Growth Raises Tough Questions for a Tiny Company


Photo credit: A Girl With Tea/Creative Commons

Last week the Federal Trade Commission gave the green light for Coca-Cola to proceed with the purchase of Honest Tea. Acquisitions that exceed $63 million in value require government clearance to make sure the transaction isn't anticompetitive—if a really big company buys another really big company, there is the potential for consumer choices to be limited and prices increased.A Reuters news item shed some light on why the approval went through so quickly:

Coca-Cola Co (KO) took a step toward buying tiny bottled tea and juice maker Honest Tea, as the Federal Trade Commission announced antitrust approval for the transaction.

Tiny? That's kind of insulting. Obviously in comparison to Coke's 2010 sales of 1.6 billion servings per day (across all products), Honest Tea's 274,000 servings per day is tiny—about 2/1000th the size of Coke. But it sure feels like we're bigger than we were when we started out of my house in 1998. Back then our annual sales were $250,000, or about 360,000 bottles. In 2010 we sold more than 100 million bottles and Honest Tea is now carried in natural food stores across the country. But the fact that we're still considered tiny by mainstream beverage standards highlights how much work we have yet to do.

As we seek to grow from tiny to small by joining the Coca-Cola family, there are bound to be other challenges ahead. Just last week we received the following voicemail:

"This is Ray. The tea is good but I need to know who owns the company. I want to know who owns the company. If it's Coca-Cola, I'm not buying it anymore."

Ray's message highlights a different kind of challenge for us. We have always believed that the conscious consumer who thinks about the social and environmental impact of what he or she puts in her body is the ideal consumer for our products.

But Ray sounds like the "unconscious" conscious consumer—someone who unthinkingly judges a product or brand because of its association without considering the actual merits of the product itself.

Back when we partnered with Ford to promote the launch of the Escape Hybrid there were some who criticized us for associating ourselves with a company that markets gas-guzzling SUV's. My response to that anti-Ford consumer was similar to what I told Ray. If you are concerned about what a large corporation is selling, why would you object to that company's efforts to sell a more sustainable or healthier product?

Size doesn't seem to matter when it comes to making a difference, as we learned once again last week, when we were honored to be included in Planet 100's list of the Seven Greenest Companies of 2010.

So we need to challenge consumers like Ray with the following question, "If we met this kind of standard in 2010, how do you see us changing what we make or how we operate in 2011?"

Sometimes it seems the unconscious conscious consumer would rather curse the darkness than light a candle. When large companies make genuine efforts to evolve, they deserve support. Otherwise, how do we make substantive progress toward a different kind of economy?

It's certainly not a tiny question.

Read more about coke, tea, and business:
Learning Tough Lessons About Leadership in Green Business
For the Founders of Guayaki the Future isn't Just in the Tea Leaves
Beijing Slams Pepsi and Coke As "Dirty" For Using Too Much Water
The Virtue of Humility: Why Coke's Ethical Store Failed

Tags: Corporate Responsibility