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Table of Contents

Executive Summary....................................................................................................................... 3
Company Overview ....................................................................................................................... 4
Current Market Situation ............................................................................................................... 5
Competitive Situation .................................................................................................................... 9
Macro Situational Analysis ......................................................................................................... 13
SWOT Analysis ........................................................................................................................... 16
Issues Analysis ............................................................................................................................ 21
Market Segmentation................................................................................................................... 22
Marketing Strategy ...................................................................................................................... 25
Action Plans................................................................................................................................. 27
Appendix ..................................................................................................................................... 42

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Executive Summary
This report provides an in-depth analysis and evaluation of the current and prospective
profitability for Honest Tea. This reports methodology consisted of analyzing Honest Teas
current market condition, competitive and macro situation analysis as well as diving into issues
Honest Tea currently faces.
This report identifies new target markets for Honest Teas products, new points of sale for the
products they currently carry and additional line extensions that will enter into restaurants.
This report finds that the forecasts for honest tea in its current position are ample and steadily
growing; however this report details the areas in which honest tea can leverage its position to
become a major industry player and market leader in RTD tea beverages.
Honest Tea has not gained the market share it deserves because it is not being sold in the
locations where its potential consumers are shopping. Honest Tea is currently sold in grocery
stores and in specialized health food vending machines.
We believe to gain access to the wide range of potential buyers; Honest Tea has to make its
products more accessible in more locations including gas stations, restaurants and schools.
The research in this report draws consideration from Honest Teas current distribution network
with Coca Cola and how we can increase the number of potential points of sale through their
distribution channels.
Further investigations reveal that Honest Tea could greatly benefit from a wide array of
marketing tactics that would increase brand awareness and would drive sales to compete with the
largest RTD tea manufactures.
This report evaluates these ranges of topics and concludes that, through thoughtful and carefully
designed marketing strategies detailed in this report, Honest Tea can position itself as the RTD
tea beverage of choice.
Based on our finding it is recommended that Honest Tea leverages its relationship with Coca
Colas distribution network to enter into new restaurants and restaurant chains where coke has an
established presence.
The aims of all the recommendations in this report are to gain market share, increase sales,
provide new points of sale, create brand awareness, gain new customers, open new markets,
launch new products, increase website activity, educate consumers, promote recycling and to
differentiate Honest Teas Products.

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Company Overview
Honest Tea was founded by Seth Goldman and Barry Nalebuff in 1997 and was launched in
February 1998. They created the company to produce a product to solve a problem; the problem
was that most drinks were either too sweet or too tasteless. Most of Honest Teas competitors, at
the time, were using tea that was lower
quality dust and left-overs after quality
tea had been produced. Goldman and
Nalebuff made the decision to use high
quality, real tea leaves to produce their
products. Their goal for the company,
Honest Tea, was to provide an allnatural brand that would create healthy
and honest relationships with their
consumers, suppliers and the
environment.
Honest Tea was started in Goldmans
kitchen where he made and bottled the
tea. In 1997, five weeks after taking
the plunge, he brought thermoses of tea
and a recycled bottle with a mock-up
label to Fresh Fields (Whole Foods Markets). The buyer ordered 15,000 bottles, and Seth and
Barry were in business--if they could figure out how to make that much tea. (Honest Tea) In
1998, the company was successfully launched; with only 3 employees they accumulated sales of
$250,000 in the first year. In the first year, 1998, they only produced 5 different flavored teas.
However, by 2010, Honest Tea had 127 employees with sales of $71.5 million. By March 2011,
the company was bought by Coca-Cola, but Honest Tea remained an independent operating unit.
Fifteen years after starting Honest Tea, in 2012, the company continued to grow and the sales
reached $88.5 million. Their product line grew from 5 flavored teas, to a line of over 40
products, including; teas, lemonades, juices, and fizz beverages.

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Current Market Situation

Honest Tea Today
Currently, Honest Tea is the United States top-selling organic bottled tea, available in more than
100,000 stores throughout the United States. Their major goal for their company is to create and
promote a great-tasting, healthier, organic beverages and extend economic opportunities to
communities in need.1 They accomplish this by only sourcing organic materials and using Fair
Trade Tea ingredients for their production. In fact, in 2013, they purchased 5 million pounds of
organic ingredients to make their tea, which has increased their organic purchases 6-fold in the
past 6 years. They export their tea from four major countries: China (56% of their green and
white teas), India (41% of black tea production), Egypt (2% for Hibisucus), and South America
(1% for Rooibos) 2. In addition, since their invention of the first organic Ready-to-Drink tea in
the industry, Honest Tea worked very hard to get all of their ingredients to be Fair Trade
Certified. Finally in 2011, all of their ingredients for all of their product lines were certified by
the Fair Trade Association. Their product lines consist of ready to drink teas HONEST TEA,
HONEST ADE, HONEST KIDS, HONEST SPLASH, HONEST Unsweet Lemon Tea,
and HONEST Fizz.
The National Honest Tea Index3
Since Honest Tea emphasizes not only honest products by only using 100% organic
ingredients, but a completely honest relationship with their consumers, Honest Tea wanted to see
how honest their consumers are with them. Therefore, for the past few years, Honest Tea has
conducted a marketing research experiment in order to create awareness for their products and
test to see how many people throughout America would be honest if given the opportunity.
They set up unmanned kiosks in all of the major cities throughout the 50 states and filled them
with Honest Tea bottles from every product line, an empty container (for payment), and a sign
saying Honest Tea $1.00 per bottle. Honest Tea placed hidden cameras at every location and
watched as people participated in the study. In the end, they calculated how many people in each

1
"HONEST Tea Increases Organic Ingredient Purchases to 4.9 Million lbs in 2012-2013, a Six-Fold
Increase in Six Years." Business Wire. Business Wire, 22 Oct 2013. Web. 4 Nov 2013
2
"Our Mission." Honest Tea. Honest Tea Corporation. Web. 4 Nov 2013
3
http://www.thenationalhonestyindex.com/

Page |6

state and each demographic were honest and how many were not. They defined honesty as
people who took the Honest Teas and placed at least $1.00 in the container. The results that they
received are located in the Appendix.

