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Case Study Honest Tea Green

One of Honest Tea co-founder Seth Goldman’s favorite drinks is Heavenly Lemon Tulsi Herbal Tea, which he describes with the same entrepreneurial passion that has fueled the company’s dramatic growth. The drink is earthy, he says, but in a smooth way and with a hint of spice.

Yet it’s the story behind the lemon tulsi drink that connects even more deeply with Goldman. In 2012, the year after he sold Honest Tea to Coca-Cola, Goldman traveled to a small farm in southern India and planted tulsi with his own hands in ankle-deep water and mud. For him, tulsi, also known as holy basil and used in Hindu rituals, served as the latest reminder of the importance of Fair Trade practices to a family farm that only gets power three hours a day as it struggles to nurture and grow its only source of income.

The story of Heavenly Lemon Tulsi Herbal Tea is in many ways the story of Honest Tea. Modest beginnings mixed with big hopes. Social and environmental consciousness brewed with business acumen. And an important relationship with a larger, more sophisticated company that could take tulsi, or a whole line of tea drinks, and propel it onto an international stage.

The origins of Honest Tea date back to the mid-1990s, when Goldman’s thirst – and quest – for a drink that was only slightly sweetened went from concept to reality. Recently, he reflected on the birth, first steps and coming of age of Honest Tea, as well as the game-changing relationship with Coca-Cola that began in 2008 with a 40 percent investment and blossomed into full ownership three years later.

Beginnings and Brewing Tea in the Kitchen

While in grad school at the Yale School of Management, Goldman and one of his professors, Barry Nalebuff, discussed a Coke vs. Pepsi case study, and the class identified an opening in the beverage market for a drink that was flavorful but not as sweet as most drinks already on the shelf. A few years later, while working at Calvert Mutual Funds, Goldman went for a run one day in New York City and afterward mixed some juice drinks with a friend – something they did often.

That’s when the idea struck him: to quench his thirst once and for all, he’d have to create a drink himself. He reconnected with Professor Nalebuff, who in a touch of serendipity had recently returned from researching tea in India and had even concocted a name for a bottled tea made with real tea leaves. The name was Honest Tea... and a brand was born.

The two joined forces and soon after, Goldman quit his job at Calvert and started brewing tea in the kitchen of his Maryland home. They produced the original five flavors: Gold Rush Cinnamon Tea, Kashmiri Chai Tea, Black Forest Berry Herbal Tea, Moroccan Mint Green Tea and Assam Black Tea.

The first big order came from the local Fresh Fields (now Whole Foods Market) store in 1998; the company propelled forward in 2001 when it was included on Oprah’s "O" List and became the best-selling bottled tea brand in the natural foods industry in 2002. Honest Tea launched its first Fair Trade Certified™ bottled tea in 2003 and also made Inc. magazine’s fast-growing companies list that same year. Another important milestone followed in 2004 when the company gained USDA organic certification for every product it made. 

In the early days of Honest Tea, Goldman wasn’t certain how big the company could become. He desired to build a national brand, but growth was slow, albeit steady, at first. The company remained small – it didn’t surpass 20 employees and $10 million in revenue until 2006. New tea flavors and new drinks were added along the way, including the world’s first organic bottled tea, First Nation Peppermint, in 2003 and Honest Kids, a line of less-sweet juice drinks for kids, which debuted in 2007 and would end up making a big impact on the entire category of beverage options for kids.

But it wasn’t until nearly a decade in business that Goldman saw the first indications that Honest Tea would fulfill his hopes. In 2007, big companies started knocking on the door. The first big investment offer came from a large beverage company and served as validation to Goldman “that we were tapping into something big.” Those talks ended, though, because the company wanted to buy all of Honest Tea, which did not appeal to Goldman and Nalebuff because they wanted to remain part of the business.

Shortly after, a new conversation began with Coca-Cola, which was interested in a minority stake. Their subsequent deal, reached in 2008, instantly provided Honest Tea with the ability to scale rapidly and access to Coca-Cola’s global distribution channels. Honest Tea was in 15,000 stores at the time of the agreement; today, it’s in more than 130,000 stores. Coca-Cola also offered its production and purchasing prowess to Honest Tea, allowing the company, for example, to buy lighter-weight, less-expensive bottles and invest the savings in converting to only Fair Trade ingredients.

“When Coke invested in 2008, only about 40 percent of our teas were Fair Trade Certified™, and now all of them are,” Goldman notes. The relationship also allowed the Honest Kids line, which had transitioned to a recipe that used only fruit juice as a sweetener, to leverage existing Coca-Cola partnerships and land in national food service customers such as Wendy’s, Subway and Chick-fil-A.

