Honest co-founder downplays potential of legal action from Coca-Cola in new tea launch

As Seth Goldman and his team plan the launch of a new ready-to-drink tea, he downplayed the possibility that the offering could draw legal action despite its potential similarities to Coca-Cola’s Honest tea.

Goldman, who co-founded Honest tea before selling a 40% stake in the ready-to-drink tea brand to Coca-Cola in 2008 and the rest three years later, learned last month that the Atlanta company would discontinue it at the end of 2022. 

Despite its removal from shelves, Goldman is confident there is still a burgeoning market for an organic, low-sugar and Fair Trade Certified tea like Honest, which he launched in 1998 with Barry Nalebuff, his college professor. He sees an opportunity to fill the void that would be created by the brand’s departure with his new beverage. 

The new beverage has yet to pick a name, but Goldman said the “initial varieties will very closely mimic” the best-selling Honest tea flavors. The beverage also will include the same product characteristics associated with Honest that allowed it to carve out a niche with consumers in the sector against heavyweights like PepsiCo and Unilever’s Pure Leaf as well as Coca-Cola’s Gold Peak. 

Goldman said he doesn’t have a noncompete clause with Coca-Cola and noted information to make Honest tea flavors like Honey Green are public knowledge that can be found on the internet. They are not trade secrets like the recipe to make Coke. The only proprietary information, he said, is the Honest tea name and the signature of himself and Nalebuff on the side of the bottle. 

“I’m comfortable there won’t be legal action,” Goldman said in an interview. Coca-Cola’s “action is going to create a space in the market, and that was a choice they made, so they certainly shouldn’t be surprised or upset that somebody would go take a space that they vacated.”

The new tea is targeting a launch in the natural food channel in October, though supply chain and other roadblocks could alter the timing, Goldman said.

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The 56-year-old Goldman has not talked with executives at Coca-Cola since he was told on May 23 that the Honest tea line would be discontinued. The beverage company plans to keep producing the popular Honest Kids drink and exploring licensing ventures and innovation opportunities for the Honest brand in other categories. Goldman noted his relationship with Coca-Cola remains “amicable.”

Coca-Cola declined to comment for this story. 

The new tea will have the backing of Spike Mendelsohn and Nalebuff. Mendelsohn, the celebrity chef, is currently partnering with Goldman on Eat the Change, a two-year-old startup making environmentally friendly, nutrient-dense snacks from carrots, mushrooms and other plant ingredients.

The tea will be part of Eat the Change’s portfolio but will take on a different name. Goldman said this creates a small “wrinkle” because Eat the Change doesn’t use ingredients from six crops that represent 57% of all agricultural production in an effort to support biodiversity in agriculture. The commodities are soy, corn, wheat, potatoes, rice and sugar cane, the latter of which is used in Honest tea. 

Goldman said they are actively looking at alternative sweetener options that are all-natural to replace sugar.

Goldman, who also is the chairman of plant-based food company Beyond Meat, said after the news about Honest tea came out, he was approached by beverage companies eager to work with him on launching a new tea brand. He opted to start the brand independently, confident he could tap into his 20-plus years of relationships with farmers, retailers, customers and employees who were instrumental in growing Honest tea.

Goldman doesn’t discount the possibility of eventually selling the brand or partnering with a large beverage company on a distribution deal if the right opportunity arose, but he’s quick to note that’s not something he’s thinking about now or the reason behind his decision to bring a new tea to market.