Results
The results of this promotion (see Appendix) demonstrate that people of every demographic
throughout the United States are interested in Honest Tea, although they may not be so interested
in paying for something that they do not think that they have to pay for. Therefore, we believe
that since Honest Tea is doing so well in the organic segment of the ready-to-drink tea industry
and since the National Honest Tea Index promotion has successfully increased awareness for
their products, it would be beneficial for Honest Tea to focus on expanding their revenue, market
share, and awareness in the entire ready-to-drink tea industry instead of focusing on the organic
portion of the ready to drink industry.

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Industry Analysis: United States Tea Industry Background4

During 2012, the annual consumption of tea increased to over 79 billion servings (3.6
billion gallons).

On any given day, approximately one half of the American population consumes tea,
most prominently in the South and Northeast of the United States.

5/6 of Americans consider themselves tea drinkers

82% of Americans drink black tea every day

Annually, 130 million pounds of tea are imported into the United States.

Away from home purchases of tea have increased by 10% since 2008.

Since 2008, total tea sales have increased by 16%, and retail sales increased by 25%
in 2012.

In the tea industry, there are three types of teas: iced tea, ready to drink iced tea, and tea
bags/loose tea. However, since Honest Tea focuses on and has seen the most success on their
production and sales for ready-to-drink teas more than any other type of product that they
produce, the best option for Honest Tea would be to focus on the ready-to-drink segment of the
tea industry.
Top Market Competitors for RTD industry 20125

4
"Tea Fact Sheet 2013 ." . Tea Association of the USA. Web. 4 Nov 2013
5
Zmunda, Natalie. "Coca Cola Puts Major Marketing Push Behind Fuze." . Advertising Age, 20 Aug
2012. Web. 4 Nov 2013. http://adage.com/article/news/coca-cola-puts-major-marketing-pushfuze/236765/

Page |8

Ready to Drink Tea6

Ready to drink iced tea comprises over 25% of all teas prepared in the United States. According
to the Tea Association of the USA, sales of tea and ready-to-drink (RTD) tea increased by 5.1%,
estimating $4.3 billion in food, drug, convenience stores and mass merchandisers. Among the
competitors in the RTD tea industry, there are Lipton, Arizona, Snapple, Nestea, Gold Peak,
Honest Tea, and Fuze. (Coca-Cola also owns the Fuze and Gold Peak companies in this
industry.) Although Honest Tea is the leading organic tea company in the organic ready-to-drink
tea industry, its market share in the entire RTD tea industry is only .5%. Therefore, in order to be
competitive in this industry, Honest Tea needs to focus on increasing their market share and their
sales. Below are the dollar sales and market share statistics for the major product lines in the
RTD tea industry in 2013.7

The Top Canned/Bottled Companies in 2012

Brand

Dollar Sales

% Change vs. Previous Year

Arizona
Lipton Brisk
Lipton
Snapple
Arizona Arnold Palmer
Diet Snapple
Lipton Pure Leaf
Nestea
Gold Peak
Lipton Diet
Category Total

$619,909,800
$290,364,600
$253,655,500
$189,103,100
$157,908,000
$148,280,300
$148,275,000
$99,814,740
$90,086,380
$83,658,560
$2,464,627,000

-0.9
3.5
-10.5
1.9
43.2
11.5
-7.3
-6.1
12.3
42.9
3.9

6
"Tea Fact Sheet 2013." Tea Association of the USA. Web. 4 Nov 2013
7
"Beverage Industry." 2013 State of the Industry. Beverage Industry, 10 July 2013. Web. 6 Nov 2013

Page |9

Competitive Situation
Non-Alcoholic Beverage Industry
This industry has the most diversity because many drinks are non-alcoholic. The non-alcoholic
industry divided into 9 categories: carbonated soft drinks (CSDs), fruit beverages, bottled water,
milk, sports drinks, energy drinks, nutritional drinks, tea, and coffee products8.
These drinks are the most popular because they are the most convenient to purchase. They are
found in almost every restaurant, grocery store, and soda fountain throughout the United States.
Ready-to-Drink Tea Segment of the Non-Alcoholic Beverage Industry
Honest Tea is focused on succeeding in this segment of the non-alcoholic beverage industry
because it specializes in ready-to-drink teas and because it has done so well in the organic readyto-drink tea market. The three top competitors in this segment are: Coca-Cola, Pepsi, and Dr.
Pepper. The graph below demonstrates the market share for this segment during 20139.

8
Kehoe, Patricio. "A Closer Look at the US Beverage Industry". The Motley Fool, 26 July 2013. Web. 6
Nov 2013
9
Cooper, Ted. Dr Pepper Faces Tough but Doable Task With Coca-Cola and PepsiCo. The Motley Fool,
28 Oct 2013. Web. 6 Nov 2013

P a g e | 10

Coca-Cola: Inside the ready-to drink industry, they not only produce Honest Tea, but they also
produce Gold Peak and Fuze. Based on the table above, with $90,086,380 and 1.8% market
share, Gold Peak is one of the top 10 companies within this industry, making it a major
competitor of Honest Tea. Coca-Cola has also combined with Nestle to make Nestea, which
according to the table was ranked 7th in the industry. They have $99,814,740 in sales revenue and
4.7% market share, which makes it another competitor to Honest Tea.
PepsiCo: In the ready-to-drink industry, PepsiCo only owns Lipton. However, since Lipton has
four brands in the top 10 competitors in the industry (2 of which are in the top three), and has
32.3% market share in the industry, Lipton is a major competitor for Honest Tea.
Dr. Pepper: In the ready-to-drink industry, Dr. Pepper only produces the product lines for
Snapple. However, since Snapple (4th) and Diet Snapple (6th) are both ranked in the top 10 for
the top competitors for the ready-to-drink industry, they have proven to be strong competitors for
Honest Tea in this industry.
Arizona: This is the only privately owned company that has ranked as a top competitor in the
ready-to-drink tea industry. Arizona produces two out of the top 10 competitors in this industry,
Arizona, the top ranked competitor, and Arizona Arnold Palmer, the fifth ranked competitor. Not
only does Arizona have the most sales revenue $619,909,800, but Arizona has dominated in
market share with 40%. With all of these assets, Arizona is Honest Teas biggest competitor.
Barriers to Entry
There are not many barriers to entry for the ready-to-drink tea industry in the US because it is
extremely easy for a new drink to enter into the market as long as they have the resources, labor,
and capacity to produce enough products for distribution. However, it is significantly difficult for
a new company to be unique enough to compete with the major companies in the industry,
particularly Coca-Cola, Pepsico, and Dr. Pepper.

