Unilever acquired Ben and Jerry’s, Dannon acquired Stoneyfields Yoghurt and more recently Coke acquired 40% of Honest Tea. This morning I had the pleasure of hearing Seth Goldman co-founder of Honest Tea speak at a networking breakfast of the National Capital Chapter of the Association of Corporate Growth (ACG).
Seth is a great speaker with a great sense of humor and plenty of good material. Go hear him if you have the opportunity. And he, or someone at Honest Tea, has the knack for identifying what might go viral. Just for fun, watch this very short video that demonstrates Wall Street is 89% honest!
We need people and companies like this to create a positive image for what sustainability can mean for business and for society. With the acquisition by Coca-Cola of 40% of Honest Tea I wanted to know whether the culture and approach of Honest Tea could help Coca-Cola to further its sustainability achievements. (The popular question is whether a large corporation will squeeze the sustainability out of a much smaller one, but I prefer the half glass full approach!)
I asked Seth this question in the Q&A and he was optimistic in his response, explaining that he felt Coca-Cola had embraced Honest Tea so far. At a worldwide meeting of Coca-Cola execs, announcement of the first Honest Tea production plant inside a Coca-Cola facility received standing applause from the audience. The Honest Tea process is fairly unique in Coca-Cola facilities in that it uses raw agricultural produce (tea leaves) rather than syrup, as its raw material. I can see how this might have a broader influence on a large company.
Seth also described being sought by Coca-Cola execs to input ideas on how they could enhance their existing sustainability efforts using their core resources and capabilities.
Maybe Seth’s enthusiasm is just infectious, but I for one was encouraged. The acquisition delivers continued rebalancing of Coca-Cola’s portfolio and provides alternative and more sustainable routes for growth. I need to find a parallel acquisition in my sector! As long as Honest Tea is nurtured as a catalyst for further change, this acquisition will be a model for another way of enhancing corporate sustainability. As Seth concluded (and as much as it pains me to say it with my British heritage), “the tea party has just begun”.
Monday, May 24, 2010
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hi Kevin,
ReplyDeleteThanks for the generous comments. It is intriguing to think about what an analagous investment might look like in telecom -- personally, I am intrigued by the notion of helping the developing world leapfrog telephone poles and wires -- by definition when you leave behind old infrastructure you create the potential for new entrepreneurs and for a lighter environmental footprint. So much of the social media in our country is gossipy, but is there a way the developing world could adopt instantaneous information to their advantage? For example, one of the reasons local agricultural producers don't realize enough margin when they sell their produce is because they have imperfect information about pricing -- could you empower local farmers to gain more margin by providing real time shifts in spot prices?? Anyway, just an idea, but perhaps an intriguing one. best regards, Seth
Seth, thanks for the response. You have identified an area for social entrepreneurship that we are exploring with a similar though not identical project. Lifelines is a joint project with Cisco and and One World, an NGO partner http://bit.ly/9gMu2V. It consists of a voice-mail platform that provides farmers in a pilot region in India with expert advice on agriculture and animal husbandry problems. It is a chargeable service in order to try and make the business proposition sustainable. I guess the pertinent question, in light of the blog title, is whether for a venture like this we would be better acquiring a local business rather than building it in partnership with an NGO.
ReplyDeleteDutch Leonard at Harvard studies this issue. He co-authored a paper on the topic, examining Ben & Jerry's/Unilever, Stonyfield Farm/Groupe Danone, and Tom's of Maine/Colgate. Here's the citation: Austin, James E., and Herman B. "Dutch" Leonard. "Can the Virtuous Mouse and the Wealthy Elephant Live Happily Ever After?" California Management Review 51, no. 1 (fall 2008): 77-102.
ReplyDeleteYou can also find an abstract here: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=271872