Coca-Cola also help expose the rest of the world to Honest Tea. The brand has launched in the United Kingdom with a line of three herbal teas unique to the UK market.

“We had big ambitions but no way to get there” before Coca-Cola, says Goldman.

A Mission and an Activist Mindset

Early on, Goldman and Nalebuff knew they wanted Honest Tea to be a mission-driven company. The last sentence of their original mission statement speaks volumes: “We strive for relationships with our customers, employees, suppliers and stakeholders which are as healthy and honest as the tea we brew.”

This philosophy would drive Honest Tea’s efforts to work with Fair Trade suppliers and use only organic ingredients whenever possible. It also set the company apart from many competitors, and reinforced Goldman’s personal commitment to social and environmental responsibility, something that had drawn him years earlier to Calvert, a leader in responsible investing.

“I’m more of an activist than a business person,” says Goldman. “My mindset when I wake up in the morning isn’t how do I make more money, but how do I make more change in the world.”

In developing nations where farmers barely subsist from their crops, that support can be dramatic. Fair Trade premiums paid on top of the price of the tea and sugar used in Honest beverages are put back into the supplier communities to be used for infrastructure projects such as schools and roads, and equipment like ambulances, gas stoves and modern farm equipment. Honest Tea recently crossed a major milestone of contributing more than $1 million in Fair Trade premiums, which have had a direct impact on the lives of the people in the communities where Honest sources its tea and sugar.

New Products and Markets Fuel an Entrepreneurial Heart

Goldman says some people were surprised that he continued to be involved with Honest Tea – his title is TeaEO Emeritus – after the Coca-Cola buyout since it doesn’t often work that way in corporate America. Goldman wanted to remain involved and still describes himself, 19 years after the company’s founding, as “an entrepreneur at heart.”

He remains passionate about the brand and is excited about the recent launch of the Honest Sport line of organic sports drinks made with sea salt, as well as the continued international and food service industry expansion. He worries, too, about things like how to reach every customer now that Honest Tea is in 130,000 stores and counting. Goldman knows using paid media – something Honest Tea has done little of – is necessary to reach new consumers, but he still wants his field marketers to be out there handing cups of Honest Tea to customers because “it’s hard to advertise a taste.”

Mostly, Goldman is steeped in the gratification of knowing that after six years with Coca-Cola, annual revenues have grown 10-fold to $218 million and Honest Tea’s mission has deepened through Fair Trade expansion, by having an entirely organic portfolio of beverage options and launching more zero-calorie products.

“It’s great when you can be an engine of change in the public arena,” he says, “and an engine of financial return to your investors.” 

Shel    February 29, 2016

Are people really honest? One company decided to find out and in the process they managed to create one of the best social media campaigns in 2015.[1]  Honest Tea,  has prided themselves to be transparent in all their endeavors, and are now inspiring a nation to do the same. Challenging American’s  to prove they are honest people, and in the process managing to conquering their own brand awareness like never before.

The Social Experiment

Since 2010, Honest Tea has conducted a social experiment where they set up unmanned racks of Honest Tea offered for $1 each on an honor system. Monitored by hidden cameras and employees who tracked the percentage of people who paid by city. It started with 6 major cities across the U.S. to determine how honest people are when they think no one is watching. And has expanded across the nation ever since proving each year that over 90% of Americans are honest and continue to be.

Please take a peak at the Teaser video below for more on the Honest Tea’s Campaign

To see which states were the most honest and  other interesting results, quench your curiosity by clicking on the National Honesty Index

 

 

So why did they conduct this experiment?

Seth Goldman is president and TeaEO of Honest Tea explains:

“Beyond the fact that we seek to have honest and direct relationships with our ingredients, suppliers, and consumers, it’s a fun way for people to interact with our brand. We do lots of sampling over the summer, but our Honest pop-up stores offer an opportunity for people to be part of our company rather than just passive drinkers. It turns out that it’s also a nice way to help people think differently about our society and each other.”[2]

Each year Honest Tea matched the contributions from these pop-up stores and donates them all to a specific charity in order to help people help themselves and increase sustainability in the world.

