Welcome to part 1 of our two-part series, The Evolution of Iced Tea. In this installment, we'll explore the history of the iced tea market and the major players of the last few years. Don't miss part 2, which covers today's iced tea market.
When Seth Goldman, the co-founder of the organic iced tea brand, Honest Tea (a play on the word “honesty”) found out the company he had built from scratch and sold to beverage giant, Coca-Cola, was being discontinued by the soft drink company in 2020, he referred to it in a post on Twitter (now “X”) as “a gut punch.”
An alumnus Yale School of Management, Goldman is known as something of a pioneer of the less sweet, natural, and healthier iced tea beverage comprising a market now flush with products fighting for shelf space at supermarkets. The concept of Honest Tea was born out of a paucity of alternatives to sugary sodas and almost equally sweetened tea and fruit drinks. At the time, Goldman’s career trajectory was angled in a direction far removed from the beverage industry.
“I was working for this mutual company – Calvert Investments – and I went for a run. Thirsty, I went looking for something to drink. All I found were sugary soft drinks and sweetened fruit-based drinks or so-called juices,” Goldman says. “There was clearly a gap in the market for natural drinks without much sugar.”
So, he called up his mentor, Yale Professor Barry Nalebuff, and together they came up with the idea of an organic tea-based beverage made with real tea. Raising a half million dollars in start-up financing, the pair perhaps had scant sense that they were about to revolutionize the ready-to-drink (RTD) tea-based beverage industry.
The Origins of Iced Tea
Long before Goldman and Nalebuff founded their company in 1998, iced tea was a fixture in the deep south with roots dating back to the 19th century. Combined with ice brought in from northern states, ample sugar, and a twist of lemon, the tea-based nectar was known as “sweet tea,” and was a refresher on hot summer days.
Cold tea had already been used in a highly alcoholic (rum-based) punch in the 1800s in Regent's Punch, which was favored by then English Prince Regent George IV. Tea was still the most popular hot beverage in the United States then.
Indeed, in 1879, an iced tea recipe appears in a cookbook called Housekeeping in Old Virginia. In the book, the author recommends steeping tea for a day, followed by filling goblets with ice, putting two teaspoonfuls of granulated sugar in each, and pouring the tea over the ice and sugar. However, it wasn’t until the World’s Fair, held in St. Louis, Missouri in 1904, that iced tea really took off.
An English merchant and tea farmer (as well as the Commissioner of Tea in India) named Richard Blechynden, aiming to popularize tea shipped from his estates, decided to offer free cups of the hot aromatic beverage on the fairgrounds. St. Louis was in the throes of a scorching summer that year. As one might imagine, a steaming ‘cuppa’ in the blazing sun didn’t much appeal to the public. In response to this promotional crisis, Blechynden decided literally to turn things upside down: He and his team took a hot-brewed Indian tea imported from his estates and filled several large bottles with it; inverting the containers, they fed the tea’s liquor through iced metal pipes, cooling the liquid.
Blechynden observed that cooling the tea so quickly did nothing to alter the color or character of the tea, much less the flavor. The cold beverage was a hit for parched fairgoers. He would later call it an “act of desperation” as he’d brought a large volume of tea to sell at the event, and it wasn’t moving until people started consuming it cold.
The result was to make iced tea go viral where it was already being drunk in the South. Had Blechynden stayed in the USA and built on his innovation, he might have died sitting on a tea empire. However, that crown goes to another Brit: Sir Thomas Lipton (later made a Baronet). To enhance tea sales from his plantation in Ceylon (now Sri Lanka) in his grocery store, which he had opened in 1871 in Glasgow, Scotland, he decided to make it more accessible to the public by altering how tea was packaged and transported. The name might sound familiar as his eponymous business, now known as Lipton Tea and Infusions.
