In early February, Honest Tea, Inc., Bethesda, MD, and The Coca-Cola Company, Atlanta, GA, completed an agreement resulting in Coca-Cola holding approximately 40% interest in the fast-growing maker of certified organic beverages. 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. According to the Wall Street Journal, Coca-Cola paid $43 million for its 40% stake, with the right to purchase the company within three years. Beverage Digest says Honest Tea racked up $23 million in sales last year.

“We started Honest Tea 10 years ago with five thermoses and an ambitious vision for offering a new type of beverage—a delicious, healthier drink produced with a consciousness about the way the ingredients are grown. 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,” said Seth Goldman, co-founder and “TeaEO,” Honest Tea.

The strategic opportunity was identified by Coca-Cola North America’s Venturing and Emerging Brands (VEB) Business Unit. “Honest Tea is at 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, Venturing and Emerging Brands.

Honest Tea was started in 1998 when Mr. Goldman and his co-founder, Barry Nalebuff, brewed samples of tea in Goldman’s Bethesda, MD home and brought them to the regional office of a natural foods chain. Since then the brand has become the top-ranked tea brand in the natural foods channel (according to SPINScan) and has begun to expand into mainstream grocery and convenience stores.

“The knowledge and access that Coca-Cola North America and its distribution system can provide comes at a perfect time as Honest Tea is at an exciting inflection point. I look forward to helping Seth and the team continue to build the business the right way in the years ahead,” said Gary Hirshberg, president and “CE-Yo” of Stonyfield Farm and longtime board member of Honest Tea. Mr. Hirshberg will continue as a member of Honest Tea’s Board.