This was definitely a marvelous campaign yielding some outstanding metrics and significantly boosted Company’s overall presence.  [3]

280 million total impressions

$2.79 Million in earned media

Not to mention Honest Tea experienced double digit growth in each market

160 press stories

 

Now that’s impressive!  But their momentum continued in the next phase of their campaign adding one more of twist. After several years of successfully conducting physical honesty experiments across the country, Honest Tea hired Carrot.IS and Influential to revamp the campaign to add social components. [4]

The result a hybrid:

Social experiment

+

Facebook application

“The Honest Tea Pact”

+

#RefreshinglyHonest campaign

EQUALS

Nomination for Shorty Award

Okay let me steep down this equation for you:

First they conducted the Social Experiment component Honest Tea activated 27 pop-up stores in major U.S. cities. The results were released in August of 2015. Revealing the most and least honest cities in the country, along with the honesty of people based on their demographics like hair color and gender. It’s clear that people around the country are honest when given a choice to pay or steal, but Honest Tea wanted to find out how this would carry over to social media?

Next they devised a two-part strategy, combining the honesty experiment and testing the honesty of Social media users.

“The Honest Tea Pact,” the Facebook application was designed to collect information about the online experiment.   After authenticating via Facebook, users agreed to share a piece of content in exchange for an Honest Tea coupon. Honesty was then measured by whether the user actually completed the share in exchange. (Users received a coupon regardless of whether they shared a coupon or clicked ‘cancel’). The data was then analyzed and correlated between Facebook and the social experiment this was updated on Honest Tea’s National Honesty Index microsite

The Results

The Facebook app received over 20,000 authentications in a 24 hour period, resulting in over 18,000 coupon downloads and millions of data points to sift through and correlate with honesty. [5]

Pairing  Facebook  with Twitter, Instagram, YouTube and Blogs they then called upon followers to be #RefreshinglyHonest and post about the “unfiltered, imperfect” moments in their lives.

In the clip below Seth Goldman TeaEO  candidly reaches out to followers, and genuinely shares his honestly refreshing moment.

Honest Tea uploaded their own posts with the #RefreshinglyHonest hashtag on Instagram and Twitter to its campaign website.

#RefreshinglyHonest Not every bottle is perfect on the outside 

And even soliciting Influencers like Olivia Jensen on YouTube

Drum roll please…..

And the Nominee for the 8th Annual Shorty Award in the Food & Beverage category goes to Honest Tea

The evolution of  the social experiment by addition of  social media components has simply allowed Honest Tea’s campaign to brew to perfection and measuring some honest to goodness results.

UPDATE…..

Austin Graff, Social Media Manager at Honest Tea shares his thoughts on about this brilliant campaign,

Hi Shelina,

Great blog! We wanted to hit every major social media platform to show up where all of our target was playing. We tied an engagement metric to the campaign because engagement is how you can tell if content is resonating with the consumer.

Hope this helps and let me know if you need anything else from me.

Austin Graff Social Media Manager |  HONEST TEA, Inc. Refreshingly HONEST® since 1998.
Join us: Facebook| Twitter| honesttea.com
We’re on a mission! Read about the journey in our 2014 Mission Report

About Honest Tea

Founded in 1998, Bethesda, MD based company Honest Tea is the nation’s top-selling organic bottled tea company specializing in lower calorie beverages that are ‘just a tad’ sweet. Honest Tea’s product lines include: Honest Tea ready-to-drink bottled teas, Honest Ade and Honest Kids organic thirst quenchers. All varieties are USDA-certified organic and all tea varieties are Fair Trade Certified™. In addition to being named one of The Better World Shopping Guide’s “Ten Best Companies on the Planet based on their overall social and environmental record,” Honest Tea was also listed as one of PlanetGreen.com‘s “Top 7 Green Corporations of 2010,” and was ranked by The Huffington Post as one of the leading “8 Revolutionary Socially Responsible Companies.” Honest Tea was purchased by The Coca-Cola Company in March 2011 and operates as an independent business unit. For more information visit www.honesttea.com. [7]

  1. By making an honest and genuine connection with your followers surely pays off and yields great dividends for your marketing efforts. These can be carried over year after year without diminishing your momentum.
  2. Making correlations between all platforms used instead of reporting individually can provide a better picture for a company’s ROI on Social Media investment.
  3. Having a strategy and knowing what you want to accomplish can provide a clearer picture when measuring your social media metrics.

If you have concerns as to the accuracy of anything posted on this site, please send your concerns to Peter Carr, Program Director, Social Media for Business Performance.


Organization: Honest Tea
Industry: Beverage Industry
Name of Organization Contact: Seth Goldman is president,TeaEO and Austin Graff Social Media Manager

Authored by: Shel

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