Welcome to Chief Executive's Manufacturing CEO Briefing. Keep your colleagues informed - forward for signup.
Post-Company Sale Disappointment: One CEO’s Journey
Seth Goldman created an entrepreneur’s dream in the success of his Honest Tea startup beginning in 1998, then built upon that dream by selling his brand for a mint to Coca-Cola in 2011, then further embellished his accomplishment by staying on with the beverage titan to help run Honest Tea—and even give his new bosses advice on how to work with new ventures and emerging brands.
That’s why it was “a real gut punch” a few weeks ago, Goldman told Chief Executive, when Coca-Cola unceremoniously announced that it was dumping the Honest Tea organic and fair-trade line, whose sales had declined while those of its other tea brands, Gold Peak and Peace Tea, had risen significantly. Coca-Cola said it would retain the better-selling Honest Tea Kids sub-brand and the rights to the Honest marque.
Rather than simply harp on Coca-Cola’s decision, Goldman decided to do what any scrappy serial entrepreneur would do: He fought back. The first step was to assemble the old team of Honest Tea suppliers and staff people and launch his own new brand—appropriately named with the double entendre Just Ice Tea—to show Coca-Cola executives the error of their ways.
His experience is hardly unique; many entrepreneurs who sell to larger firms and stick around experience similar situations—and similar disappointments. After all, you’re not the boss anymore. But Goldman’s candor and willingness to share about the situation is unique. Even though he quit Honest Tea in 2019, the recent moves still stung. Four lessons he took away from the unraveling of Honest Tea from Coca-Cola:
- It really—really—isn’t your baby anymore. “Toward the end of the pandemic a few months ago, they were doing their [brand and product] review, and I knew about their decision to do fewer, bigger bets and not have as many brands. That decision gets [made] based on sales and margins, and Honest Tea wasn’t looking as good as the others.” Goldman also believed that Coca-Cola was capable of pushing through supply-chain snarls that limited inventories of Honest Tea in some markets if there was a corporate will to do so.
- Maintain key relationships. While Honest Tea’s owner no longer appreciated the brand, other stakeholders certainly did, and Goldman found that out immediately upon Coke’s announcement in May. Honest Tea suppliers reached out to him, and consumers rallied. “It’s a great lesson in karma: All the relationships we had with different people over time are coming back, and the way we treated them is paying off. They want to work with us. If we’d treated them unfairly or squeezed them, they might not” be positive about Just Ice Tea, Goldman said.
- Maintain ties to the team. Goldman has continued to work with many staff members and outsiders from his Honest Tea startup days, and it is paying off in his pivot to Just Ice Tea. Purpose-based companies like his tend to retain purpose-driven relationships. “Companies I was friendly with wanted to go after this space and wanted me to be associated with it,” he said. “But I figured if anyone should go after it, it should be” the old Honest Team.
- Honor your legacy. “Was it a failure?” he said of Honest Tea. “It wasn’t. The goal was always to democratize organic, and Honest Kids is still doing that. But also, as I think about launching the new brand, if Honest Tea hadn’t done what we did—making organic bottled tea available to millions around the country—we wouldn’t be able to do what we’re doing now.”
“Just Ice Tea will be on shelves by early October,” Goldman said. “I care a lot about what Honest Tea did and what it stands for and what it meant to all the people who consumed it, and all the work that went into it. There’s disappointment that Coca-Cola is walking away from it, but that doesn’t mean there isn’t consumer demand for our kind of product.” Read the full article >
– Dan Bigman, editor, Chief Executive. dbigman@ChiefExecutiveGroup.com
Talent solutions to help your workplace thrive. Come together with fellow mid-market CEOs and C-Suite executives to tackle your biggest workforce challenges – and opportunities. Move beyond high-level discourse and walk away with tangible frameworks to help you and your team navigate the year ahead. Join us online September 28.