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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Please note:
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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Honest Tea Sells Equity Stake Contd...
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Honest Tea was founded by Seth Goldman (Goldman) and Barry Nalebuff (Nalebuff), in 1998, in Bethesda, Maryland, USA. The company operated on the principles of social responsibility and environmental sustainability.
It was based on the concept of
'just the tea', and was made using spring water, tea, and very little sweetener.
By 2008, Honest Tea had emerged as one of the leading bottled organic tea manufacturers in the US. In a span of ten years between 1998 and 2008, the company's revenue grew by a compounded annual growth rate (CAGR) of 66%.
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Since its inception, Honest Tea had maintained its ethical stance and carried out its business in a responsible manner, benefiting the communities with which it worked, and minimizing environmental impact.
The fact that Honest Tea had agreed to sell a stake to Coca-Cola, widely seen as a company with a track record of environmental abuses and unethical practices in many countries where it operated, left many loyal customers of Honest Tea and analysts flabbergasted.
Goldman, however, justified this partnership stating that it would help Honest Tea spruce up distribution and reach more customers in the US. He opined that greater reach would benefit organic farming and would have a positive impact on the environment. It would also inculcate healthy drinking habits among the consumers...
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