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Coca-Cola purchases 40 percent stake in Honest Tea

BY Drew Buono

ATLANTA Coca-Cola and Honest Tea have completed an agreement that gives Coca-Cola about a 40 percent interest in Honest Tea, with the potential to buy the remaining shares of the company. The current deal was valued at $43 million with the right to purchase the rest of the company in three years, according to the Wall Street Journal.

Honest Tea has been around for 10 years and has produced organic beverages, which have brought it into being one of the top-ranked tea brands in the natural foods channel, according to SPINscan.

“Honest Tea is on the forefront of the rapidly growing organic beverage business, and [founder and chief executive officer] Seth Goldman and his management team have successfully anticipated and met consumer needs in this expanding category,” said Deryck van Rensburg, president and general manager of venturing and emerging brands at Coca-Cola North America. “This transaction is a superb example of our mission in venturing and emerging brands to seek out and invest in the best beverage entrepreneurs and the highest growth-potential beverages.”

One of the company’s newest products is Honest Kids, a line of low-calorie organic thirst quenchers sold in 6.75-ounce pouches, which was launched last year.

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Kraft and Kellogg pursue increase in ad spending despite fall in income

BY Diana Alickaj

CHICAGO Kraft and Kellogg Co. have decided to increase ad spending despite decreases in net income, according to published reports.

According to Kellogg chief executive officer David Mackay, the company’s loss, which was 3 percent in the fourth quarter, was mainly due to an increase in ad spending. The company is said to have spent 12 percent of its $11.8 billion in sales on advertising. The Kraft Co. decided also to increase its marketing spending to about 8 percent of its total sales by 2009, despite a 6 percent fall in net income.

The decision to increase marketing spending comes in response to its desire to increase prices, which the company feels will not be possible unless it devotes adequate spending in advertising. The increase in marketing sales are put in place in the hope that consumers will feel that the product will be worth the new price increases Kraft hopes to establish.

“Our pricing realization was not as strong as we would like it to be, because we don’t yet have suitable brand equity,” stated Kraft chief executive officer Irene Rosenfeld. “But the key to our future in cheese, as it is in so many of our businesses, is continuing to ensure that we have invested appropriately in quality, in marketing support and in innovation to be able to realize those price opportunities.”

According to published reports, analysts are not convinced that this will work as quickly as the chief executive officers of Kellogg and Kraft would hope. As Jonathon Feeny, a Wachovia analyst explains, “The problem in the cheese business isn’t so much costs; it is that brand equity and product differentiation are well below average, not something that can be fixed overnight.”

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SheerBliss releases gourmand’s ice cream sandwich

BY Jenna Duncan

HALLANDALE BEACH, Fla. Gourmet frozen dessert maker SheerBliss Ice Cream announced the launch of their designer ice cream sandwich, Blisswich. The rich, all-natural, ice cream sandwich contains vanilla ice cream with a pomegranate juice swirl squeezed between vanilla or chocolate cookies.

Gary Barron, president of SheerBliss, said the new product was created in response to a growing demand for deluxe ice cream treats.

Blisswich was released in stores in the Midwest and east coast this week and will receive wider distribution throughout the west in the next few weeks.

SheerBliss products are now carried in more than 4,600 stores in 36 states.

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