The Coca-Cola Company Signs Agreement for 40% Stake in Honest Tea

06/02/08 The Coca-Cola Company and Honest Tea, Inc. announced that the two companies have completed an agreement resulting in Coca-Cola holding approximately 40% interest in the fast-growing maker of certified organic beverages, including the best-selling Honest Tea. Coca-Cola may elect to buy, and the remaining Honest Tea shareholders may elect to sell to Coca-Cola, the outstanding interest not currently owned by Coca-Cola in the future. Financial terms of the investment were not disclosed.

"We started Honest Tea ten years ago with modest resources, but an ambitious vision for offering a new type of beverage – a delicious healthier drink produced with a consciousness about the way the ingredients are grown. As more consumers become aware of how their decisions impact the health of the planet and themselves, we are thrilled to receive this investment from the world's largest beverage company to help take our brand and our mission to a larger scale and wider audience," said Seth Goldman, co-founder and TeaEO, Honest Tea.

The strategic opportunity was identified by Coca-Cola North America's Venturing and Emerging Brands (VEB) Business Unit. "Honest Tea is on the forefront of the rapidly growing organic beverage business, and Seth Goldman and his management team have successfully anticipated and met consumer needs in this expanding category," said Deryck van Rensburg, president and general manager, Venturing and Emerging Brands, Coca-Cola North America. "This transaction is a superb example of our mission in VEB to seek out and invest in the best beverage entrepreneurs and the highest growth-potential beverages."

Honest Tea was started in 1998 when Goldman and his co-founder, Barry Nalebuff, brewed samples of tea in Goldman's Bethesda, MD home and brought them to the regional office of a natural foods chain. Since then the brand has become the top-ranked tea brand in the natural foods channel (according to SPINScan) and has begun to expand into mainstream grocery and convenience stores. "This is our chance to bring organic beverages to the mainstream," said Barry Nalebuff, co-founder and chairman, Honest Tea. "Customers will get to discover that they can have it all – great taste, less calories, and organic. Honest." In 2005 the company created Honest Ade organic thirst quenchers, and in 2007 it launched Honest Kids, a line of low-calorie organic thirst quenchers sold in 6.75-ounce pouches.

"The knowledge and access that Coca-Cola North America and its distribution system can provide comes at a perfect time as Honest Tea is at an exciting inflection point. I look forward to helping Seth and the team continue to build the business the right way in the years ahead," said Gary Hirshberg, president & CE-Yo of Stonyfield Farm and longtime board member of Honest Tea. Hirshberg will continue as a member of Honest Tea's Board.