P a g e | 11

Threat of Substitute Products

Because it is so easy not only for new companies to enter the market, but for current competitors
to create new products, there is a high threat of substitute products. However, because the trend
of eating healthier has increased the past few years, Honest Tea has a major competitive
advantage because it is very difficult for a company to create a product that utilizes healthier
ingredients than the ones Honest Tea uses.
Bargaining Power of Suppliers
The bargaining power of suppliers for Honest Tea is very low considering they are owned by
Coca-Cola and they have utilized their resources to find the best place in the world to get the
ingredients for Honest Tea. In addition, since Honest Tea stresses honest, ethical relationships
with their suppliers, the suppliers for Honest Tea are very content and do not utilize their
bargaining power.
Bargaining Power of Buyers
In the ready-to-drink tea industry, the bargaining power of buyers is low because there is a vast
distribution of products and the prices of the products are very low. Therefore, if one person
switches companies, it does not affect Honest Tea that much. However, if many people protested
against Honest Tea and they lost a significant amount of profit, the buyers would have a higher
bargaining power.
Sustainable Advantage
Currently, Honest Tea has two ways that they can create/maintain a competitive advantage in the
ready-to-drink tea industry. First, Honest Tea is the only company to have a completely organic
label and 100% Fair Trade Certified ingredients for their ready-to-drink tea in the industry.
Second, they are known for having an honest relationship with their consumers and suppliers and
for their huge contribution to social responsibility. Therefore, if they educate their customers on
the benefits of using Honest Tea and they continue to use Fair Trade Certified ingredients, they
should be able to get consumers to switch to Honest Tea due to their numerous health benefits
and gain more sales/market share. Second, if they promote their honest relationship with their
suppliers and consumers, they can create a twofold competitive advantage. First with their

P a g e | 12

suppliers, by stressing an honest relationship to their suppliers they can have a better distribution
system by making their current suppliers content and obtaining more suppliers who are interested
in working for a company that they know that they can trust. Second, if they demonstrate their
honest relationship with their consumers, they can get more customers to switch from their
competitors thereby increasing sales and market share.
Strengths of Competitors
The advantages of the competitors, particularly Arizona, Lipton, and Snapple, in the ready-todrink industry in the US include:

More Market Share: Based on the graph, as of 2012, Honest Tea only has .5% market
share in this industry and the three major competitors have at least ten times as much,
ranging from 10.5% (Snapple) to 40% (Arizona).

More Sales Revenue: Because Honest Tea is a part of the Coca-Cola Corporation and did
not rank as a top competitor in the industry in 2012, there was no record as to how much
revenue Honest Tea made in 2012. However, the top competitors for Honest Tea made:
$619,909,800 (Arizona), $253,655,500 (Lipton), and $189,103,100 (Snapple).

More Awareness/Loyalty: The market share, sales revenue, and the % change vs.
previous year demonstrate that consumers are more aware of and loyal to Snapple,
Lipton, and Arizona than they are to Honest Tea.

Duplicity
Although it is easy to create products that are similar to Honest Tea, it is not easy to recreate the
health benefits or organic label that Honest Tea has with its products. Because all of their
products are created from 100% organic Fair Trade Certified ingredients, Honest Tea has the
ability to fight against many diseases such as heart disease, cancer, and obesity.

P a g e | 13

Macro Situational Analysis

Legal Regulations
Because Honest Tea is a beverage and belongs to Coca-Cola, it needs to follow many
government regulations before it is officially approved. Some of these regulations that Honest
Tea must follow include:10

Licensing their bottling plants and suppliers

Federal Food, Drug, Administration Regulations

United States Department of Agriculture (USDA) Regulations: This helped Honest Tea
the most in their survival against the competition because by following these regulations,
Honest Tea earned the greatest organic competitive advantage in the ready-to-drink tea
industry, the USDA Organic Seal, which they place on all of their products.

Honest Tea must follow these laws in order to make sure that the production, transportation, sale,
safety, advertising, labeling and ingredients of their products are approved by the state so that
they can legally sell their products and do not harm their consumers11.
Environmental
Helping the environment is the most important priority for Honest Tea. Therefore, they
participate in many activities to ensure the health of their physical environment. In order to
measure their environmental performance, they compare their performance against Key
Performance Indicators that Coca-Cola has created that are placed into their annual report for
that year.12
Physical Environment: There are many things that Honest Tea does in order to help reduce
their carbon footprint. First, they make reducing their carbon emission a major priority by
producing their bottles next to the places that they sell their products. Therefore, they do not have
to travel far to sell their products. In fact, in their 2012 Mission Report, they stated that on the

10
Goldman, Seth. "Honest Tea's Seth Goldman Addresses Congress ." INC.. N.p., 27 Mar 2012. Web. 6
Nov 2013
11
"Our Mission." Honest Tea. Honest Tea Corporation. Web. 4 Nov 2013
12
"Our Mission." Honest Tea. Honest Tea Corporation. Web. 4 Nov 2013

P a g e | 14

West Coast plant they reduced their carbon emission by 1300 tons for all of their 16.9 PET and
glass bottle production. Next, they invest in renewable resource credits from their Jade Green
Energy Tea production. In 2012, they bought 204 megawatt hours. Third, in order to get the full
health benefits from Honest Tea, they switched from Epigallgocatechin (EGCG)-only one type
of catechin- to flavonoids, which includes all types of catechins. Finally, Honest Tea only uses
healthy soil that is filled with recycled nutrients to produce their tea.
Corporate Social Responsibility13
Honest Tea stresses social responsibility to the environment by only using organic ingredients
for their products. In addition, they are involved in many other ways in order to help build a
better community including working with Fair Trade USA to help farmers by supporting better
wages and prices, safer working conditions, environmental protection, and long term community
development and participating in community service projects throughout the United States.
A. Fair Trade Project
Every time Honest Tea purchases products that are Fair Trade Certified, they pay a premium of
approximately 7%, which goes directly to the farmers so that they can afford education and
healthcare. In 2012, Honest Tea gave Fair Trade $126,304 for their community. Also, Honest
Tea provides Fair Trade with a service fee (% of total ingredients cost) that goes toward the
administrative costs for the program. The results of this program helped India and China
tremendously in 2012.
India: Honest Teas proceeds allowed India to: install biogas, devices that use methane produced
by cows to power stoves, in many households; conduct research on Indian Olive trees; and
distribute thermoses and jars to workers so that they could keep their food warm.
China: Honest Teas generous donations have provided loans to China so that they can improve
their villages; resources to build walls around elementary schools for extra security; and
maintained levels of medical supplies in tea community hospitals.

