Seth Goldman, TEO of Honest Tea, Talks About Holding to Values while Living in “the Grey”

"If anyone sees us backing away from organics, fair trade commitments, call us out. Hold us to it.  We have determined to keep the "mission in the bottle."
— Seth Goldman, TEO of Honest Tea.

I recently interviewed the “TEO” of Honest Tea, Seth Goldman.  A few days later, I received a package with six bottles of Honest Tea and a signed copy of Goldman's book, Mission In A Bottle.  Without thinking about the symbolism, I poured a bottle of the Peach White Tea over ice into a Coca-Cola glass and sat down to read the book:fair trade, organic ingredients—distributed by a multi-national corporation. Maybe E.F. “small is beautiful” Schumacher would be surprised. Maybe big can be beautiful, too. Or maybe, as Goldman puts it, we'll always live somewhere in the grey.

JF:  How did you decide to define sustainability for Honest Tea as 'to nourish and uphold?'

SG: That's the literal, dictionary definition.  But the irony is that here we all operating in a consumer economy. The definition of consume is to devour and destroy.  You couldn't get more opposing definitions. To be a business committed to sustainability, yet operating in this contradiction, it's the grey space we all operate in. Some people are more thoughtful and willing to admit that's where they are and others do it without considering it.

JF:Do you think Honest Tea will always live in that“shade of grey?” Do you think there's ever a point where you can you say you've moved out of the grey?

SG: Yeah, I think we always will [live in the grey]. There are current issues we deal with, and even if we solve one of those issues, we should be moving on to the next one. As long as we are a consumer-based economy, there's no way around it. No way to totally lose that area of grey. If you think you've solved all the problems, you're not stretching yourself, you haven't asked enough difficult questions, and if you think you have, then you weren't ambitious enough. You don't have to embrace the grey, but that's where we are. We wouldn't exist without consumers. We encourage consumers to push themselves, too.

JF:  What is the biggest issue of “grey” for Honest Tea?

SG: In terms of resources and energy, packaging is the biggest. National recycling rates are around 30%. I'd like to think that Honest Tea consumers recycle more, but statistics show that two-thirds of all the products we consume end up in landfills. And that's not sustainable. We talked in the mission report about creating a more holistic, full-cycle package. We also have to think about the materials of packaging moving away from petroleum-based packaging. We’ve made progress. We first light-weighted by going to plastic and then again, by light-weighting the plastics. But there's still more work to do.

JF:  I know you have really solid recycling campaigns: the Drink Pouch Brigade, for example.  I'm learning, however, a lot about contextualizing sustainability efforts. Just because you empower people to recycle doesn't mean you are negating, one for one, each plastic Honest Tea bottle.  How is Honest Tea contextualizing recycling efforts?

SG: Well, the irony is that recycling efforts are at 35 percent. It’s almost a wash. You have to use trucks to transport the products. I think though, that if we can get the rates up over 40 percent, then you have more of a recycling stream to start to make new packaging. We've had experiences with plants to make recycled products, but there isn't enough recycled packaging material available. We know there's enough packaging available, so we can't abandon recycling, but we need to find a way to get those numbers up.  If we get them up to 50 percent, here's the deal:  the trucks picking up the recycling will have more throughput. It's like us: if we ship one pallet across country, it doesn't make sense. But if we can ship 26 pallets, it's more efficient. It lowers the cost per package, and then it does make long-term sense.

JF:  Let's talk about the buy-out with Coca-Cola. I heard on NPR this morning that Coca-Cola has been pushing against the non-GMO label. How you do manage this relationship?

SG:  Yeah, it's a real challenge. I'll be honest with you.  It's a challenge. Here we are a company committed to transparency.  We were the first to make fair trade, organic bottled tea.  You can find online where we buy from, the people who produce for us. So working with Coca Cola is a challenge. I wrote a blog about it earlier this year. I drew the analogy from my family. Just because my brother and I have different political views doesn't mean we won't share Thanksgiving together or that I don't trust himto share in other family events together. There's bound to be moments when a small entrepreneurial, mission- driven company is not going to see the world or all issues the same way as the large multinational corporation that it's part of. Just as with my family, we respect each other. We understand that change doesn't happen overnight, but we have a conversation and we grow together.

JF: Are they listening to you? How much leverage do you really have?

