organization. After entering Coca-Cola through the Venturing & Emerging Brands (VEB) unit and spending the last several years with that great team, we have mostly moved into Coca-Cola North America’s water, tea and coffee portfolio over the last year. And that’s a good thing because it means the Honest brand is large and stable enough to sit within a larger portfolio of brands, and that the broader organization has a shared ownership stake in the success of our brand and mission.
And all this growth we’re seeing is happening with the DNA we’ve planted over the last 18 years. The brand we’re building together with Coca-Cola is even more Honest – that’s honest with a capital H – than it was when Coke first invested in our company in 2008. Back then, we had a brand with organic varieties and some Fair Trade-certified varieties. Now all of our bottled tea is Fair Trade-certified. And we’ve converted all of the sugar we source to Fair Trade certified. Developments like this give me confidence in the timing of this transition.
I didn’t just wake up one day and suddenly decide it’s time to move on. There has been a long-term plan from the beginning with Coca-Cola, lots of conversations and slow-but-steady change to match the growth of the brand and the capabilities it needed to succeed. The reason I’m taking this step now is because even though I’m absolutely devoted to Honest Tea and love the brand, team and mission, I’m an entrepreneur and an activist at heart. While I can certainly fulfill a lot of these goals at Coca-Cola, I miss the gritty and occasionally stressful challenge of scrapping and struggling to build an enterprise.
Tell us about Beyond Meat and what attracts you to their mission and opportunity.
I’ve served on a number of boards over the years, and one company that has really captured my interest and imagination is Beyond Meat. It’s in a much earlier stage than Honest Tea, and it’s facing a different set of challenges. The entrepreneur behind the company is someone I really admire, and who I think can benefit from the gray hair I’ve acquired building Honest Tea. As an activist, I look at the environmental challenges our planet faces, such as providing the world’s population with protein-based diets. Beyond Meat’s mission is to create plant-based protein that perfectly replicates animal protein. If you look at the constituents of meat, there are five parts: amino acids, fats, water, and some trace minerals and carbohydrates. All of those things exist in the plant world. The challenge is how to assemble them so they mimic the taste, texture and taste of meat – perhaps with less cholesterol and fat. That's a high-impact opportunity for the planet and for consumers. What’s fun about this is when I talk to friends and relatives about this company, I get that same puzzled look I got 19 years ago when I used to talk about Honest Tea. In my view, Beyond Meat is still in that eyebrow-rising stage. That reaction reinforces to me that this is an exciting moment, and I know I can have a big impact in helping to scale this company.
Is it really possible to divide your time between two leadership roles?
Well I’ve never done it before, so we’ll see! But I’ve always been a notorious multi-tasker, going back to college. And we’re seeing more and more successful entrepreneurs managing multiple roles.
What exactly will your role be with Honest Tea and VEB going forward?
I’ll remain closely connected to Honest, but not in the overbearing role I’ve probably played for 18 years (laughs). I will continue to serve as a brand steward to help ensure we stay on course and preserve the Honest Tea voice. And I’ll still provide input on formulations, packaging and key strategies, as well as of course on the mission that drives our innovation and growth. I’ll also continue to stay close to the key retailers, distributors and suppliers who have helped us build the brand over the years, many of whom are close personal friends.
In addition, I will play a broader role within VEB to help identify opportunities for growth, particularly leveraging my experiences in the entrepreneurial and natural channel communities. We are at an unprecedented moment in the food and beverage industry where new concepts emerge quickly and powerfully – look at coconut water and fresh-pressed juice, two categories that were barely around ten years ago. If we are going to continue to be relevant in the future, we need to continue to find, create and invest in these opportunities with the right speed and effectiveness. I hope to be a catalyst that provides additional energy to the actions that VEB and Coca-Cola have already put into motion to capture these new opportunities.
Will you be dividing your time between Bethesda and California (where Beyond Meat is based)?
Yes. I will definitely spend time in California, but will not be moving there permanently. My wife and I are happy residents of Bethesda, and I will continue to have my office at Honest Tea headquarters.
Will someone replace you at Honest Tea?
There won’t be another TeaEO, but we have a director and brand marketing GM, Ami Mathur, who’s based in Atlanta. Our marketing, operations, innovation, finance, HR and logistics teams will remain in Bethesda.
You mentioned Honest Tea’s recent sales growth and expanded distribution. Clearly, Coke’s marketing and distribution muscle has been an asset to the brand. How has the company helped you advance your mission?
Sales is a natural and easy way to define success. But I look even more at our impact, which for us translates into how we democratize organics… how many people we reach and how much demand we create for organic and Fair Trade ingredients. That’s where the relationship with Coke has been so important. In 2007, the year before Coke invested, we purchased 800,000 pounds of organic ingredients. In 2015, we will purchase more than 6.7 million – an eightfold increase. I mentioned the move to Fair Trade sugar; the reason we were able to do that is because we were able to leverage Coke’s buying power to acquire bottles that were less expensive than the bottles we were buying before. Coke was buying billions of bottles compared to our millions. That scale is basically what helped us “fund” the move to Fair Trade sugar and deepen our investments in the supplier communities we source from. And now, thanks to our partnership with Coke, we’re reaching people who weren’t necessarily looking for an organic product. They’re just thirsty. They’re looking up at a menu board or reaching into a convenience store cooler and choosing our product. They may find out after the fact that it’s organic. Before Coke’s first investment, we were in only 15,000 stores – mostly in the natural foods channel and mostly on the coasts. We weren’t reaching the same people we are today in more than 100,000 stores across the country.
