Coca-Cola Buys Stake In Organic Tea Maker

NEW YORK (AP) — The Coca-Cola Co., the world's No. 1 soft drink company, said Tuesday it bought a 40 percent stake in organic tea maker Honest Tea, adding to its offerings of non-cola beverages.

The 40 percent stake cost roughly $43 million (euro29.3 million), which puts the total value of Honest Tea at about $110 million (euro75 million).

Under the deal, Honest Tea Inc. can take advantage of Coca-Cola's distribution network and expand its sales reach. And after three years, Coca-Cola has the option to buy the rest of the company.

Coca-Cola can add Honest Tea to a non-cola drinks portfolio that includes Glaceau's VitaminWater, which it purchased for $4.1 billion (euro2.79 billion) in June.

The company said in a statement that it may choose to buy the outstanding interest in the company, or Honest Tea shareholders may decide to sell their shares to Coca-Cola in the future.

Coca-Cola and its main cola rival, Purchase, New York-based PepsiCo Inc., have been competing to capture the growing market in non-cola drinks such as enhanced water, energy drinks and bottled water. PepsiCo brands include Gatorade, SoBe Life Water and Lipton-brand ready-to-drink teas.

Honest Tea was founded in 1998 by Seth Goldman and Yale business school professor, Barry Nalebuff. Goldman quit his job at the Calvert Group, a socially minded investment fund, to start the tea business.