SG:  Here's the thing: If you look at it from an economic standpoint, Honest Tea is less than half of one percent of Coca-Cola's total sales.  The idea that somehow we can dictate their policies is not going to happen. On the other hand, we are an important part of their growth and in the natural food market. I'm optimistic about the direction.

JF:  How did you make the decision to take on Coca-Cola as an investor, knowing you have really opposing values? What was your plan to stay committed to your values?

SG:  When Coke invested in 2008, they were a minority investor. We still had the ability to control decisions.  For those three years we definitely continued to run the business independently. When Coke bought us out, I said the same thing: that we would have independence. We've had some employee turnover, that's natural. But the core team is still intact. Because we acted consistently, we haven't had falling out. We don't just say great things: we follow through.

We want to set up accountability, that we do follow through. Ironically, when we were a smaller company, we were less accountable. Now that we are part of a larger company, we want to make sure we are both documenting and having others hold us accountable.

The main reason employees agreed to go along with it was because I painted the picture of what our impact could look like. We didn't want to be a model, but we wanted to drive the change. Our mission report highlights that. We were in 15,000 stores before Coke's investments and now, we are in 100,000 stores after Coke's investment. We are reaching millions more people than before. We previously purchased 8,000 pounds of organic ingredients. Now we can buy five million pounds andincrease fair trade purchasing. This is how we start making real impact in our sourcing countries.

JF: Have you been accused of being Coke's  'green child?'

SG: I haven't heard it, but it doesn't mean someone hasn't said it. But what I say is that if anyone sees us backing away from organics, fair trade commitments, call us out. Hold us to it.  We have determined to keep the "mission in the bottle."  Not just when it’s Fair Trade Month or we are on a special end cap. If those are our values, the goal is to sell as many products as we can, to as many people as we can, in as many places as they can find it.

JF:I'm glad I can buy Honest Tea, a fair trade beverage at CVS.

SG: Yeah! (laughter) We used to dream about that. And now, we are partnering with fast food restaurants. Someone asked me this morning, "Don't you feel tainted selling to a fast food company?" I said, look, those companies aren't going away. If someone has the option of buying a fair trade, organic, low-calorie beverage at a fast food company, I want them to."

JF:  It's challenging for the purists when Honest Tea is linked to Coca-Cola. But ultimately, you're bringing a socially, beneficial product to the normal, average person.

SG: That's what I'm saying about “the grey” from the consumer side. The consumer may say,'I don't like buying from a large multi-national,' but that's when I say, if you're committed to supporting organic agricultural or fair trade labor standards, then you need to support it in a large-scale, too, because that's where change happens on a broader level.

JG:  Sounds like you're a big fan of Fair Trade USA, then. Can we talk about your decision to work with Fair Trade USA instead of Fairtrade International?

SG:  I do agree that Fair Trade for All is where we need to go, large scale, but it is critical that standards are not compromised. I was a little frustrated about how much the licensing fee costs, something like 23%. I don't want my fair trade investment going to an office, I want it to be on the ground.

JG: On a different note, how did you build the culture of Honest Tea? I imagine you've brought the triple bottom line values with you, that you personally live with those values, but how did you build a culture of people who implement those values?

SG:  It starts with the stating these values and hiring people who share these values. And then, building it, for us, we look for every opportunity to do this. We have a daily, newsletter called Afternoon Tea we send out daily that highlights our mission. We have Mission Monday and Wellness Wednesdays which help employees think about how they can live more balanced lives. And on Fridays, we focus on sales displays because we recognize that we need to grow. Those activities highlight three of our core values: growth, mission and employee wellness.

JF: How do you maintain those values in your personal life?

SG: (laughter) Well, I'm very committed to exercise because I don't sleep well if I don't do that. It helps me work out tensions and sleep well. That balances with my family, my wife and three boys, the most wonderful distraction. They help me find perspective.

JF: Do you spend time in nature?

SG: Yes, running is an automatic chance to do that. And we live right along the Potomac, so that' s a great diversion. Our house is backed up against a park, so we play sports together.

JF: Any advice for aspiring social entrepreneurs?

SG: First, I'd say read our book, Mission in a Bottle.  It's a comic book, but we want it to inspire people that they can do both, make a profit and use business for change. Secondly, follow your passion. People perform best when they are fulfilling their passion. But passion alone is not enough. It takes passion plus the skills to do it. I do encourage people to follow their passion, but not without the ability, the know-how, to make it happen.

 

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