Nestle to Buy SweetLeaf Tea Company

AUSTIN, Tex.

SweetLeaf Tea Co. has agreed to sell its remaining equity to Nestle Waters North America.

SweetLeaf CEO Dan Costello praised Nestle’s “increased capabilities” and reassured the Austin-based staff it would continue to manage the SweetLeaf and Tradewinds brands. Sales of the combined brands were $53 million last year.

SweetLeaf follows a trail blazed by Honest Tea, a Bethesda, Maryland–based organic tea company whose acquisition by Coca-Cola was completed in February.

Nestle acquired a 35 percent interest in SweetLeaf in 2009 for $15.6 million with an option to purchase the company at a later date. Executives expressed surprise that Nestle moved so quickly but the product is scalable and sales have been exceptional. Market researchers predict RTD teas will earn $4.4 billion this year. Executing that option expands Nestle’s beverage portfolio of bottled waters to include organic and natural iced teas, juice drinks and lemonade. The acquisition will be reviewed by regulators.

SweetLeaf TeasIn a prepared statement Costello wrote that Sweet Leaf Tea was “founded on premium ingredients and a commitment to good health and great flavors, in step with Nestlé Waters North America’s long history of providing healthful bottled water beverages.”

The company was founded in 1998 by Clayton Christopher who bottled his grandmother’s sweet tea recipe. He used USDA certified organic ingredients and pure cane sugar and developed a fresh-brew technique. Tradewinds is an all-natural brand that was launched in 1993 and makes several tropical juices as well as tea.

His early success led Freestone Partners LLC to finance SweetLeaf's expansion in 2006 and 2007. Revenue was less than $10 million when Catterton Partners injected $8 million into the firm in 2008.

Nestlé’s broad distribution network and 700-person sales force is expected to double sales to $100 million, a threshold quickly exceed by Honest Tea following Coca-Cola decision to distribute the brand nationally. SweetLeaf is expected to similarly benefit from the Nestle’s extensive bottling and distribution network. Nestle Waters is a of Switzerland’s Nestle SA. The firm owns seven regional bottled water brands and Nestle Pure Life and earned $4 billion last year making it the largest bottled water supplier in the U.S.