325. Seth Goldman — How to Build a Profitable Brand with Values With Just Ice Tea

0:00Well, this time around, the learning curve, which was very steep, because with Honest Tea, we were really creating a category. There wasn't a category of less sweet drinks. There wasn't a category of organic bottled tea, and there wasn't a category of fair trade bottled tea. So we had to sort of go out and educate the consumer, develop the supply chain for all those things. And we had to convince retailers and distributors that those were viable business opportunities. This time around, when we heard the news about Honest Tea, every retailer we reached out to, in some cases, retailers reached out to us and said, hey, we need you to, our shelves are going to be empty.

0:36So this was in May of 2022. And I started talking to retailers really by June. They said, our shelves are going to be empty by the fall. So as soon as you can make the product, we're going to put it on the shelves. Are you ready to hear more? Welcome to the Bulletproof Your CPG Brand podcast. The podcast or entrepreneur of CPG founders who want to protect runway, improve execution, and compete smarter with the resources they already have. I'm your host, Dan Lohman. Most brands do not have a spend problem. They have a visibility problem. The reports tell them what happened, but not always why it happened, what influenced it, where the profit's leaking, or what to fix first.

1:14That is where cash, margin, execution, and runway quietly disappear. Each episode gives you practical strategies to see what others miss, act faster, and build a stronger retail business. Every episode has a free guide to help you go deeper. Use it with your team. Look for the places where cash, margin, execution, or decision quality may be slipping. Then run the free 15-minute CPG runway leak finder at retailsolve.com forward slash fineleaks to see where your biggest issues may be hiding. Because the goal is not more information, the goal is knowing what to fix first. Now let's roll up our sleeves and get started.

1:52Seth, thanks for coming on today and thank you again for this is your second time. You are on episode 38. That's almost 300 episodes ago. That was a long time. So thank you so much for coming on and just being here. I look so forward to talking to you. So for anyone who doesn't know you, which I can't believe there's anyone left in the world. Tell us a little bit about yourself. Sure. Well, it's great to be with you again and appreciate how you've been able to share the stories of what's going on in CPG. It's such a dynamic sector. And I can't imagine 300 episodes ago how much has changed since then.

2:31So I first got into this business as the founder of Honest Tea back in 1998. I had started that out of my house in Bethesda, Maryland. Thank you. Really the simple idea that there should just be a less sweet drink, less sugary drink on the market. And we got that up and running into 17 whole food stores and then evolved to become the first organic bottle tea and then the first fair trade bottle tea. We scaled it nationally and became the best selling tea in the natural foods industry. And then in 2008, we sold a portion of the company to the Coca-Cola company, who saw that there was, you know, believed in the potential of what we were building there.

3:12And they bought the rest of the business in 2011. And then it continued to grow. And I continued to stay on there through 2019, though, along the way, I also got involved with some other natural food companies. One was Happy Baby, which eventually sold to Danone. And then once I finished that work, I got involved with Beyond Meat and joined as an investor board member advisor and then became chair of the board. And I'm still chair of the board today at Beyond Meat. And I left my work with Coca-Cola and Honest Tea in 2019 and was sort of thinking about new things to get involved in. And I got involved with a restaurant, Plant Burger, where I'm chair of the board.

3:58but also launched a company which initially was called Eat the Change. It was focused on planet-friendly snacks and healthier snacks. But in 2022, just about four years ago, I got a call from the Coca-Cola company telling me they were going to be discontinuing honesty. And of course, that led to this moment of a pivoting moment where I said, well, just because Coca-Cola has made that decision doesn't mean what Honest Tea stood for should go away. Got back to work with a lot of the same folks who built Honest Tea and created just Ice Tea, and we're now scaling that nationally, and it's been fun.

4:38We're now larger than Honest Tea was in its 11th year, so it's happening quickly, and that's certainly keeping me on my toes. Well, congratulations on all that. That's really exciting, and I'm really thrilled that you're back into the tea business. I mean, we need it. I wonder why Coca-Cola let go of it. Why did they change their mind? During the pandemic, they really lost track of honesty. I would see in the stores where there should be 11 or 12 facings, there'd be one or two, or sometimes for weeks at a time, nothing. And so Honest Kids continued to do very well. That was a brand we also created, and it's still doing very well.

