Honest Tea Charges into K-Cup Arena

The Coca-Cola Company is about to extend its reach within the tea sector through a new deal to bring Honest Tea to Keurig Green Mountain Inc.

Honest Stacked LogoHonest Tea was founded in 1998 with the goal of introducing a bottled iced tea with little sweetener that tasted freshly brewed. The company topped $1.1 million in sales in its second year and by 2008, sales had reached $38 million. Impressed by its growth and potential, Coca Cola Co. purchased a 40% stake in the company and then purchased all but 5% of the remaining stake in 2011. Honest Tea continued to operate as its own business unit and has expanded its lines with Honest Ade®, Honest Kids®, Honest Splash® and most recently, Honest Fizz®, a naturally-flavored, zero-calorie soda. Now Honest Tea is helping Coca Cola introduce its first K-cup® product.

The Honest Tea® K-Cups® will be part of Keurig’s Tea over Ice line. Products in this segment are designed to brew at a concentration that allows them to be poured over ice cubes for an instant iced beverage. There will be two flavors available: unsweetened black tea and unsweetened green tea.

WTN140908_HonestTea_K-Cup_PacksThe Honest Tea introduction is part of a 10-year deal where Coca Cola Co will also create a series of products for the new Keurig Cold (TM) system, due to be released in 2015. Coca Cola will have a 10% share in Keurig Green Mountain. The share increases to 16% in May.

“As we began to collaborate with The Coca‑Cola Company on the development of their brands for our Keurig Cold system, the opportunity to incorporate certain Coca-Cola brands, like Honest Tea, into our Brew Over Ice selections for our Keurig hot brewing system became an exciting possibility,” said Mark Wood, Senior Vice President, Global Hot Systems at Keurig. “Whether hot or cold, adding great brands like Honest Tea to the Keurig system is a part of our ongoing mission to provide consumers with unparalleled choice and variety.”

Keurig stock rose 1% following the announcement.

Source: Benzinga and Coca Cola Co.