The remarkable story of Honest Tea Ever heard of the remarkable success story of US based Honest Tea? Well if you haven't, here's the gist. Seth Goldman had trouble finding the right cold drink for himself after every workout. Iced teas were too sweet and health drinks were just too watery or tasteless. His quest for the right balance between taste and health led him and his partner Barry Nalebuff to do a lot of homework on iced tea. They found that what most American iced tea makers bought as raw material was tea dust and fannings that were left over after the whole tea leaves were brewed. No wonder they tasted so dull, and no wonder they had to be sweetened so much! The partners got to work and started brewing and preparing iced tea from whole tea leaves - with a lot less sugar content. They named it Honest Tea - directly taking on competition where it hurt most - by effectively suggesting that others were dishonest, which perhaps they were. Take a look at the Mission statement that the partners wrote for their business, back in December 1998, when they set up their business: Mission Statement Honest Tea seeks to provide bottled tea that tastes like tea- a world of flavor freshly brewed and barely sweetened. We seek to provide better-tasting, healthier teas the way nature and their cultures of origin intended them to be. We strive for relationships with our customers, employees, suppliers and stakeholders which are as healthy and honest as the tea we brew. They were very clear about what their differentiation would be and what the core values of the business were going to look like. Honest Tea became a huge success in the US, largely because they executed this mission statement brilliantly. What started as a tea brewing operation in Seth's home kitchen in 1998 with annual sales of $ 250,000, grew quickly to cross the $ 1 million mark in 1999, with a 5 member team. By 2002, the team had expanded to 17 members and turnover crossed $ 4.6 million. During these 4 years, Honest Tea kept innovating to launch a wide range of iced teas literally from across the world - from Moroccan Mint Green Tea to Kashimiri Chai to Gold Rush Cinnammon, Assam Black, Decaf Ceylon, Jakarta Ginger and many more. "A world of flavor, freshly brewed and barely sweetened" - that's what their mission statement said, and that's what they went about doing. By 2005, the company widened its product basket beyond tea, but kept the core promise of "Honest" intact. They came up with healthy and true to label versions of "ades" - lemonades, limeades and moved further into the beverages territory in 2007 by launching the Honest Kids range of organic thirst quenchers - healthy as well as tasty fruit based drinks. In 2008, when the company had 87 employees contributing to a turnover of $ 38 million, Coca Cola Company bought 40% of its equity. This move provided Honest Tea access to Coca Cola's bottling network, enabling the company to get on to a new growth path, which saw turnover jump to $ 75 million by 2011, at which time, Coca Cola bought the rest of the company's equity, making Honest Tea an independent, but wholly owned subsidiary, and in the process giving a huge payoff to the two partners who relentlessly pursued their mission statement and executed it flawlessly. Their vision, their commitment to core values and fantastic execution saw them grow the business 300 fold over a 13 year period, before selling out. Think BIG lessons for us Fascinating story indeed - but what are lessons that Think BIG draws from it, what are lessons that will help you Think BIG and become BIG? Here are a few for you to consider: 1. Differentiate Honest Tea became big because they put a lot of thought into their product. They identified what's wrong in the market and came up with a genuinely superior proposition. And then they delivered the masterstroke - which was naming it in such a way that the differentiation stood out visibly, and instantly put competition on the back foot. What do you find around you which don't look like great solutions for investors? Do you think you can create an "honest" proposition that's genuinely superior to what's on offer? Take retirement income solutions for example. Do you think annuities from insurance companies are really the best option for retired people? Do you think fixed deposits are really the best option? Or do you think you can put together an "honest" retirement income solution that you know is much better than what's on offer in the market? If you think you can, what are you doing about it? How are you packaging this solution? How are you branding it? How are you making sure that investors understand instantly that your solution is better than popular alternatives? Take another example: if you believe that you score much higher in the HNI space than some of your larger brand competitors because you don't try any sharp practices, you don't sell complex products when they are not required, you do what's right for your clients, how do you communicate this to your target clients? Ever thought of branding your practice as the "Honest Wealth Manager"? Do you think this will make your target audience sit up and take note, and put competition on the back foot? The key to BIG growth is an ability to sharply differentiate yourself and your solutions from what's available in the market, and then communicate this differentiation very effectively - just like Honest Tea did. 2. Build on your core competencies Honest Tea would not have become as large as they did, if they sat back satisfied with their initial set of 5 "Honest" iced teas. Their core competence was to come up better beverages - that were healthier and at the same time tasty. After introducing teas from every part of the world, they went into "ades", then into kid-focused fruit drinks. They remained a healthy beverage company - but kept expanding the product range to target different consumer segments. In our world, taking our earlier example forward, once you hit success with the "Honest Wealth Manager" solution, would you consider creating propositions like "Honest Retirement Advisor", "Honest Protection Solutions" and so on? Think this will create BIG growth paths for you? 3. Strategic alliances The final leg of Honest Tea's growth came from their decision to strike a strategic alliance with Coca Cola. They gave up a chunk of equity, but got in return a huge distribution network to propel growth to the next level. Once they reached the next level, they were in a position to encash 13 years of fantastic work, which they did seamlessly by selling out completely to their existing partner. Selling a minority stake at stage one set the tone for a much bigger sell out 5 years down the road. To conclude Think BIG has been advocating 5 pillars of growth that you need to embrace for you to grow your business to a genuinely BIG scale : (1) Vision (2) Upskilling (3) Team building (4) Process orientation and (5) Execution focus (Click here to read more). Think BIG also recognizes IFAs across the country who embody these 5 growth pillars, in our annual Think BIG Advisor Awards (Click here to read more). Honest Tea has implemented all 5 growth pillars brilliantly, which led them to grow turnover 300 times in 13 years. Growth pillars are the same for any business - its commitment to them that makes the difference. What Honest Tea has demonstrated, more than anything else, is that when the market is offering sub-optimal products, there is a BIG business opportunity for you, if you can offer an honest alternative. Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.
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