5:18But after the pandemic, Coca-Cola said, we've got to simplify our business model. And they made a decision that was called fewer, bigger bets. So they went from having three different brands of bottled tea to two. And so that left Honest Tea out. And while, of course, it was very sad for me at the time when I heard the news, it was really a gift they gave us in this opportunity to go back in and to do it. if you could think about all the things you've learned in your career and if you could apply them, you know, it was really a great opportunity for us. And it's certainly been both more fun and grown more quickly than honesty.

5:58I'm so glad you're able to fill the void. And I'm so glad that you're doing this again and that you're scaling and growing so much faster. Now, you mentioned that you're growing faster. You're ahead of where they were before. How did that happen? Well, this time around, the learning curve, which was very steep, because with Honest Tea, we were really creating a category. There wasn't a category of less sweet drinks. There wasn't a category of organic bottled tea, and there wasn't a category of fair trade bottled tea. So we had to sort of go out and educate the consumer, develop the supply chain for all those things.

6:31And we had to convince retailers and distributors that those were viable business opportunities. this time around when we heard the news about honest tea every retailer we reached out to in some cases retailers reached out to us and said hey we need you to our shelves are going to be empty so this was in may of 2022 and i i started talking to retailers really by june they said our shelves are going to be empty by the fall so as soon as you can make the product we're going to put it on the shelves wow so we we had both a deadline and an opportunity that we wanted to capitalize on. So we moved really quickly.

7:07That's exciting. And one of the things you were, so one of the things you said earlier is we're talking about change. A lot has changed and there are a lot more pressures on brands today. The focus of what we talked about before was mission driven brands. And I see that on your LinkedIn profile, you've doubled down on supporting brands that are mission driven. So let's first talk about that and then why it's so important. Sure. So I've always thought of myself more as an activist than a straight business person. You know, business is the channel or the venue that I choose to practice my activism.

7:43And so I really, when I look at the companies I've shared with you, whether it's Beyond Meat, Happy Baby, to me, they've all had that mission driven component. And another one we didn't mention, but I'm also involved with, is Tony's Chocolonely, which is working to end exploitation in the cocoa supply chain. And so in all those cases, purpose is a critical part of these brands and of these businesses. And so we actually have become part of the initial group of companies who have signed on to Purpose Pledge, which is an initiative that started just really in the past year where we have 10 commitments we've made around environment, around labor and sourcing and the communities we work with.

8:28And then so it's this idea that it's broader. There's shareholder capitalism where just the shareholders are the folks you listen to and stakeholder capitalism where shareholders are still important. But so are other stakeholders that aren't necessarily at the table. And we try to factor all of them into our decision. And just to make it clear, this is still capitalism. We're still taking investors' money. We still have a duty and an opportunity to compound it. And that's the goal. But we're just trying to do it with a broader lens. Thank you for sharing that. And to reframe mission, the reason why I'm so focused on that is because back then mission was a key driver in a lot of brands.

9:08You prove that you've proved it several times since then. During the pandemic, when the world shut down, mission brands were, it was difficult, but we understood what was going on, the supply chain disruptions, etc. etc now we've got a lot of other factors and shoppers are under a lot more pressure and so what i'm seeing and tell me if you agree with this is that not only is a lot more pressure on on the brands but there's also a lot more pressure on the shopper and what i'm getting at is that you know gas price doubled literally doubled up the street for me and from just a couple months ago and so because of the volatility customers are rethinking the way they spend money And where I'm going with that is that the mission driven brands, if they're strategic, if they're smart, have an opportunity to carve out a niche because you stand for something.

10:02You provide value and quality well beyond what most brands produce or provide. That's true. But, you know, we also have to operate in the economy that exists. Right. So when we see prices rise due to tariffs or other inflation, we've got to be involved in that too. I mean, part of me would just love to not raise prices, but we're looking at the landscape. And we've got to be competitive economically within the context we're in. It's great when our missions give us a value added or an extra degree of loyalty, or maybe we get a little bit of extra attention. but we still got to deliver on all the other basic economic deliverables that are expected of a business.