13
"Our Mission." Honest Tea. Honest Tea Corporation. Web. 4 Nov 2013

P a g e | 15

B. Community Projects
In 2012, Honest Tea gave back to the community through separate projects and even partnered
with many other organizations to participate in projects that helped the community. Some
examples included:

Foldable Bikes: In honor of Breast Cancer Awareness month (October) and Earth Month
(April), Honest Tea gave away 1200 bikes in promotion of healthy lifestyles.

Recycled Cell Phones: In April, Honest Tea and Dasani worked together to promote
recycling by giving away cell phone cases made entirely out of recycled materials.

Reusable Lunch Sacks: Honest Tea, Annies, Stoneyfield Yokids, and Seventh
Generation offered reusable lunch bags to consumers who purchased two products or
more from their partnering brands. The results saved 836,160 pounds of garbage from
going to landfills.

Breast Cancer Awareness: Honest Tea, Evian, and Fuze banned together and raised
funds for this wonderful cause. Together, they contributed $400,000 and promoted early
detection of breast cancer and mammograms for women.

Between 2012 and 2013, Honest Tea participated in 20 community service events, had more than
300 hours of community service, one hundred of their employees volunteered, and they served
19 non-profit communities in America.

P a g e | 16

SWOT Matrix for Honest Tea

Internal Factor
Management
Marketing
Product/Offerings













Price


Promotion








Place

Personnel

Strengths
Visionary, mission-driven,
experienced
The nation's #1 organic bottled
tea
Uniquely tasting product that
comes in variety of flavors
Strong brand equity
The products are USDA
Certified Organic, OU Kosher,
and Fair Trade Certified
Premium high-quality
ingredients
Cost-effective recyclable
lightweight patented packaging
Competitive pricing in the
organic tea market
Costeffective guerilla
marketing
Effective use of social media
platforms
Positive reputation for social
responsibility

Access to Coca-Colas
distribution channels
Relationships and leverage with
retail outlets to secure the ideal
shelf space
Honest Tea continues to run as a
stand-alone business with
existing mission-driven
management team and
employees

Weaknesses

Decreased decision-making
power due to Cokes
acquiring Honest Tea
Plastic packaging is
considered harmful

Price may limit access to

mass markets
Brand recognition still very
low
Lack of traditional mass
marketing advertising
Coca-Cola purchasing
Honest Tea takes away
from the brand image for
health conscious consumers

With full ownership of

Honest Tea, Coke has an
authority to change current
management

P a g e | 17

Finance

Manufacturing

R&D

External Factor

Consumer/Social

Competitive

Technological
Economic

Legal/Regulatory

Consistent growth in revenue

and profits
Substantial Cokes investment in
Honest Tea
Access to Coca-Colas global
bottling network
State of the art tea brewing and
filtration system at a bottling
plant
Honest continues to develop new
beverage lines
Honest continues to explore new
sustainable practices
Opportunities
Loyal customer base
Increasing popularity of organic
and natural foods & beverages
Positive market outlook for
organic beverages in other
countries
Create contracts with schools,
restaurant chains, and fitness
centers nationwide
General technological
advancements in manufacturing,
distribution, and promotion.
Economy is at recovery stage
Consumer income is high
High U.S. Food & Drug Admin.
standards increase barriers to
enter organic industry by
competitors

Threats
Consumers may switch to
substitutes once they
become available

Other companies entering

organic market can
duplicate the product (no
patents on the product
itself)
Competitors can also gain
access to these
technological breakthroughs
Economic recovery is very
slow
Changes in USDAs
qualifications for organics
Currency risk
County-specific food &
beverage regulations and
standards
Political uncertainty

P a g e | 18

SWOT Analysis
Strengths
One of the main strengths of Honest Tea is its visionary, mission-driven executive team with its
current head Seth Goldman. We started Honest Tea thirteen years ago with an ambitious
mission to create a delicious, healthy beverage alternative produced with the health of our planet
and our consumers in mind, said Seth Goldman.14
Another companys strength is tea itself. Honest Tea offers a variety of USDA-certified organic
and Fair Trade Certified healthy organic teas and juice drinks manufactured with less sugar
and fewer calories than most ready-to-drink beverages in the market.14
Furthermore, Honest Tea's entry into Big Beverage has a lot of advantages. Goldman and
VEBthe Venturing and Emerging Brands unit of Cokehave negotiated a unique agreement
that allows Honest Tea autonomy to continue to run its day-to-day operations while being able to
access the scale benefits of a major conglomerates system in different areas such as distribution
and manufacturing. Since being acquired by Coke, Honest Tea expanded from 15,000 to 100,000
accounts nationwide. Our mission is to bring health and wellness to as wide an audience as we
can," said Goldman.14
Finally, Honest Tea has been continuously recognized for its mission-driven business practices.
One month after Coke purchased Honest Tea, the company officially transitioned all of its tea
products to being Fair Trade certified an important aspect of its mission-driven mindset. Fair
Trade links farmers directly with importers, which creates long-term sustainability. Through Fair
Trade, communities where Honest Tea sources its product earn better income, which allows
them to hold on to their land and invest in quality.15

14
The Coca-Cola, C. (0003, January). Honest Tea Joins The Coca-Cola Family. Business Wire (English).
15
Fair Trade USA. What is Fair Trade? Retrieved November 6, 2013 from http://www.fairtradeusa.org/