So, you’re confident the brand is in good hands when you consider the Coca-Cola partnership and the team you’ve built at Honest?
Yes, I absolutely believe it is. We’ve never had a stronger year or had had more momentum as a brand. I used to feel like we had to scrape for every sale, and now we’re well above our business plan. So it’s an exciting time for us.
Coca-Cola recently has made investments in other mission-driven brands like Suja and fairlife, led by entrepreneurs who are in a similar position you were in years ago. What message does Honest Tea’s growth and success as a part of the Coca-Cola family send to the teams behind these brands?
It shows that I still feel valued. I still feel relevant to the brand. I’ve never felt like I’ve had to fight to protect something – there has never been pressure to compromise on our mission or on our ingredients. As part of the purchase agreement with Coca-Cola, I committed to staying with Honest Tea through 2011. Everything since then has been voluntary. I’m here because this is where I want to be. It’s work I believe in, and Coke is a partner who has embraced our brand and its mission. Coca-Cola decided to invest in Honest Tea because it believed, and continues to believe, that Honest Tea can be a billion-dollar brand – one that plays a significant role in the American diet and helps drive demand for organic and Fair Trade ingredients.
What can other entrepreneurial brands and big companies learn from the Honest Tea/Coca-Cola partnership?
I hope this becomes a case study for the right way to do an acquisition of a mission-driven brand. I’ve been approached by lots of companies around the world who want to learn why this model works. From the beginning, we created a structure that both incentivizes Coca-Cola to help grow our brand and protects our vision as a mission-driven business. I think part of it is that our partnership is rooted in a sense of mutual respect and ensuring both sides stick to their word and collaborate in ways that build trust and confidence. And we’ve had a structure in place, through VEB, to enable this to happen. When Coke exercised an option to buy Honest Tea in 2011 after taking a 40 percent ownership stake in 2008, we mutually agreed the operating structure was working. Aside from the economic purchase of the company, we decided not to make any big changes. We’d seen brands get acquired by companies and have one of two different scenarios unfold. Either the entrepreneur has no ability to tap into the larger company due to a lack of a supporting infrastructure. Or the corporation slowly sucks the life out of the entrepreneur via endless meetings and compromises. That’s not what an entrepreneur does; an entrepreneur should be sharing his or her passion and vision – meeting with customers and consumers. And that’s why the VEB model has been so important.
What has Coke learned from you guys?
When we closed the deal, we had dinner with Sandy Douglas (president of Coca-Cola North America) and Muhtar Kent (chairman and CEO), and I remember Muhtar saying something to the effect of, “This deal can’t be about Honest Tea becoming more like Coca-Cola. It has to be about Coca-Cola becoming more like Honest Tea.” And I certainly feel like we’ve mutually achieved that objective. We’ve built this brand together without compromising the product or the mission, and we’ve been able to keep the entrepreneurial elements of the business and the brand.
And now when we go into sourcing communities, it’s not just some guy from Bethesda who’s interested in organic ingredients. It's a member of The Coca-Cola Company saying, “We’re on a fast growth track, and if you want to be a part of our growth, you need to make your gardens organic and Fair Trade certified in order for us to consider you as a partner.” Being able to help these communities move in a positive direction is powerful.
What about the organic tea space puts the brand in a good position going forward? What trends are paving a positive path for the brand?
There are so many. When we started, we were just trying to sell a less-sweet drink. And now we’re either driving or riding – or both – the wave towards transparency and simple, authentic ingredients. One of my friends talks about the “undoing of food” – breaking down food into its simplest components. When we started, Honest Tea was about simplifying the ingredient deck and simplifying the agricultural process. When Coke decided to make the investment in Honest Tea, we talked about the reasons they wanted to invest, they showed a graph with three mega trends: health and wellness, environmental responsibility and corporate responsibility. And they said, “There’s a small space where all those trends overlap.” That was a very prescient way to look at things. This is the space where Honest Tea has always done business, so we’re benefiting from having occupied this space for a long time.
Looking back over the last 18 years, what are you most proud of?
First, I’m proud of this brand we’ve created that really does play an important role in people’s lives. We hear this from consumers every day. Our brand is an important companion on their path to better health. I’m also really proud of the team we’ve built. We have a wonderful group of passionate, talented people. And it has been great to see those people embraced and supported by the Coke organization. And third is the impact we’ve made as a business. We know the investments and choices we’ve made – the way we work with our suppliers and the criteria we have for our tea – are making a difference to the planet and to these communities. And that’s so gratifying.
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