10:50We have to get margin. We have to get profit. We have to make sure that we're creating economic opportunity for our employees. We have to pay competitive salaries, and then we have to think about the other benefits. And for us in particular, all of our employees have stock options. For us, that's an important way to make sure they get to experience the upside of the business we create and we're certainly, you know, feel like we're creating that upside. They should benefit at least as much, if not more than our investors from doing that. Thank you for sharing that. And I agree with you completely.

11:21I mean, I understand that every brand's under the same, has the same constraints to deal with. However, what's really cool about what you're doing specifically in the mission space, and this is where I was going there, is that you help provide profitable growth to the category. And what I mean by that is big brands commoditize their products. So the former, you know, go pick on them for a little bit. You know, when they have a lot of money to deep discount, they pull profitable dollars out of the category. What the retailers take to the bank is the contribution that you provide, one. And then two, you have the ability to build larger baskets.

11:58So you also have the ability to drive more traffic. So I'm sorry. Yeah, please go ahead. No, that's a really good point. And in fact, what happened, it's funny, you know, when I got the call from Coca-Cola about honesty being discontinued, the first thing I did was look at what happened, what's happened to the tea category since I've been away. You know, I've been away for more than three years. What's happened and what it felt like it was you rented your house out to somebody, you traveled overseas, whatever you come home and you're like, Oh my gosh, what did you guys do to the place? You just let it all go to pot.

12:29You didn't, you didn't maintain it. You didn't, you didn't give it a new coat of paint. You didn't invest in quality or marketing. And so the category was declining. And so we went to the retailers and said, this category needs innovation. And it's really striking to see. And we look at really around the country, you'll see, you know, the category still is declining, but we've been growing so quickly. And even you look at the top legacy tea brands and they're all in red. And then you look down and you see us with double digit growth in every market and realize this is an opportunity to bring back growth to the category, to bring back excitement.

13:06And you're right that when you look at the shopping cart, every chain we've looked at, we are connecting with a more valuable shopper, a shopper who is spending more in this category and also has just a bigger basket. So it's a valuable customer to the retailer. So those are really important insights that we can bring to the retail partners we approach. Thank you for sharing that. So when you're talking about how your success, you mentioned innovation. So how are you helping to grow the category with your innovation? What's unique or different now than what you had before? Well, it's funny. A lot of it is what we had before, but the category had moved away.

13:53So the category had just moved to cheaper tea. So glass bottles, when we were back at Honest Tea, they were far more prevalent. Now we're really one of the only brands, if not the only brand, in the glass bottle in most of these chains. They moved away from organic. They moved away from fair trade. And you're looking at tea, which is one of the least expensive commodities in the world. So from our point of view, we should be able to buy tea that is high, super high quality and still be organic and still be fair trade to invest back in these communities and still be economically competitive on the shelf.

14:31and then investing in new fun flavors and different blends. What's on the shelf had just gotten, frankly, just stale and plain. The consumer got tired. Everyone was just selling a lemon tea. So we launched this summer a watermelon lime white tea. We have an orange mango herbal tea that I'm drinking here today. So there are a lot of ways to bring back fun and excitement. And then the marketing, creating a fun social presence, a dynamic social presence, not just hiring some spokesperson, but with authentic field marketing, being out in events, whether it's in New York City or in California, having passionate people become ambassadors for our brand, connect with consumers.

15:14So few consumers actually get to meet people connected to companies. And we just have an amazing dynamic team of people who really love sharing the story of what we're doing and can get people excited about it. That's cool. Well, and we were talking about this before. Big brands tend to talk at us. We talk to our customers and treat them like people. That's exciting. You're able to leverage that. I was going to say, one of my favorite LinkedIn posts that you have that you put out there, your company, is where you're talking about all the things you're doing. And you're talking about how, I forget your exact words, but you're looking at a cooler, all glass bottles, all.

15:52And the point being is that every single thing that you're doing is in line with or in lockstep with your mission, your values, where a lot of companies aren't doing that. Can you talk about the importance of that, not only to your brand, but as you're working with these other brands, how can brands leverage that to increase loyalty and convert occasional shoppers into loyal customers? Sure. Well, one of the key things is it has to be authentic and consistent. So we can't say, oh, it's Earth Month. We're going to go be environmentally friendly. And then sell product, for example, plastic. When we launched Just Iced Tea, we said we're not going into plastic at all.

