Discover Bethesda, Maryland...365 Days a Year!

Day 67: 'The Real Thing' – Honest Tea!

Honest Tea

Barry Nalebuff and Seth Goldman co-founded Honest Tea in Bethesda in early 1998.  Barry, an MBA professor at the Yale School of Management, and Seth Goldman, one of Barry’s students, had worked on a case study on the beverage industry when Seth was earning his MBA degree. The two recognized that there was a missing market segment in the beverage industry between water and super sugary soft drinks.  Fast forward a few years after Seth graduates.  Seth returns home from a long run and is frustrated that he can’t quench his thirst with anything but water, a soft-drink, or something he has to mix and concoct himself.  The idea from graduate school of a less-sweet alternative beverage is still rattling around in Seth Goldman’s mind.  He decides if I can’t buy he’ll just have to start a company and make it.  He contacts Barry, who has serendipitously just returned from Asia where he was studying the tea industry for another case study at Yale.  Barry noticed that most of the tea used for bottling in the U.S. was really the lower quality tea that was left-over after the quality tea had been harvested for tea bags abroad.  Barry thought it would be great if this high quality tea was used in beverages instead.  He even coined a phrase for that tea – “honest tea.”  From the moment Seth heard the phrase, a company, Honest Tea was born.  From the beginning the term “Honest” has been a part of the vernacular of this socially and environmentally conscious company.  The company’s mission is “to strive for authenticity, integrity and purity, in our products and in the way we do business.  Honest Tea seeks to create honest relationships with our employees, suppliers, customers and with the communities in which we do business.”  The company has won numerous environmental, health, and social responsibility awards and accolades and hopes the entire line of its products will be Fair Trade Certified by the end of this year.

Five weeks after starting the company Barry and Seth made their first sale, after putting an Honest Tea label on an old Snapple bottle, when they convinced a buyer at a local Bethesda Fresh Fields to give the product a try.  Today, our hometown boy Seth has helped put Honest Tea in tens of thousands of locations nationwide.  I was on the Big Island in Hawaii recently and it brought a smile to my face to see bottles of Honest Tea being offered for sale.  The company has had a compound annual rate of growth of over 60% every year so it was no wonder that Honest Tea caught the attention of Coca Cola.  In 2008, after 10 years of phenomenal growth, Coca Cola bought a 40% stake in the company with an option to purchase the remainder of the company three years later.  On March 1, 2011 Coca Cola exercised its option to acquire the remaining portion of Honest Tea.  TeaEO Seth Goldman (is that cool instead of CEO?) will remain in charge of the business and to maintain the company’s entrepreneurial spirit and innovation, the business will operate as a stand-alone business within the Coca Cola empire.

So what does the future hold for this Bethesda business jewel? Seth Goldman believes that the merger with Coca Cola will not, as some skeptics believe, be the end of the innovative Honest Tea we know and love, but rather just the beginning.  “This is our chance to bring organic beverages to the mainstream.  Consumers will discover that they can have it all – great taste, fewer calories, and organic. Honest.” Seth, we look forward to seeing you achieve your vision –to bring the world not only a healthier, better tasting beverage, but one that also protects and preserves the environment while at the same time promotes the well-being of all the people involved in its production.  We wish you and your team at Honest Tea all the best in the years ahead. ~Brian

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