Honest Tea acquisition bolsters Coke in bottled tea

By Reuters
Posted March 1 at 12:43 p.m.

Coca-Cola Co. said Tuesday that it acquired the remaining stake in Honest Tea for an undisclosed sum, giving the world’s largest soft drinks maker a stronger position in bottled tea.

Coke said Seth Goldman, Honest Tea’s founder and chief executive, will continue to run the business as an independent unit within Coca-Cola, whose tea portfolio has lagged those of rivals such as PepsiCo Inc., whose teas include Lipton and Tazo, and Dr Pepper Snapple Group Inc., which makes Snapple.

Honest Tea, which sells bottled teas and other juice drinks, was started in 1998 with a socially and environmentally conscious mission. Analysts and other industry watchers have said it remains to be seen whether the company can keep up its philosophy once it gets  swallowed by Coca-Cola.

“It’s a legitimate concern and I’d say it’s still a risk,” Goldman said in an interview.

Still, he said Coke was honoring the product, including setting up a high-quality tea brewing system and using only fair-trade tea. In addition, Goldman said he expects the drinks will always be sweetened with organic cane sugar, instead of the less-expensive high-fructose corn syrup that goes into many other Coke products.

Goldman has reinvested most of his proceeds from the sale back into the brand, the companies said.

Coke first bought 40 percent of Maryland-based Honest Tea in February 2008 for about $43 million, with an option to buy the rest.

Honest Tea had gross sales of $71 million in 2010.

Coke shares were up $1.17, or 1.8 percent, at $65.09 on the New York Stock Exchange.

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One comment:

  1. Cornrefiner March 2 at 4:28 pm

    Independent research shows that when primary shoppers are asked what foods they are consuming less of or avoiding, 24.7% mention sugar, but only 6.5% indicate high fructose corn syrup. A total of 36.6 % of primary shoppers look for sugar on food and beverage labels, but only 3.7% look for high fructose corn syrup.

    High fructose corn syrup is simply a kind of corn sugar. It has the same number of calories as sugar and is handled the same by the body.

    The American Medical Association stated that, “Because the composition of high fructose corn syrup and sucrose are so similar, particularly on absorption by the body, it appears unlikely that high fructose corn syrup contributes more to obesity or other conditions than sucrose.”

    As many dietitians agree, all sugars should be consumed in moderation as part of a balanced lifestyle.

    More information is available at http://www.CornNaturally.com.

    Audrae Erickson
    President
    Corn Refiners Association