
Can Honest Tea Say No to Coke, Its Biggest Investor? - fogus
http://www.nytimes.com/2010/07/08/business/smallbusiness/08sbiz.html?_r=1
======
mattmaroon
Here's how I would sell it to Coke.

"You guys have a large financial incentive to believe that HFCS is no
different than sugar. Maybe it isn't. I'm obviously skeptical, but that
doesn't matter.

What does matter is that a large and growing segment of the population does
believe HFCS is bad for you and doesn't want to drink it. Chains like Whole
Foods won't even carry your products because of it.

You invested in Honest Tea because we were eating your lunch in the iced tea
and kids juice markets. We have competitors who are doing the same. You have
your own iced tea and juice brands, and part of the reason some people choose
ours over your older ones is the belief that HFCS is bad for you.

So even if HFCS is no different than sugar, as long as people think it is,
that's going to remain a key reason why people buy products. Studies keep
coming out and getting highly publicized saying it's bad for you. You can
refute it all you want, but to the believers you just look like cigarette
companies who say that smoking doesn't cause cancer.

So you have two choices. You can tilt against windmills and keep arguing HFCS
is no different than sugar, which might even be true, but it won't matter
because people will buy products that don't have it more and more over the
coming years while our competitors eat our lunch. Or you can eat your own
lunch.

What did Apple do when they realized that one day iPods would be obsolete
because phones would play mp3s? They built a phone that played mp3s better
than the rest. That's what you need to do.

And note that Apple is still selling more mp3 players than anyone too. So keep
making your Hi-C with HFCS for the people who don't care, and let us monetize
the people who do care for you. Someone's going to eat that portion of your
lunch, it might as well be you."

~~~
jshen
I think this misses the issue I think Coke has on this subject. People believe
HFCS is bad in part because companies like Honest are pushing against it.
There's a real argument that public perception can be swayed one way or the
other. You're assuming that the perception of people is preordained.

~~~
CapitalistCartr
My opinions regarding HFCS is based on my limited review of the science, and I
promote that view to friends and family. Coke stands no chance of winning by
throwing advertising against word of mouth. Word of mouth takes awhile, but
it's stronger. I think Coke will offer a sugar version of their main products
in the USA soon.

~~~
hugh3
Forget the limited science, the HFCS version of coke just tastes worse than
proper coke.

I suppose if you grew up on the HFCS version you might be accustomed to it,
though.

~~~
LogicHoleFlaw
I grew up on the HCFS version and I still think the cane sugar version tastes
best. And is more satiating.

~~~
lurkinggrue
Same goes for the sugar version of Dr. Pepper.

The sugar versions are smoother.

------
hugh3
What somebody really needs to do is to take the fight to the US Government, to
eradicate the sugar tariff system which keeps the US stuck eating liquefied
corn (bleech) while the rest of the world munches down on delicious sugar from
real sugar cane.

Alternatively, wait for global warming to convert Texas into a prime
sugarcane-growing region.

~~~
robotron
I hope your Texas remark is a joke I'm just not getting because of the textual
medium. The US is the 10th largest producer of sugar and Texas is one of four
US states known for growing sugar cane.

~~~
hugh3
It may be top ten, but it's only got 5% of the number one producer (Brazil)
and less than half of relatively tiny countries like Thailand. A small part of
Texas/Louisiana is suitable for sugar cane production, but basically the US
climate is pretty sucky for sugar -- it's one of very few major crops that the
US just can't produce in quantities that satisfy its needs. (At least, not
without resorting to using corn for sweetening purposes.)

I just chose Texas because it's big, and likely to be on the front lines of an
expanded subtropical climate in the US. The image of vast canefields
stretching from Lubbock to Corpus Christi amuses me.

------
lwhi
The fact that Coke have taken on an ethically-conscious company isn't going to
directly impact on the way the public views Coke. I think, these days, the
majority of people are too sophisticated for that kind of simple brand-
arithmetic.

A battle with a larger corporation over marketing just makes Honest Tea seem
more honest, and as the concept of 'honesty' is one its main marketing
pillars, the spat could possibly lead to more profit (for both companies) as a
result.

Even if this story doesn't involve a strategic decision, there could be a
positive pay-off for both.

~~~
Supermighty
I don't think The Coca-Cola Company cares what brand of sugar water they sell.
So long as it's them it's being bought from.

~~~
docgnome
I don't agree. I think they want to sell the brand of sugar water with the
highest profit margins.

~~~
lwhi
I think they want a diverse range of branded sugar waters. Allowing them to
profit from multiple independent markets.

It's not one or the other - it's the whole spectrum.

------
sachinag
This story was absolutely planted in the NYT by the Honest Tea people
terrified that Coke would make this change - among others - when they complete
the acquisition next year when Coke can do anything it wants with the company.

~~~
mrkurt
Or planted by the Honest Tea/Coke people as a bit of awesome PR for a brand
they've invested in.