16:35We're going to just do glass in cans. And so from that point of view, the organic piece is a through line. It's not just kind of an opportunistic approach. You know, and then the way we formulate, we talk about this idea. We have the name Justice in our name, right? Just Ice Tea, Justice. So we have to make sure that we are investing in the right kind of relationships with our partners. And so for us, that's why fair trade is so important. So with fair trade, it means the working conditions in the tea gardens are inspected, both the wages and the conditions. But in addition to that, we actually invest back into these communities through the fair trade purchasing.

17:19These premiums go to the community for them to invest. in whatever they deem appropriate. And so the community where we've done most of our tea buying is in Mozambique. And when we met with them back in 2023, early 23, they said what we really need here is a health clinic. This is a province where the average life expectancy is 54 years old. So super early, you know, mortality among adults. And they said we need it to be able to diagnose when someone, we can't tell when, if someone has malaria or AIDS or cholera, we don't know the difference. And so a diagnostic clinic could help address those illnesses, all of which, by the way, are curable if they're detected early.

18:02If they're not detected early, they're fatal. And so building that clinic is very much in line with the name of our brand, the fair trade commitment we have. So this idea of trying to be consistent with what we're doing is important. And, you know, I always say there's no such thing as a perfect company. We're going to make mistakes and we try to be honest about where our shortcomings are. But that commitment is authentic and we do everything we can to carry through with it. It's so desperately needed. Like you said, something that is completely preventable and they have no idea how to diagnose it.

18:38So thanks for all you're doing beyond just our country. What else are you doing to help brands? Because I see that you're working with a lot of brands, mentoring them and supporting. Well, I try to when I do try to get involved in a deep and meaningful way. I I've got a full time job, so I'm not looking to be a consultant. So, you know, beyond me, as chair of the board, really do work closely with the CEO and the leadership team to help guide that business. As you may know, the whole plant based category has been challenged over the past few years. that the categories declined significantly. And so helping think about how do we pivot to still be relevant.

19:17Science is really impressive. The impact is very impressive both from a health perspective, environmental perspective. So how do we pivot to still meet the needs of consumers? And again, with Tony's Chocolonely, this is the role I have there is to be a chair of what's called Mission Guardians. And our specific task is to make sure that this fast-growing candy company, chocolate company, upholds its commitments around its sourcing, these five principles to make sure there's no child labor, that everything is traceable. And so being basically a voice within this company to protect that critical piece of that business.

20:00So for me, when I can help be a leader and enforce standards or direct towards opportunities, that's where I like to get involved. I certainly, like I think so many people in this industry, I'm always a student of the industry, always looking at what's happening, but there's just so many companies I can get involved with. And for me, I want to do it in a deep and meaningful and long lasting way. Thank you for sharing that. So when you said that the plant-based category is suffering or is not doing as well. From your perspective, what do you think is causing that? You know, it's been a really interesting thing to watch.

20:42So there's definitely some cultural shifts, right? I mean, the whole Maha movement actually has some useful elements in terms of the dialogue, but some of the dialogue around, you know, we should only be eating, you know, red meat. That's just not something I believe is best for health or for the environment or for the planet. But that's just been interesting to see that that's been a shift there. There's been this narrative put out and a lot of it has been put out by, I would say that the incumbent industries like the meat industry against ultra processed food and that the label has been applied to all types of things that aren't ultra processed.

21:21So I certainly am not going to be out there promoting Doritos or soda. Those don't grow on trees or tea bushes. but something like a beyond burger is an example is used with the exact same equipment that pasta is made with an extruder so that you know if someone has a problem with that processing on that kind of product then they shouldn't be eating pasta and i'm i'm a big fan of pasta so you won't see me doing that but i think there has been a bit of a confusing narrative um and i think also you know what companies like beyond made have done are sort of or the whole industry has raised the question, well, do we need to be as dependent on animal carcasses as we are for our diets?

