Coca-Cola Co. announced late Monday that it would discontinue Honest Tea as part of a repositioning of its ready-to-drink tea portfolio that will also help it meet packaging supply challenges. Brand founder Seth Goldman immediately criticized the move as a “gut punch” for the organic brand whose traction among health enthusiasts and socially conscious consumers led the beverage giant to acquire it in 2008.

The latest: Honest Tea founder speaks out following shutdown

Coca-Cola in a statement said it would continue to make and market the associated Honest Kids product lines but was rationalizing its tea portfolio behind brands “with the greatest potential for scale and profitable growth,”—namely, its Gold Peak and Peace Tea brands. It also continues a move by Coca-Cola to prune its portfolio of slower-growing items: The brand in recent years has axed slow-growing so-called “zombie brands” such as Tab, Odwalla and Zico. Rival PepsiCo has also trimmed its portfolio, offloading Tropicana late last year.

Honest Tea will be phased out by the end of the calendar year. Coca-Cola cited slowing sales, limited regional appeal, and the need to consolidate resources to address ongoing packaging supply challenges.

“Shifting from a three-brand tea portfolio to a prioritized two-brand tea lineup will free up investment resources and supply chain capacity to better meet consumer needs and capture share in the category,” Sabrina Tandon, group director, RTD Tea, Coca-Cola North America Operating Unit, stated. “We believe Gold Peak and Peace Tea are best positioned to meet consumer preferences for high-quality brewed teas with different levels of sweetness and flavor.”

A supply chain crunch that arose in the pandemic has impacted the company’s ability to meet demand for brands like Gold Peak, Tandon added.

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“Ongoing supply chain challenges mean we are having to prioritize production and distribution of certain product SKUs, and that we’ve been unable to meet consumer demand for Gold Peak,” Tandon added. “This, among other factors, helped drive this very difficult decision.”

Goldman, who founded the brand in 1998, and stayed with Coca-Cola following its acquisition through 2019, in a Twitter thread described the shutdown of Honest Tea as a “a gut punch to all the sweat, tears, and incredible passion that went into building our beloved brand,” including Fair Trade certified farmers and suppliers who provided product ingredients.

Goldman has since co-founded Eat the Change, a healthy plant-based snack brand with chef Spike Mendelsohn, a former "Top Chef" contestant. He is also the chairman of Beyond Meat, the plant-based meat brand.

Ads for Honest Tea highlighted its roots in so-called “conscious capitalism,” a movement credited for consumers’ increasing proclivity to support brands demonstrating equity in social and environmental causes they believe in.

Coca-Cola in its statement credited Honest Tea for its role in helping the company penetrate the fast-growing natural foods channel. It acquired 40% of the brand in 2008 for $43 million, and took it over entirely in 2011.

Tandon said there was some overlap between the customer bases for Honest Tea and that of Gold Peak, the RTD tea brand Coca-Cola introduced for the time in 2006. That brand transitioned to a “real-brewed” formula in 2018, appealing to “tea truists” who value tea-forward taste profiles and high-quality ingredients.

“We see endless runway with Gold Peak and are excited to expand the trademark with new product and packaging innovations that will appeal to the Honest Tea consumer,” Tandon said.

Peace Tea has built a loyal Gen Z following in the Midwest, Northeast and Southeast with fruit- forward flavors offered in colorful, 23-oz. cans.