P a g e | 19

Weaknesses
The main weakness Honest Tea faces is difficulty finding a balance between its desireand now
abilityto enter the mass market as Cokes sub brand and its desire to keep its soul. Although
its relationship with The Coca-Cola Co. has provided Honest Tea with access to the mainstream
channels, the company still strives to ensure it maintains its credibility within the natural
specialty channel as well, Goldman explains. After the acquisition, Honest Teas loyal
customers experienced cognitive dissonance. While consumers loved Honest Tea, they simply
could not get behind Coke. The presumption in the natural foods industry is always when a big
company invests in a mission-driven company, the latter gets lost.16
Honest Teas promotional strategy is another weakness that must be addressed. After being
acquired by Coke, Honest Tea scaled from guerilla marketingsampling events in metropolitan
areas that often guarantee social media brand exposure and media coverageto sporting
billboards and television ads. Honest Teas first television commercialand first mass
marketing initiativethat featured animated tealeaves jumping into a bottle of Honest Tea
proved unsuccessful.16
Opportunities
According to Research and Markets, the future of global organic beverage industry is very
promising. As organic beverages are becoming more popular, they now transition from niche to
the mainstream. Aside form natural food stores such as Whole foods market, a wide range of
organic beverage product lines can be purchased in major international supermarkets such as
Wal-Mart and Tesco at relatively low prices.17
Furthermore, tea is the second most consumed beverage in the world, after water. On any given
day, over fifty percent of the U.S. population drinks tea, and since 2011 for the first time the

16
How Honest Tea Has Kept Its Corporate Soul. September 17, 2012. Retrieved October 19, 2013 from
http://management.fortune.cnn.com
17
PR, N. (2013, January 30). Global Organic Food and Beverages Industry Outlook to 2016 - Rising
Health Awareness Anticipated to Escalate Demand. PR Newswire US.)

P a g e | 20

United States has consumed more tea than England. However, unlike England, about 85 percent
of the tea the U.S. consumes is iced tea.18
Despite slow economic recovery, the U.S. tea industry continues to flourish. Over the last ten
years, ready-to-drink tea segment has grown more than fifteen-fold. In 2012, ready-to-drink sales
were projected at $4.8 billion.
In addition, consumers embrace the concept of organic tea drinking due to intrinsic health
benefits that it provides. Research suggests that tea may help with medical conditions such as
cancer, heart disease, and diabetes. It may also promote weight loss, lower cholesterol, and
improve mental alertness.
Given the impressive growth of RTD tea segment in the industry, the intrinsic benefits of tea,
and upward trend in RTD tea consumption, the future for RTD tea in the United States looks
promising.18
Threats
The main threat Honest Tea faces is increased competition in RTD market. The advantages of
the competitors, particularly Arizona, Lipton, and Snapple, in the ready-to-drink industry in the
US include high market share, increased sales, and high brand awareness and recognition.

18
The Tea Association of the USA. State of the Industry. Retrieved November 6, 2013 from
http://www.teausa.com/

P a g e | 21

Issues Analysis
1. How do we increase our brand awareness?
2. How do we increase our market share in the United States?
3. How do we successfully promote our products to a broader audience?
4. How can we improve our brand image?
5. How can we compete with mass market prices without sacrificing quality?
6. How do we maintain our authority over Honest Tea while being incorporated into the
Coca-Cola Corporation?
7. How do we differentiate our products in order to expand while maintaining our current
customer base?
8. How do we increase and retain new customers?
9. How can we create customer awareness through word of mouth?
10. How do we continue to be socially responsible and reduce our material waste?
11. How do we get new customers to switch to Honest Tea?
12. How do we use our organic label to create a competitive advantage in the Ready-to-Drink
market?

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Honest Tea Market Segmentation

The original target market profile proposed by Honest Tea founders should be expanded due to
exponentially increasing consumers health-consciousness and partnership with Coke. As
green has gone mainstream, the company should consider marketing its products to a broader
audience. Honest Tea, however, faces a difficult challenge. The company must find a balance
between mainstream consumers and the companys original niche audience, as the company
originally gained its elite following due to the unique nature of its product, as well as its unique
approach to advertising.

Target Market Profiles

Profile Type

Description

Demographic

60% women, 40% men

Median age 35, with a range from 18-65
Likely to live near concentrated urban areas
College or university students and graduates
Average family income $52,000

Geographic

Metropolitan regions of the United Sates

Metropolitan regions of select developed countries

Individuals that place high emphasis on certified organics

and non-genetically modified products
Individuals that place high value on family
Individuals who are attuned to global and environmental
issues
Individuals interested in indoor and outdoor healthy
activities or just living a healthy lifestyle

Psychographics

Behavioristic

Bottled water or RTD tea drinkers, who occasionally drink

iced cappuccino/coffee
Shop at places like Whole Foods and other health stores that
carry products that fit their high standards

P a g e | 23

Primary Target Markets

We will be reaching this market through a diverse mass market media advertising campaign. We
will be reaching out through social media and posting videos that highlight our brand, the teas
production methods and raw materials acquisition. We will be publishing ads in magazines as
well as sponsoring events that are health related or physical in nature: marathons, bicycling
events, outdoor recreation, heart walks, and fundraisers for cures.
To reach mothers, we will be placing ads in specific magazines that reach their demographic
characteristics. We will also host daytime advertising on programs with majority women
viewers. We will be placing promotion materials including free trial offers in shopping market
mailers.
Winners Circle:
Among the wealthy suburban lifestyles, Winner's Circle is the youngest, a collection of mostly
35- to 54-year-old couples with large families in new-money subdivisions. Surrounding their
homes are the signs of upscale living: recreational parks, golf courses, and upscale malls. With a
median income over $100,000, Winner's Circle residents are big spenders who like to travel, ski,
go out to eat, shop at clothing boutiques, and take in a show.
Bohemian Mix:
A collection of mobile urbanites, Bohemian Mix represents the nation's most liberal lifestyles. Its
residents are an ethnically diverse, progressive mix of young singles, couples, and families
ranging from students to professionals. In their funky row houses and apartments, Bohemian
Mixers are the early adopters who are quick to check out the latest movie, nightclub, laptop, and
microbrew.
Up-and-Comers:
Up-and-Comers are a stopover for younger, upper-midscale singles before they marry, have
families, and establish more deskbound lifestyles. Found in second-tier cities, these mobile
adults, mostly age 25 to 44; include a disproportionate number of recent college graduates who
are into athletic activities, the latest technology, and nightlife entertainment.

