I'm copying a link to an article in the Baltimore Sun describing Coke's recent purchase of a 40% stake in Honest Tea. http://www.baltimoresun.com/business/bal-bz.tea16apr16,0,7713638.story .While Honest Tea is obviously a for-profit entity, the article reminded me of some of the issues raised in the Dees article about non-profits that either undertake for-profit activities or partner with corporations. Are the organizations (or in this case Honest Tea) susceptible to mission creep or does it make good business sense? I would argue for the latter though with some concern about losing Honest Tea's sense of authenticity.
CEO Seth Goldman makes the case for taking advantage of Coke's distribution network, including an exclusive contract with McDonald's to reach thousands of more consumers and influence healthier diets. I would be curious to hear if you guys think Honest Tea is selling out or moving its mission forward.
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I would like to believe that Seth Goldman, who has shown great passion for Honest Tea, is not partnering with Coca Cola to sell-out but to further build access to the product. What’s interesting to note is that the agreement allows Coca Cola to invest, not buy, into the company, which means that Goldman and his management team will retain control of how the business is run (probably to avoid a similar fate of other beverage acquirees, most notably such as Snapple).
While Coca Cola’s intentions of buying Honest Tea may be to gain market share in a more health conscious market, Honest Tea gets to use the resources of a big corporation to achieve its own goals and build up the presence and “goodness” of socially responsible products. The danger of the agreement damaging Honest Tea’s mission with the prospect of achieving this greater good may be a risk worth taking.
Very interesting! This reminds me a lot of the conversation we had in class with Professor Greenblatt re: Ethos Water and Starbucks.
I agree that Honest Tea will be able to reach many more customers through Coke's distribution chain. And hopefully this will provoke a competitive response from the likes of Pepsi, with even more beverage companies offering "healthy" options.
However, Honest Tea will need to be VERY careful about retaining control and maintaining its social mission. The Baltimore Sun article states that in three years, Coke will have the option of buying a majority stake. At that point, I am skeptical of how business practices could change. Even in the interim, will Coke use standards that are in line with Honest Tea's stated practices?
I guess Honest Tea needs to consider its main objectives and if getting more people to drink healthier teas is primary, then this is probably a decent decision.
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