22:05And I think some people take the question as threatening because meat tastes good. I certainly, before I became vegan, certainly liked the taste of meat. But so it's easy to try to avoid that question by saying, oh, well, it's really processed, So I don't want to eat it rather than think about, well, is it really processed? And if I can meet my dietary needs without killing another sentient being, you know, is that is there a role for that in my diet? It doesn't certainly have to be vegan all the time, but is there a way to incorporate more plant based foods? And so in the long term, I'm confident the plant based category will will will thrive.

22:48But it's like a lot of different businesses. They go through different cycles. And I think certainly these days it's been a challenging one. And I appreciate you sharing that. One of the things, I mean, I agree with you. It's a political argument. I don't mean to get into the deep politics. But my point is, if you go to Europe, you don't buy products with GMOs in them. But those same companies that sell products in Europe are spending tons of money to fight getting rid of GMOs in this country. So from a political standpoint, it doesn't really make sense. And so we are polluting ourselves, I believe.

23:22So it goes back to the mission. Yeah. It's also notable that in Europe that some of these narratives around plant-based foods just don't gain any traction. So in Europe, where I would say the environmental issues are more front and center, harder to avoid, a great example in the Netherlands where, you know, they literally are surrounded by water and sort of, so there's real risk to climate change. And there you see the plant-based categories thriving. so sometimes the people who have a clear understanding of the threats of the environment are more tuned and embrace these diets more readily i used and last project that i did last thing i was working on i actually leveraged the the value of plant-based and was able to deliver a nine percent growth to the largest retailer and the way i did that is focusing on the fact that it's digest better, et cetera.

24:19So the point being is there's so many good things about it. But getting back to what we were talking about earlier in terms of mission-based, we need to do a better job of communicating the values, not only the value we're producing, but the values of the brands that we are producing to the consumer we sell to. Your thoughts? I think it's true, but at a certain point, there's only so much consumer education you can do. So as an example with Beyond Meat, you know, this whole narrative, again, part of the Maha narrative about seed oils being really bad for your health. I personally don't have an issue with seed oils, but, you know, at Beyond Meat, we said it's, they were using canola oil, and they just, we just switched to coconut, to, I'm sorry, to avocado oil.

25:05And just because you're not going to win that or we're too small a business to try to win that big argument. So you have to meet the consumer where they are within the context. And just, you know, a similar example, look, I talk about environmental responsibility, but what we sell at Just Ice Tea are single serve containers. And I can certainly make an argument that environmentally, it just, we should only be selling large bottles or just tea bags. But, you know, that would be a tough business because I'm not meeting the consumer where they are. So, yes, we sell single serve containers, but they're organic and they are in packages that are completely recyclable.

25:48So, you know, you have to, like I said, there's not a perfect company. And so we do it within the context that we operate in. And I think that, you know, that's, you just have to have that lens rather than say, the only thing we're going to do is something that's the highest ideals and doesn't become a real business. How would you go about helping other founders communicate those values better? Sell this, tell the story. I think transparency really is the key here. So, you know, one thing we do a lot of just IT is just show everybody what's in. We have a policy on our social media. No posed photos, no fake, no AI treatment of a photo.

26:35It has to be real. And so we'll show people what's going on. We had a typo on one of our labels. Instead of saying farmers, it said famers. We left it out. And we just owned it. Like we didn't try to claim we meant to do that. It's like, oh, that was just a typo. Just as an example, like we've got to be, we are real people and show that we're doing the best we can with what we have, but we're going to make mistakes as well. And so that transparency across all the different ways we operate is important. Well, and you sharing that, that authenticity, it helps bring more value to your brand. it says that your feet and your lips are moving in the same direction so that's right it's a great idea yeah yeah well and it again it should be you know in the same way that our our tea right is just the ingredients that on the label right there's no um there's nothing fake it's it's all real brood ingredients and um you know everything we say is in there is in there and uh again with having that paper trail around organic around fair trade all these things that are any claim we make needs to be you know um hold up under scrutiny thank you for sharing well and also the packaging everything that you do you're doing it right and and actually where i'm going with that is microplastics are such a huge issue yeah so trying to get away from that is going to be challenging but yet i guess it's in almost everything that we we have now especially in fish, which is that.