P a g e | 24

Kids and Cul-de-sacs:

Upper-middle-class, suburban, married couples with children--that's the skinny on Kids & Culde-Sacs, an enviable lifestyle of large families in recently built subdivisions. With a high rate of
Hispanic and Asian Americans, this segment is a refuge for college-educated, white-collar
professionals with administrative jobs and upper-middle-class incomes. Their nexus of
education, affluence, and children translates into large outlays for child-centered products and
services.
Secondary Target Markets
Millennial Vegetarian/Vegans 20-35
There is a trend in American culture of vegetarian and vegan young adults. These individuals are
very set on buying the healthiest and most eco-friendly products possible. When making
purchasing decisions they first consider the environmental and health implications. Currently
there are not many brands holding brand equity in the drink market because it has been saturated
by unhealthy choices for a long time. Effective advertising and product placement for this
demographic can raise brand awareness recognition and market share.
Health Conscious Adults/ Young Adults 23-40
There has been a large growth in the demographic of adults and young adults that are changing
their eating and drinking practices to reflect their healthy choices. There has been a rise research
in publication of messages that identify our diets as a primary indicator of long-term expected
health. These individuals are aware of food certifications and place high emphasis on certified
organics and non-genetically modified products. They are shopping at places like Whole Foods
and other health stores that carry products that fit their high standards.

P a g e | 25

Marketing Strategy for Honest Tea

Product /
MKT Mix

RTD Bottled Tea

RTD Draft Tea

Element
Lightly sweetened tea that comes in Brewable loose tea leaves in three
variety of flavors
USDA Certified Organic, OU
Product

Kosher, and Fair Trade Certified

Premium high-quality organic
ingredients
Lightweight plastic as well as glass

basic flavors black, green, and

raspberry
USDA Certified Organic, OU
Kosher, and Fair Trade Certified
Premium high-quality organic
ingredients

packaging
A little higher price point than nonPrice

organic RTD teas, justified by

Competitive pricing

quality organic ingredients

Guerilla marketing
Honest Cities Campaign that
generates social media and
traditional media coverage
Word of mouth
Promotion

Traditional mass advertising

TV ads on Food Network, Life
Time, TLC, We TV and other
TV channels

Use Coca-Colas relationships to

gain access to the national
restaurant chains where Coke has
presence. No additional
promotional efforts necessary.

Health and Wellness magazines

such as Womens Health
Social media platforms
Natural food stores Whole Foods,
Place

Restaurant chains, where Coke has

Publix, Fresh Market, Harris

presence such as Boston Market,

Teeters, Trader Joes

Subway, Carrabbas, Longhorn

P a g e | 26

Mass supermarkets Wal-Mart,

Steakhouse

Sams Club, Costco, Target, Win

Schools (cafeterias)

Dixie

Hospitals (cafeterias)

Schools (vending machines,

Wellness Centers (cafeterias)

cafeterias)
Fitness and Wellness Centers
(vending machines, cafeterias)
Hospitals (vending machines,
cafeterias)
Gas Stations nationwide

The marketing strategy for Honest Tea will first emphasize the differentiated product that they
already carry. Ads will highlight the certifications of USDA Organic, OU Kosher and Fair Trade
Certified as well as the premium high-quality ingredients they use in manufacturing. We will
also look into distributing a loose-leaf brew able tea into restaurants managed by Bloomin
Brands.
Our price point will be a little higher than our RTD tea competitors; however it is justified by the
quality ingredients Honest Tea uses.
Our promotional campaign will focus on generating social media buzz, increasing word of mouth
and increasing brand awareness through strategically placed television advertisements on
networks such as Life Time, TLC, We TV and the Food Network. We will additionally
purchasing media buys from major health magazine publications such as Womens Health and
Health and Wellness Magazine.
We will be leveraging our relationship with Coca Cola to utilize their extensive distribution
networks to place our products in more locations. We will be expanding our grocery and
convenience store locations as well as chain restaurants like Subway, Boston Marker and Pita
Pit. We are also interested in placing a row of Honest Tea into Coca Cola vending machines
which we feel will move units quickly.
Our plan is to increase the number of potential sales points to include schools, fitness and
wellness centers as well as gyms, gas stations and vending machines nationwide. Honest Teas
products are wonderful and will gain a large following as long as we can place the products in
the access points where the consumer chooses to buy RTD teas.

P a g e | 27

Action Plan #1
Title: Honest Tea vending machines
Objective: To increase brand awareness among health conscious consumers and also to increase
sales.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 2: How do we increase our market share in the United States?
Issue number 4: How can we improve our brand image?
Issue number 5: How can we compete with mass market prices without sacrificing quality?
Issue number 6: How do we maintain our authority over Honest Tea while being incorporated
into the Coca-Cola Corporation?
Issue number 8: How do we increase and retain new customers?
Target Market
Health conscious men and women
Description
Build Honest Tea vending machines to place in fitness centers nationwide. This way the
consumer will have easy access to healthy drinks after a workout.
Responsibility
Distribution and logistics
Budget
Vending machine cost is $3,600
Approximately $0.56 per day to operate
Price per year of each machine = $3,804.40
Budget for 100 machines = $380,440
Measurement
How fast the vending machines run out of products.

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Action Plan #2
Title: Fill Coca-Cola vending machines with Honest Tea
Objective: To associate Honest Tea with Coca-Cola, increase sales of honest tea, and provide
easy access to Honest Teas products.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 2: How do we increase our market share in the United States?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 8: How do we increase and retain new customers?
Target Market
Teenagers and adults
Description
We will be adding Honest Teas products into the coca cola vending machines not just health
machines, which will provide direct access points for consumers to choose Honest Tea products.
Removing a drink that does not sell as much volume or multiple rows of the same product could
be swapped for a row of honest teas. Consumers are using vending machines more regularly and
this will provide them with a healthier alternative to soda.
Responsibility
Distribution and logistics
Budget
If we place Honest Tea into 100 Coca-Cola vending machines (Using 1 of 4 rows)
Budget for one year $380,440/4 = $95,110
Measurement
How fast Honest Tea products sell compared to Coca-Cola products.

