Good news for Honest Tea, one of my favorite socially-responsible businesses, and no, I’m not talking about its newest flavor, Pomegranate White Tea with Acai. (I don’t even know what Acai is.) The company recently got an infusion (couldn’t resist) of $12 million in equity funding, as it continues to grow briskly, by offering customers good-tasting, lower calorie bottled teas.
I wrote about Honest Tea for FORTUNE in 1997 after a chance encounter with the brew, and since then I’ve gotten to know the company’s co-founder and Tea-E-O, Seth Goldman, who is a neighbor in Bethesda, MD. Seth strives zealously to run the business in a responsible way–buying organic where possibly, dealing squarely with suppliers in the developing world, forging partnerships with Native Americans who supply peppermint for its “First Nation” Tea, and so forth. Just as important, the tea tastes good.
Sales were about $3 million in 2000; they were $13.5 million last year. One of the new investors is Stonyfield Farm, a like-minded firm; its CEO, Gary Hirshberg, has been on Honest Tea’s board since 2002. Jeff Swartz, the CEO of Timberland, also sits on the board. So Seth is getting advice from leaders of two of the most successful socially-responsible businesses in America. Honest Tea will use the new investment, in part, to expand its product line to include organic fruit drinks for kids.
On his website, Seth says: “We believe that every time we make and sell a bottle of tea we can help improve the American diet, support a more sustainable form of agriculture and find ways to create wealth at the community level. And we’re out to prove it. Honestly.”
As for dishonesty, that’s the charge being leveled against Coca-Cola and Nestle in connection with Enviga, their new green tea products that is being marketed as a “calorie burner.” The Center for Science in the Public Interest has filed a lawsuit against the two beverage giants “for making fraudulent claims in marketing and labeling” Enviga, an artificially flavored green tea drink. You can read my CNNMoney column about Enviga here.
In its press release announcing the lawsuit, CSPI says that no test of Enviga’s calorie burning power went beyond three days. It calls Enviga a “highly caffeinated and overpriced diet soda.”
Of course, anyone can file a lawsuit and I don’t think Coke or Nestle is guilty of fraud or even dishonesty. The label on Enviga cans is detailed and factual, and you can be sure that it has been vetted by lawyers. The companies said they would “energetically oppose this meritless lawsuit.”
But by calling Enviga a “calorie burner,” Coke and Nestle certainly imply that it can help people lose weight–a dubious proposition. By their own account, based on limited scientific evidence, you’d have to drink three cans a day for a month to lose a pound or two. The issue here isn’t dishonesty, but trust–one shouldn’t have to read the fine print on a drink label.
Which company do you want to do business with, Honest Tea or the Enviga people? By the way, I looked up Acai. It’s evidently a deep purple fruit that grows on palm trees in Latin America.