Honest Tea Case Study Help

HONEST TEA CASE REPORT

Case Outline

Honest Tea was a three-year-old start up in the fast growing ready to drink market with its future sights set on increasing distribution and brand awareness. However, in order to expand distribution, the company needed financing. The company had a number of options to finance the distribution of the company operations. Such as the company has received a $ 5 million investment offer from West Coast venture capital firm however, Goldman and Nalebuff, the owners, were concerned of the implications of such investment on control, mission and culture of the company. The company also had other several options to raise the financing such as the owners can raise the money from angel investors. The market potential of the company was very large however; it needed to be decided which investor made sense. Until now, the company had raised financing which had been driven through ease of access and out of necessity however, now was the time to craft a plan to raise the proposed financing.

Problem Statement

The problem faced by Goldman and Nalebuff is that which course of action or which investor base they are recommended to approach to meet the financing needs of the company.

Analysis

The analysis of the case has been performed by analyzing the current and future performance of Honest Tea and studying the past financing and the current financing purpose of the company. Lastly, analysis of the proposed financing has been performed.

Performance of Honest Tea

The performance of the company is good even though the company has recorded losses since its initiation. Since, the launch in 1998 the company has experienced tremendous growth each year. The revenue of the company has increased by 349% between 1998 and 1999 as shown in the exhibit 9 in the case. Other key performance metrics and ratios are shown in exhibit 1 in the appendices. The company took the advantage of the market opportunity to create a new beverage category, which made the competition irrelevant in the industry……………………..

 

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