New Software Brews Savings for Honest Tea

Honest Tea launched in 1998 and has never looked back. The maker of a variety of ready-to-drink bottled organic teas, thirst quenchers and drink pouches sold in tens of thousands of stores now employs 98, and has revenues approaching $50 million for the current fiscal year.

Headquartered in Bethesda, MD, the company had been using Excel and QuickBooks. In 2008, management realized that its rapid expansion called for a more sophisticated software solution that would deliver operational insights, coordination, and control. “Excel and QuickBooks were just not cutting it,” says Honest Tea CFO Jonathan Clark. “We needed an integrated solution to better manage our business.” He explains that since Honest Tea outsources all production to manufacturers and packers, they had to rely on their partners for feedback of much of their business data. However, by the time they received inventory information at the end of each month, the data was already outdated. “We needed the tools to tell us exactly how much raw material we had on hand at all times,” he added. “We supply our co-packers with recipes and raw materials. They supply the capital and labor to make the teas.”

Honest Tea’s search for new software was quickly narrowed to three systems, and then to one – SYSPRO Enterprise Resource Planning (ERP). “We had a supplier and a co-packer that already used SYSPRO, and they highly recommended it,” said Clark. “We took a look, and found that it fit our needs.” He notes a key software requirement was one that would facilitate growth.

“Stoneyfield Farm is on our board, and I spoke to their computer consultant. His advice: make sure you get a system from a company large enough, so you know they are going to be around for a while. Our sales were heading towards $200-$250 million, and we needed software that could handle that level of business. SYSPRO has a great track record, and their system could accommodate our growth.” Clark quickly added that SYSPRO partner Driscoll and Associates was also a key factor in the company’s choice. “We posed a lot of questions, and they always came back with answers and solutions.”

Because Honest Tea outsources its production, the company must be especially accurate in forecasting demand. “We work out projections with our sales teams based on sales history and anticipated demand,” explained Clark. “We use SYSPRO and some Excel to refine the projections and break down our exact requirements.”

SYSPRO software has enabled Honest Tea to cut inventory levels in half. “With SYSPRO we receive real-time information from our partners so we know how much inventory we have at any point in time,” said Clark. “Our goal is now to make fuller use of SYSPRO Materials Requirements Planning to further reduce our inventory levels.” 

Clark also lauds the efforts of Driscoll and Associates. “We gave Driscoll our reporting needs, and they came back to show us how SYSPRO could meet them.”

In 2008, Coca-Cola acquired a 40 percent interest in Honest Tea, and now Coca-Cola and its subsidiaries have become both suppliers and customers as well. “We sell product to Coca-Cola Enterprises, and Minute Maid produces our line of organic drink pouches for us,” explains Clark. “This year we’re expanding our relationship with Coca-Cola. They will even be manufacturing our organic teas in glass bottles out of its plant in Massachusetts. SYSPRO ERP is a great help in managing these expanding relationships.”