US – Multinational soft beverage manufacturer, the Coca-Cola Company is considering the option of phasing out its Honest tea product line at the end of the year.
The company said it is seeking ways in which its brands will help accelerate business transformation, reflect consumer choice and promote growth as a company.
This move will rationalize its lineup of drinks and prioritize fewer, bigger brands with the greatest potential for scale and profitable growth.
Honest Kids portfolio, which is quickly growing will still remain part of the business, while Gold Peak, a national brand, will now anchor the company’s ready-to-drink tea (RTD) strategy in North America.
Coca-Cola noted that Gold Peak has become a billion-dollar brand, nine years after being launched in 2006 due to its appeal to people who value tea-forward taste profiles and high-quality ingredients.
Also, the Peace brand has become popular after building a loyal Gen Z following in the Midwest, Northeast, and Southeast with its fruit flavors.
The company added that the Peace and Gold Peak brands are driving growth in the RTD tea category, with sales increasing during the pandemic.
The growth was due to shoppers turning to beverages with immune-boosting properties and multi-serve packaging options for at-home consumption.
However, HONEST teas, which are primarily offered in single-serve bottles have been negatively impacted by a drop in immediate consumption sales and limited glass supplies.
Coca-Cola is now prioritizing the production and distribution of certain product SKUs since it has not been able to meet consumer demand for the Gold Peak brand in this ongoing supply chain challenging period.
Sabrina Tandon, group director, RTD Tea, Coca-Cola North America Operating Unit cited some overlap among Gold Peak and HONEST tea consumers.
She also indicated possibilities for the company to expand the trademark of Gold Peak with new products and packaging innovations that will appeal to the HONEST Tea consumer.
In 2008, Coca-Cola added Honest teas to its portfolio by purchasing a 40% stake for US$43 million and exercised an option three years later to purchase the rest of the tea brand for an undisclosed amount.
In recent years, it moved the Honest tea brand into coffee, sports drinks, lemonades, and kids’ beverages.
Honest branded products made more than US$500 million in revenue up from US$38 million in 2018, making Coca-Cola forecast it to reach billion-dollar brands in the U.S by 2025.
The discontinuation of Honest tea brands is the latest move by Coca-Cola as part of its 2018 strategy to focus on brands with the most growth potential, which see the company eliminate an estimate of 200 brands globally.
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