~~~
sachinag
I have friends who are brand managers at Coke. There's absolutely no way this
came from them. They're neither organizationally smart enough nor culturally
astute enough to pull this off. Everything at KO is looked at through the lens
of "how does this affect the Coca-Cola brand?"

~~~
mahmud
I think it's safe to call them "ex friends" if they read this ;-)

~~~
Radix
:D That's how I read it first, but the second and third sentences likely refer
to Coke as an organization, not his friends at Coke. (Or, at least that's how
I would spin it if I'm wrong.)

------
ars
Part 2:

[http://boss.blogs.nytimes.com/2010/07/14/how-honest-tea-
stoo...](http://boss.blogs.nytimes.com/2010/07/14/how-honest-tea-stood-up-to-
coke/)

------
halo
Makes you wonder how ActiveState got characterised as "an antispam software
development company" when antispam is only one part of Sophos's product line,
and nothing at all to do with ActiveState.

------
stcredzero
In the age of the Internet and Google, is it really still an issue?
Unfortunately yes, but do we really have to passively take it any more? Do we
really want to feel angst because a particular _brand name_ might be
corrupted?

Following brand names is much like following characters in comic books. Big
Comic Company will pony up to get Mr. HighlyVisionary to do a revamp of
NeatoMan to critical acclaim. There's hype floating about and there's true
magic going on between the covers. (That's quotable, no?) Readers fall in love
with NeatoMan again. After 9 issues, Mr. HighlyVisionary is off doing another
project, but the soap-opera plot-line has the NeatoMan fans hooked and they go
along with the decreased level of quality.

Following brand names is a similar mug's game. Is there any way we could
follow passionate _creators_ instead in the retail world? Maybe this is a
startup idea in itself?

Disclosure: I am a long-time comics fan.

------
rsheridan6
Sugar is sugar. Honest Tea is no healthier than Coke, at least not because
they use sucrose instead of HFCS (maybe it is because they use less of it, but
that's not at issue here). At least when people drink Coke, they know they're
doing something unhealthy.

Fuck Honest Tea and all of those other natural beverage peddlers that try to
trick people into thinking that their bottled diabetes is somehow healthy
because it's natural. There's nothing natural about drinking megadoses of
disaccharides.

~~~
joeyh
Erm, I think that Honest Tea was the only _completely_ unsweetened tea in my
local supermarket. "Was" because the glass-bottled, unsweetened teas are no
longer being stocked there; only the apparently more sweetened plastic bottled
teas remain.

~~~
gphil
I've also noticed that's becoming harder and harder to find unsweetened iced
tea anywhere. Is it really that unpopular?

------
kingkawn
I drink Diet Coke.

------
buzzblog
If Coke had simply let Honest Tea be Honest Tea, there's a strong likelihood
that no one would have ever even made an issue of their differing stances on
corn syrup. By attempting to impose its will, however, Coke all but guaranteed
that it would become a public matter and that the company would look bad in
the process. And along comes the New York Times to stir the drink.

~~~
snorkel
Coke is acting out of fear of future liability. Coke is fearing that someday
HFCS will be proven to be materially more damaging than sugar, and when that
day arrives the US Surgeon General will be pointing at the Honest Kids label
as proof that Coke knew something was bad about HFCS but still continues using
it in its other products.

------
drcode
I won't buy Honest Tea because of this:
[http://anerroroccurredwhileprocessingthisdirective.com/2009/...](http://anerroroccurredwhileprocessingthisdirective.com/2009/09/15/honest-
tea-not-so-honest/)

~~~
absconditus
The new bottle is designed to use less plastic. The design of the bottom of
the bottle is necessary to the bottle's structure.

"Have your plastic bottles changed size?

Unlike other companies that are reducing the size of their products, ours
still remains 16.9 ounces. We redesigned the bottle to use 22% less plastic
and therefore lower our carbon footprint and utilize fewer natural resources.
You’re still getting the exact same volume as before, just with a new design
to help with stability and strength while having less plastic."

<http://www.honesttea.com/mission/faqs/info/#15>

~~~
BrandonM
An even more thorough explanation comes from Barry Nalebuff (Cofounder and
Chairman) in the comments
([http://anerroroccurredwhileprocessingthisdirective.com/2009/...](http://anerroroccurredwhileprocessingthisdirective.com/2009/09/15/honest-
tea-not-so-honest/#comment-567)):

 _When you pick the name Honest, you have to live up to the name. We recently
switched to a thinner bottle, one which is 22% lighter. This saves us money
and saves the world resources. The only problem is that the thinner bottle was
getting dented. In fact, this was a big problem that forced us to redesign the
bottle. To help keep its shape, the inside must be under pressure. When the
bottle is filled with hot tea, the liquid expands and the plug on the bottom
pops out. (If you squeeze real hard, you can make this happen.) Then as the
tea cools, the plug pops back in and creates the pressure on the inside that
prevents the bottles from being damaged. The thinner plastic means we needed
much more pressure and hence a much bigger plug. There really is 16.9 oz.
inside and we aren’t trying to pull a fast one. But I can see how you could
get confused or could think that we are trying to be deceptive. Taller and
thinner still means lots less material. That said, we clearly need to do a
better job explaining why the bottle has this design. In the next label run we
will definitely say something to explain this to our customers. I hope that
makes you feel that you can still trust us and will stick with us. And thanks
for helping keep us honest._

