The Coca-Cola - Honest Tea Deal: Promoting Sustainability or Corporate Greenwashing?


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Case Details:

Case Code : BECG113
Case Length : 22 Pages
Period : 1998-2009
Pub Date : 2010
Teaching Note : Available
Organization : Honest Tea / Coca-Cola Company
Industry : Non-carbonated Beverages
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"As a business that has built its reputation over the past decade on a commitment to healthy organic products, environmental quality, and social justice for its producers, Honest Tea's decision to partner with Coca-Cola - a multinational corporation that has consistently violated all three of these principles in their global business practices - confounds me."1

- Honest Tea's Customer, Commenting on Coca-Cola Acquiring a Stake in Honest Tea, in February 2008.

"The world of social responsibility should not be restricted to the smaller, more boutique companies. With things like this (Coca-Cola acquiring a stake in Honest Tea), more consumers will have access to socially responsible products."2

- Seth Goldman, TeaEO, Honest Tea, in August 2008.

Honest Tea Sells Equity Stake

In February 2008, US-based bottled organic tea manufacturer Honest Tea Inc. (Honest Tea) announced that it had decided to sell an equity stake of 40% to the US-based beverage giant, the Coca-Cola Company3 (Coca-Cola), for US$ 43 million. After the transaction, Coca-Cola became the largest shareholder in Honest Tea. With sales of US$ 23 million in 2003, Honest Tea was the largest selling organic tea in the US. Though Coca-Cola's decision to partner with Honest Tea did not surprise many, given its earlier acquisition of Glacéau4 to move beyond the traditional soda industry, the same could not be said of Honest Tea's move to partner with Coca-Cola.

The Coca-Cola - Honest Tea Deal: Promoting Sustainability or Corporate Greenwashing? - Next Page>>

1] Seth Goldman, "Will Honest Tea be Corrupted by Coke," http://blog.inc.com, February 28, 2008.
2] Saabira Chaudhuri, "Coca-Cola Acquires a Stake in Honest Tea," www.fastcompany.com, August 12, 2008.
3] Coca-Cola is the world's largest beverage company. The company has a presence in over 200 countries across the world through its 400 brands. It reported revenues of US$ 31.94 billion in 2008.
4] Coca-Cola acquired Energy Brands Inc. also known as Glacéau in June 2007.


  

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