Saturday, May 22, 2010

Honest Goldman’s Marketing Wisdom

I typically walk out of an Association for Corporate Growth (ACG) National Capital chapter event with a notebook of exceptional ideas and best practices about strategy, operations and other contributors to corporate valuation.

Friday’s event was different. Sure, my notebook was filled. Yet, rather than furious scribbles about mergers and acquisitions, my take-aways from a presentation by Honest Tea’s CEO Seth Goldman related to marketing, promotion and positioning.

Perhaps most important was a reminder of a tenet of effective communications: while perception is reality, perceptions must be based on reality to resonate with customers.

This is certainly true with Honest Tea. A dozen years ago Goldman and a partner began to experiment at home with tea concoctions. The premise of their initiative was simple: devise a refreshing, low-sugar drink with natural ingredients and flavors.

Fast forward to 2010 and Honest Tea now generates nearly $70M in annual revenue from a line of teas, lemonades and kids drinks. Plus, the company is on the precipice of a national roll-out in partnership with their strategic investor Coca-Cola.

Goldman’s personal commitment to environment sustainability permeates every aspect of Honest Tea’s operations – from product development and manufacturing to packaging and distribution. It’s core to the company’s differentiation from other beverage companies.

Honest Tea continues to innovate when it comes to the environment having championed the formation of Bethesda Green, a not-for-profit that promotes sustainability.

While Goldman certainly knows how to whip up a tasty tea, his true genius lies in marketing. Here are three examples:

1. Every venture into the field is a photo opportunity. Seth lugged along a camera during his trip to China to inspect a supplier’s tea fields. The photos have been incorporated into the company’s Web site and promotional materials as a visual reminder of the natural ingredients brewed into every bottle.

2. The news of the day can be leveraged to garner your own headlines. This past April, Honest Tea turned crime and corruption on Wall Street into a CNN-worthy segment.

3. There’s a marketing play in nearly every crisis. When Honest Tea switched bottle design for sustainability reasons, customers cried foul claiming the company had short-changed them on the amount of product offered. A savvy update of the label quieted criticism while reinforcing the company’s environmentally friendly positioning.

Honest Tea's Seth Goldman in the tea fields of China.


Anonymous said...

Honestly, I'd never heard about any of it. Since I'm a long-time customer of Honest Tea, that tells me two things: First their marketing communications reach isn't very impressive. Second, a customer will buy a quality product without the environmental image. I am concerned about the health of the environment. It's one of the reasons I shop in stores where Honest Tea is sold. I'm also concerned about my own health, and I enjoy good taste--which are the reasons I've always bought it.

That said, I will make an effort to buy "greener" brands and to avoid ones I feel are bad for the environment. If I'm indicative of the market as a whole, Honest Tea should do a better job of getting their message out. Since their products are pretty expensive, it might just give consumers the incentive to try them.

Jason Leow said...

No, consumers who already embrace environmental issues and "living green" buy green products. The causal relationship doesn't start with the company being environmental. Companies that sell "green" therefore need to nurture a pool of brand loyalists by feeding and sustaining their beliefs.

To do that, they can use the usual marketing strategies - brand campaigns, thought-leadership, events-related marketing - but nothing beats public education to keep and grow those loyalists.

Dr. Syed Md.Zainul Abedin said...

I am from Bangladesh where tea is produced as an important cash crop.Honest Tea may invest here for the mutual benefit of our tea industry and Honest Tea Company.