The Coca-Cola Company is challenging itself to think differently about how its brands help accelerate business transformation, reflect consumer choice and promote growth as a company. This means rationalizing its lineup of drinks and prioritizing fewer, bigger brands with the greatest potential for scale and profitable growth.
While the HONEST Kids portfolio is quickly growing and will remain a successful part of the business, the HONEST teas product line will be phased out of The Coca-Cola Company’s beverage portfolio at the end of 2022.
Gold Peak, a national brand, and the regional Peace Tea offering will now anchor the company’s ready-to-drink tea (RTD) strategy in North America.
“Shifting from a three-brand tea portfolio to a prioritized two-brand tea lineup will free up investment resources and supply chain capacity to better meet consumer needs and capture share in the category,” said Sabrina Tandon, group director, RTD Tea, Coca-Cola North America Operating Unit. “We believe Gold Peak and Peace Tea are best positioned to meet consumer preferences for high-quality brewed teas with different levels of sweetness and flavor.”
The Coca-Cola system will continue to produce and distribute the HONEST Kids line of organic juice drinks and explore licensing ventures and innovation opportunities for the HONEST brand in other categories. “We are phasing out the HONEST teas product line, but are not selling the HONEST brand,” Tandon clarified.
Gold Peak launched in 2006 and became a billion-dollar brand in 2015. The brand transitioned to a real-brewed formula in 2018, appealing to “tea truists” who value tea-forward taste profiles and high-quality ingredients.
Peace Tea has built a loyal, Gen Z following in the Midwest, Northeast and Southeast with fruit- forward flavors offered in colorful, 23-oz. cans and a fun, free-spirited personality.
Mainstream brands like Gold Peak and Peace Tea are driving growth of the RTD tea category. Sales of both Gold Peak and Peace Tea have increased during the COVID-19 pandemic as shoppers gravitate both to beverages with immune-boosting properties and multi-serve packaging options for at-home consumption. HONEST teas, which are primarily offered in single-serve bottles with a strong concentration in the Northeast and along the West Coast, have been negatively impacted by a drop in immediate consumption sales and limited glass supplies.
“Ongoing supply chain challenges mean we are having to prioritize production and distribution of certain product SKUs, and that we’ve been unable to meet consumer demand for Gold Peak,” Tandon added. “This, among other factors, helped drive this very difficult decision.”
Tandon also cited some overlap among Gold Peak and HONEST tea consumers, adding, “We see endless runway with Gold Peak and are excited to expand the trademark with new product and packaging innovations that will appeal to the HONEST Tea consumer.”
The HONEST brand was founded in 1998 by Seth Goldman and Barry Nalebuff. In 2008, The Coca-Cola Company took a 40% investment stake in HONEST before fully acquiring the brand in 2011.
Tandon credits HONEST tea with helping the company create a new route to market into the natural foods channel, where brands like Simply, Topo Chico, vitaminwater and smartwater remain.