Coca-Cola execs obviously know a good deal when they see one. Looking to expand its beverage brand portfolio due to flagging soft drink sales, Coke has acquired a 40% share of Honest Tea, according to a recent Brandweek article.


Coke has been moving in the direction and diversifying. Last year, the beverage giant acquired Glaceau's brands including Vitaminwater, and Fuze beverages.
Deryck van Rensburg, president and GM of Venturing and Emerging Brands, Coca-Cola, North America stated: "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."
What he didn't say is that rival PepsiCo's Lipton and SoBe tea brands are dominant and own 40% of the category, so it was obviously time for Coke to compete in this explosive category.
There isn't any doubt that ready-to-drink teas are experiencing meteoric sales, much like energy drinks did a short time ago. According to Beverage Digest, Honest Tea generated about $23 million in sales in 2007. More importantly, that number represented a 24% increase in sales for the first nine months of 2007.
Honest Tea was founded in 1998, and became an organic beverage brand. The company offers many interesting tea combinations, including Pomegranate Red Tea with Goji Berry. Red teas and goji berries are currently both the hottest properties for their strong antioxidant properties among nutritional savants. Honest Tea also offers Honest Kids beverages and Honest Ade juices.
This points to an even larger trend, and it has been unfolding for quite some time. Small niche food and beverage companies, especially in the organic and natural sector, have been gradually bought out by large mainstream players. This continues unabated.
Just a few examples:
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Kellogg's owns Kashi cereals
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Danone owns Stonyfield Farm yogurts
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Conagra owns Lightlife analog meat products
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Clorox recently acquired Burt's Bees natural skincare products
The smart parent companies of these brands allow them to operate fairly autonomously and to continue to do what they do best.
On the positive side, the mega food companies also greatly expand distribution for their acquired brands, and have the ability to market with much deeper pockets. They sometimes even allow their new baby brands to influence some of their business thinking. While it is now au courant to become green or more natural, for example, the insights and influence corporate giants are getting from their newly acquired brands has actually begun to effect change in their thinking. . .and that's a good thing.
Clorox quietly purchased the Burt's Bees brand recently. Shortly after that, the company announced the launch of a safe, environmentally friendly line of cleaning agents dubbed "Green Works." Danone has left Stonyfield Farm alone with president Gary Hirshberg still at the helm. . .and the launch of Danone's new Activia probiotic-rich brand smacks of Stonyfield in a big way.
So, maybe, just maybe, all of this activity will pay off for the end consumer. Over time, we could all be the beneficiaries of better, healthier products, cleaner products, more environmentally safe products, etc. It will take time and baby steps, but something new is definitely in the air.
What do you, loyal Daily Fix readers think of these developments? I'd love to hear from you.