Sweet drinks just weren't businessman's cup of tea

SIPS

Company's `Honest Tea' not made with lots of sugar

September 04, 2002|By Sara Engram | Sara Engram,SPECIAL TO THE SUN

Seth Goldman, the driving force behind Honest Tea, says he never particularly thought of himself as a tea drinker, just a regular beverage guy. But after a post-college year in Hong Kong, followed by time in Russia, he was sipping tea on a regular basis.

He was also a runner, and back in the United States, he discovered there were very few bottled beverages that satisfied him after a run. Most were cloyingly sweet -- "liquid candy," in his opinion.

One day it occurred to him there must be other people like him, thirsty folks who didn't want to ingest huge amounts of sugar but liked the convenience of a bottled drink. So he contacted a former professor from business school and proposed a joint venture to produce a good-tasting, thirst-quenching drink with a little bit of sugar, rather than an overload of real or artificial sweetness.

It so happened that his professor, Barry Nalebuff, had just completed a study of the Indian tea industry and had the perfect name in mind -- Honest Tea.

Which explains why Goldman is now the busy chief executive or, as he sometimes prefers, "TEO," of a hot little firm headquartered in Bethesda that is gradually expanding its presence well beyond the mid-Atlantic. Nalebuff serves as chairman and advises the company by phone from New Haven, Conn., where he teaches at the Yale School of Management.

In the Baltimore market, you can find Honest Tea on the shelves at the Whole Foods Market, Graul's, Eddie's and in some Giants and Safeways with natural-foods sections. It's also in a number of cafes and restaurants. In some sections of the country, 7-Eleven stores are stocking the label.

You may have seen the company bus around the Inner Harbor area in recent days, as Honest Tea helped inaugurate the city's newest Whole Foods Market on South Exeter Street.

The colorful "honeybus" takes its name from one of the company's two new unsweetened teas, Haarlem Honeybush, a fully organic herbal tea brewed from a flavorful South African plant that grows around a town called Haarlem.

To ensure its supply of the honeybush leaves, the company has set up a business arrangement with the townspeople of Haarlem. Artwork from a local artist is featured on the label, and royalties from the sale of Haarlem Honeybush will go back to that community, helping to build a stronger economic base.

Goldman hopes similar arrangements, such as one with the Crow Nation in Montana for its First Nation Organic Peppermint Herbal Tea, will infuse some economic vitality into communities with which it forms partnerships. Doing good by these communities is a byproduct of doing well in business, and Honest Tea is intent on succeeding in a competitive market. Its niche -- slightly sweetened tea brewed from good-quality leaves -- seems ripe, judging from customer response.

According to SPINS, a market-research service that tracks the natural foods industry, Honest Tea had six of the top 10 best-selling bottled teas in July, and its share of the natural-goods market has grown above 30 percent.

Honest Tea comes in 12 flavors now, and the company seems to have capitalized on the right idea at the right time -- a good tea willing to stand on its merits, rather than counting on a national addiction to sweeteners to propel sales. Its success so far is a good sign for the beverage market, and an indication that it may be open to more diversity than we've seen so far.

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