P a g e | 29

Action Plan #3
Title: Honest ME
Objective: The main objective will be to create more brand awareness in an entertaining
interactive way.
Issues
Issue number 7: How do we differentiate our products in order to expand while maintaining our
current customer base?
Issue number 8: How do we increase and retain new customers?
Target Market
Our target audience will be all consumers who enjoy ready-to-drink tea.
Description
Honest Tea will develop a personality test called How Sweet Am I? that will match the
consumer with their perfect Honest Tea flavor based on questions that they answer. Incorporated
in the list of choices will be every flavor of tea that Honest Tea produces; therefore every flavor
will have a chance to be chosen. As the consumers answer the questions, their results get
transferred to the Fruit-O-Meter, which they will see on their screens. The Fruit-O-Meter will
measure how sweet someone prefers their tea. It will have a color scheme from green (sweetest)
to red (most bitter) and it will have a strawberry as the measuring device that will slide up and
down the scale depending on the answers that the consumers submit.
Responsibility
Marketing Research Department, Promotions Department, and website creators
Budget
Marketing Research (What questions will get the most accurate results?)
Website Development (Creation of the survey)
Promotion of Survey (Facebook, YouTube-banner ads)
Total:

$100,000
$50,000
$50,000
$200,000

Measurement
During the survey, the Fruit-O-Meter will measure results. During the six month promotion, the
results will be sent to the Marketing Research Department, who will chart and keep track of the
results and see which flavor is the most popular. After, Honest Tea will promote the most
popular products and see how much sales increase by and how many new customers they have.

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Action Plan #4
Title: Insert end of isle coupons in stores
Objective: To gain new customers, compete with competitors, and increase sales.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 5: How can we compete with mass market prices without sacrificing quality?
Issue number 8: How do we increase and retain new customers?
Target Market
Adults/young adults
Description
The Smart Source coupon dispenser will distribute $.30 coupons to shoppers. These will be
placed in the drink isles of grocery stores throughout the United States.
Responsibility
Promotions department and advertising
Budget
$60 per coupon machine (100 machines)
$0.02 (per coupon)
200,000 (coupons)
Budget for one month = $10,000
Measurement
The amount of coupons redeemed in stores.

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Action Plan #5
Title: Carry a brewed version of Honest Tea in sit down restaurants
Objective: To gain new customers and increase sales.
Issues
Issue number 2: How do we increase our market share in the United States?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 5: How can we compete with mass market prices without sacrificing quality?
Issue number 8: How do we increase and retain new customers?
Target Market
Restaurant patrons of all ages
Description
Carry a brewed version of honest tea at casual sit down restaurants for customers that request
sweet and flavored teas. Having teas available at restaurants will offer an additional point of
contact between honest Tea and the consumer. At first we will start out with Bloomin Brands
and then expand into other restaurants.
Responsibility
Distribution and sales department
Budget
Each tea urn cost $85 (3 per restaurant)
Start out in 100 locations
Budget for 1 year = $25,500
Measurement
How many customers order Honest Tea compared to other beverages sold.

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Action Plan #6
Title: Carry honest Teas at fast food restaurants
Objective: To increase sales and to potentially gain new customers.
Issues
Issue number 2: How do we increase our market share in the United States?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 8: How do we increase and retain new customers?
Target Market
Fast food restaurant patrons
Description
Carry Honest Teas at fast food type of restaurants that carry Coca-Cola products. Food chains
that make your meal in a line fashion in front of you tend to have separate drink refrigerators that
carry alternative choices to sodas. Adding honest teas to these fridges would provide customers
another potential sales point for consumers to choose our products. We will start by introducing
these refrigerators in Subways throughout the U.S.
Responsibility
Distribution and sales department
Budget
1 drink refrigerator cost $749
Total Cost for 100 store locations: $74,900
Measurement
By how many customers order Honest Tea compared to other beverages sold.

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Action Plan #7
Title: Promote Honest Tea through social media
Objective: To increase sales, open up to new markets, and gain new customers.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 9: How can we create customer awareness through word of mouth?
Target Market
All target markets
Description
Post coupons and promotions on social media sites, like Facebook and Twitter, which are more
desirable to younger age groups.
Responsibility
IT Department and Marketing/Advertising team
Budget
$70(Advertising per day)
182 days (# of days running ad)
2 sites (Facebook and Twitter)
= $25,480 (Total Budget for 6 months)
Measurement
Measured by how many people visit the link from the Ad that is posted.

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Action Plan #8
Title: Create commercial to promote organic tea
Objective: To increase the number of people viewing the website and potentially gain new
customers.
Issues
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 4: How can we improve our brand image?
Issue number 7: How do we differentiate our products in order to expand while maintaining our
current customer base?
Issue number 10: How do we continue to be socially responsible and reduce our material waste?
Issue number 12: How do we use our organic label to create a competitive advantage in the
Ready-to-Drink market?
Target Market
All target markets
Description
Commercials will run for 30 seconds on popular channels during increased viewing times (Prime
Time 8pm-10pm) and will offer a coupon if you visit the website.
Responsibility
Chief Marketing Officer, marketing team, and advertising
Budget
$4,000 per commercial
20 days a month
12 months
= $960,000 (Total Budget for 1 year)
Measurement
Measured by the number of coupons redeemed in stores that came from the website and also the
increased traffic flow to the website

