Long-admired entrepreneurial beverage brand Honest Tea is being phased out by its corporate parent, the Coca-Cola Company.
It won’t be the end for the brand: offshoot product Honest Kids will remain active after the organic tea line is discontinued at the end of 2022, Coke announced on Monday.
Honest Tea, which was launched by entrepreneurs Seth Goldman and Barry Nalebuff in 1998 and acquired by Coke in 2011, was initially considered a model for the larger company to incubate and grow smaller companies via Venturing and Emerging Brands (VEB), a group that was initially tasked with finding companies could eventually become the “next generation of billion dollar brands.”
The brand was highly influential, offering low-sugar and zero-sugar options and helping usher organic beverages into mainstream supermarket aisles. Nevertheless, Honest Tea’s sales have not scaled as Coke had hoped in the years since the acquisition. Honest Kids, which uses aseptic pouches and has been adopted by both foodservice outlets and families, has long outsold its portfolio stablemate.
Goldman expressed dismay in an 11-part Twitter message.
“Today’s announcement by Coca-Cola that they will be discontinuing @HonestTea is a gut punch to all the sweat, tears, and incredible passion that went into building our beloved brand,” he wrote. “My thoughts are with our longtime partners and friends, the #organic and @FairTradeCert farmers who helped develop their communities and protect their ecosystems with the tens of millions of pounds of sugar and spice they sold us.”
Coke-owned Gold Peak and Peace Tea – a brand launched by Coke partner Monster Energy in 2009 and then flipped to Coke in 2015 as part of a swap of brands – will become central to the company’s tea strategy, noted Sabrina Tandon, group director, RTD Tea, Coca-Cola North America Operating Unit in a press statement.
“We believe Gold Peak and Peace Tea are best positioned to meet consumer preferences for high-quality brewed teas with different levels of sweetness and flavor,” Tandon said.
Indeed, both brands have shown much larger sales in recent years. For the 52 week period that ended April 17, according to data provider IRI, Gold Peak had sales in excess of $470 million, while Peace Tea was close to $95 million. Honest Tea was at $40.6 million. Meanwhile, Honest Kids was at $103 million and growing.
Another brand from VEB, Zico, was discontinued at the end of 2020, although that brand was eventually re-acquired by founder Mark Rampolla’s PowerPlant Ventures.
That doesn’t seem likely in the case of Honest Tea, however, given the company’s continued backing of Honest kids. The release said the company plans to continue looking into licensing and other opportunities for the Honest brand in other categories. Recently, it launched a line of fruit chews in cooperation with the Hershey Co.
“We are phasing out the HONEST teas product line, but are not selling the HONEST brand,” Tandon noted in the press statement.