An Honest Accounting

Back in my college days, Driver hit movie screens like a tornado. I can still remember my astonishment: the directorial virtuosity of Martin Scorsese, the volatile performance by Robert De Niro and the pungent dialogue of screenwriter Paul Schrader. My more practical buddy Tom, an Irish American from the South Bronx who was leery of Hollywood depictions of his beloved but still-gritty city, found his skepticism overcome by a single detail: when the De Niro character, Travis Bickle, gropes the cartons of milk in a deli cooler before selecting the coldest one to buy. “Gerry, that’s never been shown in a movie!” he exclaimed.

A trivial detail, maybe, but that can be the power of verisimilitude. Which brings me to Mission in a Bottle: The Honest Guide to Doing Business Differently – and Succeeding. This remarkable graphic-novel-style treatment of the development of the Honest Tea brand by co-founders Seth Goldman and Barry Nalebuff offers on nearly on every page the kind of gritty, convincing detail whose absence, to me, has been the fatal flaw in nearly every marketing book I’ve ever read (Going back through two decades at Brandweek, BusinessWeek and Beverage Business Insights, I’ve read dozens of them).

How nitty-gritty? Double-dealing by investors and business partners, the in-the-trenches warfare at the distribution and retail tiers, the perils of operating a production plant. The editors even allowed Goldman and Nalebuff to employ the dread term “DSD,” something BusinessWeek smacked down as useless jargon. There’s also an element of roman a clef for readers already in the beverage business: though the characters in controversial anecdotes sometimes aren’t given more than a first name (if any), you’ll love trying to match the portraits by illustrator Sungyoon Choi with people you know. You talkin’ to me? Travis Bickle memorably wanted to know in Taxi Driver. If you’re in beverages, this book definitely is talkin’ to you. BevNET Magazine readers hopefully got a taste of this in the excerpt that ran here two issues ago.

The authors seem to revel in detailing their own failures – from flameouts in teabags and kombucha to their efforts to manage their own production. The latter proved nearly disastrous, not just in draining cash and creating constant quality issues, but in less tangible ways, as when Goldman and Nalebuff learn that the plant manager, desperate to fill capacity, was recruiting as clients rival tea makers like Sweet Leaf, to whom he applied the duo’s painstakingly devised tea-brewing techniques, thereby squandering a competitive advantage. About the only other beverage industry book that I recall offering this degree of unvarnished truth is Beer School: Bottling Success at the Brooklyn Brewery, a 2005 account by cofounders Steve Hindy and Tom Potter that delved into fundamental issues like the perils of self-distribution in a similarly dramatic and detailed way. A journalist by profession, Hindy had a leg up on the writing side and I’ve recommended his book to countless beer and beverage people. But you don’t find Hindy spelling out his ingredient and labeling costs to the penny per bottle, nor offering detailed blow-by-blows of critical negotiations.

Is it premature to write a memoir? I don’t think so. While Honest Tea’s story is nowhere near concluded yet, its founders have struck while the details are still fresh and, more important, their brand is still relevant. About a decade ago, SoBe creator John Bello sounded me out over possibly collaborating on a memoir, but our sad conclusion was that, as colorful and opinionated as Bello is, PepsiCo was already on the way to destroying the personality of SoBe as a brand. Jacket copy heralding a book “by the noted creator of SoBe beverages” wasn’t likely to pull in a great many readers. We don’t know the future of Honest Tea – though so far it’s looking to be better than SoBe’s – but Goldman and Nalebuff are right to strike while the iron’s hot. General business readers might be scared away by the detail offered here (though they shouldn’t), but entrepreneurs entering the beverage or other consumer products realms should read this first. And the book makes a fabulous case history for college marketing courses and MBA programs, perhaps including those taught by Nalebuff at Yale.

So what does the future hold for Honest Tea? I’d say it’s promising – but with hurdles to surmount. It’s no mean feat for Coke to have kept Goldman involved, maintaining the cultural vibe and upholding product integrity. The fit’s not always seamless: as the book notes, Coke once ordered Honest Tea not to employ package copy heralding the absence of high-fructose corn syrup, and more recently Honest Tea suffered a backlash among some loyalists after its parent supported a successful effort to defeat the anti-GMO Proposition 37 in California last year. That’s still a far cry from Coke’s fumbling of prior acquisitions. Though tea purists sometimes deride Honest Tea, it still represents a big upgrade over what was available from mainstream tea brands, and surely is helping to democratize organic and Fair Trade products.

Still, Coke generally defines successful new brands as those that reach $1 billion in retail sales, and even with its current brisk growth, I’m not sure Honest Tea’s trajectory points there any time soon. To get there, Goldman and his team will have to get better at cracking mainstream channels – particularly convenience stores – and that may require significant tweaking of the brand personality. They recently changed the package, for example, to make it more distinctive and approachable. Recently, Goldman has taken a more hands-on role in the marketing, but maintaining the interest of the Coke bottling system is a challenge. We should be rooting for Goldman and Nalebuff, though – not only because success would offer hope that huge companies can, indeed, absorb innovative brands without neutering them, but also because it might encourage the pair to write a follow-up.

 

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.