Coke Makes Honest Investment

The Coca-Cola Co. and Honest Tea Inc. completed a deal giving Coca-Cola approximately 40% interest in the fast-growing maker of certified organic beverages, including the best-selling Honest Tea brand. Coca-Cola may elect to buy, and the remaining Honest Tea shareholders may elect to sell to Coca-Cola, the outstanding interest not currently owned by Coca-Cola in the future, the two sides said. Financial terms of the investment were not disclosed.

"We started Honest Tea ten years ago with modest resources, but an ambitious vision for offering a new type of beverage," said Seth Goldman, co-founder and CEO of Honest Tea. "As more consumers become aware of how their decisions impact the health of the planet and themselves, we are thrilled to receive this investment from the world’s largest beverage company to help take our brand and our mission to a larger scale and wider audience."

The strategic opportunity was identified by Coca-Cola North America’s Venturing and Emerging Brands (VEB) Business Unit.

"Honest Tea is on the forefront of the rapidly growing organic beverage business, and Seth Goldman and his management team have successfully anticipated and met consumer needs in this expanding category," said Deryck van Rensburg, president and general manager of Venturing and Emerging Brands, Coca-Cola North America. "This transaction is a superb example of our mission in VEB to seek out and invest in the best beverage entrepreneurs and the highest growth-potential beverages."

Honest Tea was started in 1998. Since then, the brand has become the top-ranked tea brand in the natural foods channel and has begun to expand into mainstream grocery and convenience stores. "This is our chance to bring organic beverages to the mainstream," said Barry Nalebuff, co-founder and chairman of Honest Tea.

In 2005 the company created Honest Ade organic thirst quenchers, and in 2007 it launched Honest Kids, a line of low-calorie organic thirst quenchers sold in 6.75-ounce pouches.

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