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Action Plan #9
Title: Disease Destroyer
Objective: To educate the consumers on the benefits of switching to organic tea
Issues
Issue number 11: How do we get new customers to switch to Honest Tea?
Issue number 12: How do we use our organic label to create a competitive advantage in the
Ready-to-Drink market?
Target market
Ready-to-drink tea consumers from ages 5-25
Description
Honest Tea will create an interactive video game that one can play on the Honest Tea website or
on Facebook. It will be about how people can have a healthier lifestyle by purchasing Honest
Tea. The player will move through levels attempting to gather ingredients for their tea products
while combatting diseases (monsters similar to Pac man) that chase the player throughout the
game. Each level there will be a new disease that the player will have to fight. In addition, we
will have mini-games like Who Wants to Be a Millionaire? where players will answer
questions about the health benefits of Honest Tea. We will post the highest results daily and
monthly. By playing the game, not only will Honest Tea discover how knowledgeable the
average consumer is about how much drinks that they consume affect them, but consumers will
most likely consider switching to Honest Tea because they provide so many health benefits.
Therefore, their customer base will increase and so will their sales.
Responsibility
Marketing Research Department, Promotions Department, and website creators
Budget
Marketing Research (What kind of interactive game should it be?): $200,000
Website Development (Creation of the game):
$100,000
Promotion of Survey (Facebook, YouTube-banner ads):
$50,000
Total for one year: $350,000
Measurement
We can measure how many people consider the game through the point-and-click method
because we will be able to see how many people go onto that page on the website. In addition,
based on the results, we can see how many people played the game. We can also use the results
to see how much our sales have increased by comparing our sales before, during (every four
months) and after the game is available on the website.

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Action Plan #10

Title: Honestly Recycle
Objective: Increase the recycling of honest tea bottles by offering a method for customers to
gain points for recycling and can get a free bottle of Honest Tea.
Issue
Issue number 10: How do we continue to be socially responsible and reduce our material waste?
Target Market
Our target will be customers who already buy our drinks and we will be trying to increase the
frequency of their purchases.
Description
Honest tea will develop an iPhone and android app that will have interactive games and
interactive media. In the app we will add a section for entering and redeeming bottle codes. We
ask that each customer enter their bottle number and pledge to recycle that bottle. When a
customer gets ten bottle codes they will be mailed a voucher for a free bottle of honest Tea. We
will need to print identifier numbers on all bottles for this program.
Responsibility
Marketing Research Department, Promotions Department, and web developers
Budget
IPhone and Android App development
Promotional Campaign
Mailing Vouchers
Free Promotional tea bottles

(25K Each)

$50,000
$50,000
$5,000
$100,000
$205,000

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Action Plan #11

Title: Advertise in Womens Health Magazine
Objective: To increase awareness of Honest Teas products to health conscious women.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 4: How can we improve our brand image?
Target Market
Health conscious women
Description
We will run a full page ad for Honest Tea products in Womens Health Magazine. Womens
health magazine has a reach of 1.5 million people, so we will run 5 ads in 2014; which will
increase brand awareness. On the ad, we will include a $.25 off coupon for readers to use on
their next Honest Tea purchase.
Responsibility
Advertising department
Budget
1 Full page ad cost $195,810
Total Budget for 5 ads: $979,050
Measurement
Measured by the reach of the magazine and also by how many women use the coupon from the
Ad.

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Action Plan #12

Title: Give out samples in grocery stores
Objective: Increase brand awareness, increase sales, and gain new customers.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 8: How do we increase and retain new customers?
Issue number 9: How can we create customer awareness through word of mouth?
Target Market
All target markets
Description
Have an employee pass out free samples of Honest Tea at grocery stores throughout the United
States. During high volume hours, 5pm to 7pm during the week and from 11am to 2pm on
Saturday and Sunday, a grocery store employee will pass out these samples to their customers.
We will do the sampling for 1 week, 5 times a year. With each sample the customer will receive
a coupon for $.25 off their next purchase of Honest Tea.
Responsibility
Advertising, marketing, and sales department
Budget
Employees pay @ $8/hour
16 hours per week for 5 weeks
Cost for each store is $640
Total budget for 300 stores: $192,000
Measurement
Measured by how much sales increase at each location during sampling hours and also how
many coupons are redeemed.

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Action Plan #13

Title: Advertise in Mens Fitness Magazine
Objective: To increase awareness of Honest Teas products to health conscious men.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 4: How can we improve our brand image?
Target Market
Health conscious men
Description
We will run a 2/3 page ad for Honest Tea products in Mens Health Magazine. Since Mens
Health magazine has a reach of 1.8 million people, this will help with brand awareness. We will
run six ads throughout 2014.
Responsibility
Advertising department
Budget
The cost for one 2/3 page ad is $160,345
Total budget for 6 ads = $962,070
Measurement
Measured by how many issues were distributed.

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Action Plan #14

Title: Introduce Honest Tea into schools
Objective: To increase awareness and overall sales by having students ask their parents to
purchase these products at home as well as in schools.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 2: How do we increase our market share in the United States?
Issue number 3: How do we successfully promote our products to a broader audience?
Issue number 8: How do we increase and retain new customers?
Target Market
Students of all ages
Description
Create a contract with schools all over the United States to offer Honest Tea for students in
cafeterias. We will place Honest Tea beverage refrigerators in cafeterias to give students a
healthier option to other sugary beverages. We will start placing these refrigerators in private
schools throughout the U.S. and plan to be in 300 schools by the end of 2014.
Responsibility
Marketing, distribution, and sales department
Budget
Cost of 1 beverage refrigerator is $749
Total budget for 300 schools: $224,700
Measurement
Measured by how often schools reorder products.

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Action Plan #15

Title: Honest Cities Promotional Campaign
Objective: To increase brand awareness and differentiate our products by utilizing untraditional
Guerilla marketing tools.
Issues
Issue number 1: How do we increase our brand awareness?
Issue number 7: How do we differentiate our products in order to expand while maintaining our
current customer base?
Target Market
Primary and secondary target markets
Description
Conduct a social experiment to find out which cities in the US are the most honest through
setting up unmanned tea kiosks in the cities of interest and asking passers-by to honestly deposit
a dollar in the clear jar for each Honest Tea beverage. The videos from the experiment are shared
via social media platforms such as Facebook, Twitter, and YouTube. The results are also
announced via traditional media channels, such as CNN, ABC, and FOX.
Responsibility
In-house advertising agency
Budget
Cost of setting up an Honest City campaign is one city: $1,000
Total budget for 30 cities: $30,000
Measurement
Measured by social and traditional media coverage during and after the campaign.

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Appendix