When a behemoth buys a piece of you
When a big conglomerate comes knocking, it can be tempting to sell off all or part of the company you nurtured and grew.
But sometimes it can spell doom.
Whatever happened to Mad River, a tea and soft drink company that was bought by the Coca-Cola Company in 2001?
"Coke bought Mad River, put it into its distribution system and killed it," says Seth Goldman, the president of organic beverage company Honest Tea.
It's a strange quote coming from a man who recently sold 40 percent of his firm to Coke.
Goldman doesn't think his company will suffer the same fate.
"We looked at the Mad River deal and why it didn't work," he said about the research he did before partnering with Coke. "It was a total buy out. The founders handed the keys over."
Goldman's strategy was to control of the business. Of the firm's five-member board, he points out, Coke has two seats.
Coke has been bolstering its healthy beverage offerings, having bought Vitaminwater last year, but Goldman stresses he didn't want Honest Tea to get lost in the corporate fray.
Even when discussions started with Coke, Goldman says he made it clear to the beverage giant he wasn't interested in selling or giving up control of the brand.
"We developed enough as a brand and a company that we were able to say that. We knew what we stood for," he said.
Right after Coke bought a stake in Honest Tea, there were some fans of the small firm that worried about how the new owners would alter operations at their investment.
On a Fast Company blog about the deal reached in February one customer wondered:
“Will they get buried by Coke, will they lose their innovation? I was disappointed to hear they were joining forces with Coca Cola, will they be able to keep their honesty?”
Goldman maintains the company will keep it honest.
One of the only things that's going to change at Honest Tea, he adds, is that now the company has access to a bigger distribution network via Coke.
Coke is also giving a boost the Honest Tea's purchasing power.
"Now when we talk to suppliers we are part of larger buying organization," he explained.
(He gets a better deal on bottle caps, for example.)
So far, the transition has been smooth and last week they started selling Honest Tea products on Coca-Cola trucks.
Time will tell if Honest Tea becomes a household name or it ends up going down the same old Mad River.
