Sometimes when a big brand buys an up-and-coming rival it can't make the marriage work. Sometimes it's a clash of cultures and, in other cases, it turns out that the growth potential for the product may not actually match the scale of the larger company.
In some cases, the big company bought the smaller brand because if it does not work out, it has taken a scrappy competitor off the board. That's a cynical way to do business, but financially it can make sense.
Related: Coca-Cola and Pepsi face a new big-name rival
It's not unheard of for a company to decide to close a brand and then sell it back to its founder. That happened in 2019 when Coca-Cola (KO) sold Zico Coconut Water back to its original founder.
That can't always happen, however, because sometimes a company kills part of a brand it buys but not the entire thing. In 2022, Coca-Cola did exactly that with its Honest brand. It stopped making the brand's signature iced teas, but kept some of the children's products that also carried the Honest label.
Honest Tea founder Seth Goldman wasted little time in working to bring back, if not the brand, because Coca-Cola was not selling it, but its spirit.
Coca-Cola
Honestly, Its Just Tea fills a niche
Coca-Cola killed Honest Tea because it owns two other iced tea brands it sees as being better set for long-term growth.
"While the Honestids portfolio is quickly growing and will remain a successful part of the business, the Honest teas product line will be phased out of The Coca‑Cola Company’s beverage portfolio at the end of 2022," the company shared in a May 2022 press release. "Gold Peak, a national brand, and the regional Peace Tea offering will now anchor the company’s ready-to-drink tea (RTD) strategy in North America."
That was a major blow for Goldman who still believed that there was a place in the market for iced teas made from organic tea with less sugar than most products being sold.
"Goldman wasted no time, announcing two weeks later plans to introduce a then-unnamed brand to fill the void. In September of that year, Just Ice Tea made its way to store shelves — bringing with it many of the same characteristics that made Honest tea a success," Food Dive shared.
Goldman partnered on the brand with Spike Mendelsohn, his partner in Eat the Change, a company that grew out of their plant-based burger restaurant PLNT Burger.
Just Ice Tea has found its niche
Just Ice Tea, uses the same concepts as Honest Teas. The line, which hit shelves in September 2022 offers ready-to-drink organic iced tea products focused on sourcing simple ingredients and Fair Trade Certified teas and sweeteners.
“Just Ice Tea is picking up where Honest Tea left off, but we are tripling down on our commitments to our core values - Fair Trade Certified, organic and just sweet enough,” said Goldman in the launch press release “We are thrilled to have the opportunity to once again serve, and hopefully expand, the community of tea growers and retailers we assembled who were abandoned by the discontinuation of Honest Tea.”
The product line has been successful, albeit not at the level a Coca-Cola brand would need to be considered a hit. Just Ice Tea sold $16 million in 2023 and should top $20 million this year, according to Food Dive.
Goldman and his partners have not been shy about linking the new brand to their history with Honest.
“We didn’t want to leave our loyal customers high and dry, either,” said Barry Nalebuff, co-founder of Honest Tea and an Eat the Change board member. “Challenging the line from F. Scott Fitzgerald, he predicted ‘We think act two will be even better.’”
