Honest Tea’s Mission Report Highlights Progress, Road Ahead

At this year’s Natural Products Expo East in Baltimore, Honest Tea co-founders Seth Goldman and Barry Nalebuff held book signings and discussed Mission in a Bottle: The Honest Guide to Doing Business Differently — and Succeeding, an illustrated autobiography of the company’s journey. A representative from Phalada Agro, an organic products supplier based in South India, attended and spoke up at the event. He said that since he began working with Honest Tea, his co-op has increased its capacity tenfold.

The man’s words were brief, but they lasted with Goldman.

“That really reinforces how what we do at the consumer level drives change at the garden level,” Goldman said.

Just as Goldman does with the anecdote, Honest Tea’s 2013 Mission Report, which was released Tuesday, takes a step back and assesses the company’s progress, widespread influence and work left to be done.

Jenny Burns, Honest Tea’s mission director, said that she’s encouraged by the company’s continued dedication to organic ingredients. The mission report states that in 2012, the company purchased approximately 4.9 million pounds of organic ingredients. This represents a 13 percent increase from the previous year and compares favorably to 2007, she said, before The Coca-Cola Co., Inc., acquired Honest Tea, when the company purchased approximately 790,000 pounds of organic ingredients.

“For us to be able to increase the purchase of ingredients as we grow and have the impact be linked to the business growth is really exciting for us,” Burns said.

The report also vividly outlines the company’s efforts to decrease its carbon footprint and contribute to the environment’s health.

For example, the company…

  • continued its support of the Organic Trade Association (OTA) as members of its leadership circle. The OTA represents more than 6,500 farmers, ranchers, handlers, processors, distributors and retailers across the country.
  • joined the Rodale Institute, which conducts organic farming research and serves as an outreach to farmers and scientists.
  • had its products inspected and certified by the Pennsylvania Certified Organic (PCO) and the USDA National Organic Program.
  • makes finished products at a network of bottling plants around the country to reduce the environmental and financial burdens of shipping. Meanwhile, product formulations are still created in the company’s kitchen in Bethesda, Md.
  • purchased 204 megawatt hours of renewable energy certificates to offset carbon emissions from the production of Jasmine Green Energy Tea.
  • adds spent tea leaves to compost mixtures by farms near their three tea production facilities.
  • serves as a founding member of the TerraCycle Drink Pouch Brigade, which has collected nearly 183 million drink pouches since its inception in 2007.
  • added a zipper graphic to the packaging of the 59 oz. bottles. These bottles are recycled only if the label is removed, so the company created an image that they hope grabs the attention of the consumer and leads to greener results.

The list goes on.

Similar to Phalada Agro’s relationship with Honest Tea, the mission report also detailed several other encouraging results from its fair trade premium of $126,304, about 7 percent of their total cost for teas.

In India, the premium helped install biogas units in the homes of workers. These units trap methane emitted from cow dung and pipe it to a stove. The premium has also funded crop research, the distribution of jars and thermoses to workers and the purchase of a cow. In China, the premium provided loans to improve village processing facilities, funded the construction of a perimeter wall around an elementary school for extra security, maintained an appropriate level of medical supplies in community hospitals and helped farmers from the Dazhangshan tea company invest in a metal boat to replace an old bamboo raft.

Despite the environmental progress and the productive results, Goldman said the report also shows areas of needed improvement. Approximately 29 percent of PET plastic bottles were recycled in 2011, according to the U.S. Environmental Protection Agency. He said that the term “organic” still doesn’t resonate with enough consumers, despite the fact that it’s regulated by the government and has a clear definition and set of guidelines, while the term “natural” is much foggier.

“It starts with the consumer,” Goldman said. “We know and continue to be frustrated by the fact that ‘organic’ is still not as meaningful a term to consumers as the term ‘natural.’”

Goldman added that his company still has lots of work to do before this consumer understanding begins to take a noticeable shift. It starts with the marketing department, which he said will receive a sizable investment to have a greater focus next year on not just repeating the word “organic,” but instead delivering the message of its benefits. How they’ll do it has yet to be decided.

“We’re working on sharpening that message heading into 2014,” he said.

The mission report also described some of the formulation efforts and changes that have shaped the company’s path. Honest Tea’s sourcing team recently traveled to Turkey and Argentina with several orthodox rabbis to inspect and certify white grape juice as kosher. The company also recently eliminated organic cane sugar as an ingredient from its Honest Kids line and sweetened the products with organic fruit juice. As a result, the company purchased 5,000 pounds of organic erythritol and increased its purchases of organic white grape juice by 270 percent and organic stevia by 70 percent.

The report also states that while the Root Beer SKU from Honest Fizz is certified organic, the company is working toward making the other three SKUs — Lemon Limey, Orange Pop and Professor Fizz (a spiced cherry flavor) — certified organic in the near future. Goldman said that the date is still undecided, but he’s hoping for the end of 2014.

The mission report notes that in 1999, Honest Tea was the first company to launch an organic bottled tea, so it feels weird to do otherwise.

“There was a lot of sleep lost over the idea we would bring something out that wasn’t certified organic,” Goldman said. “But we recognized we couldn’t let the perfect be the enemy of the good.”

Burns said that the Root Beer SKU proves that it can be done. Goldman said that this gap serves as a business opportunity for suppliers. If Honest Tea can find a supplier with organic stevia and organic erythritol at a competitive price, the supplier has the job.

However, this supplier has yet to be found. So, echoing the theme of the mission report, there’s still more work ahead.