He popularized an innovation in the industry – the tea bag – in proliferating tea. Observing how popular iced tea was in the South by the early sixties, the Lipton Tea Company, mostly owned by British consumer goods company Unilever, developed a pre-sweetened tea powder to make the beverage. By then, the USA had become a coffee-drinking nation, but iced tea remained popular and Lipton offered it in cans as an RTD in the 1980s.
Lipton no longer owns tea gardens, and its iced tea is made from extracts of tea dust sourced from various tea fields. Ironically, the industrial processing of the drink strips away the natural aroma of the tea, which then has to be artificially added back. While this might seem like a negative aspect of mass production, as far as Lipton is concerned, it’s desirable – facilitating the achievement of consistency. So, Lipton food chemists add something called “liquid aroma.”
Sometime after the 1970s, Lipton stopped using cane sugar to sweeten the beverage in favor of fructose and high-fructose corn syrup, not only because they are cheap sweeteners, but also because they stabilized the product to add shelf life. In fact, Lipton’s “unsweetened” iced tea also contained these additives for their preservative characteristics.
Scientific literature, like the 2012 study issued by the National Institutes of Health linking high-fructose corn syrup to metabolic disorders like obesity, heart disease, non-alcoholic fatty liver, and Type II Diabetes, likely influenced Lipton to remove it from their sweet lemon tea and replace it again with cane sugar (and for some flavors, Stevia).
The addition of potassium sorbate and sodium benzoate were also added to keep Lipton iced tea “fresh” in warehouses and on grocery outlet shelves for as much as eighteen months. Phosphoric acid was used to control the pH level, keeping the beverage acidic to prevent bacterial growth. That appetizing amber hue that typifies each bottle actually comes from coloring agents like caramel colorant and “Red 40.” The latter is also used in other beverages and even cosmetics. While it’s generally considered safe, several European countries have banned its use because of research linking it to such ailments as inflammation, colitis, and attention deficit syndrome in kids. In the U.S., the Trump administration announced that the Department of Health and Human Services and the Food and Drug Administration will phase out all petroleum-based artificial food dyes from the nation’s food supply, including Red 40.
The Iced Tea Revolution
RTD teas have evolved considerably since the early days of Lipton's canned tea. Seth Goldman has played a significant role in the gradual shift away from powdered, industrially made beverages to more natural drinks.
“Until we came along, there hadn’t really been much innovation in the RTD tea-based beverage segment,” Goldman says.
Honest Tea was among the purists who used premium organic tea leaves to brew the tea instead of dust (often referred to as a byproduct of tea processing rather than tea itself). It also dramatically reduced the sweetness of the beverage. They elucidated the “just a tad sweet” phrase in various slogans linked to trust and integrity such as: “a balanced sweetness you can trust," and, “naturally sweet, honestly good.”
Goldman and Nalebuff’s strategy of dialing down the sweetness level was a gamble as the American public – especially young people – had become addicted to sugar. Others in the iced tea space, such as the AriZona Iced Tea line, had come out by then. They may have been spurred on by the success of Snapple, which was founded in the ‘70s and positioned themselves as a healthy alternative to Lipton.
AriZona differentiated their products by steeping green tea leaves using a cold brewing method, taking considerably longer time than hot brewing but resulting in a smoother tasting drink. Fruit extracts were added for flavor as well as cane sugar, agave, and honey for sweetness. However, some of their varieties ended up with unhealthy high-fructose as a sweetener in the ingredients.
After they introduced a big can measuring 20 ounces, one major appeal of AriZona Iced Tea came from the fact that, despite inflation, they kept the price consistent – just 99 cents. CEO Don Vultaggio says he just accepts lower margins, which may well be a fact. Still, there are other factors that keep the price down: efficiency improvements have been made in the manufacturing process; the company saves on distribution and transport by using 40% less aluminum in the cans (“We make the cans thinner,” Vultaggio told Today); and their truck drivers drive at night, reducing their fuel consumption due to lighter traffic on the road. The company also spends nothing on marketing. Ultimately, Vultaggio famously stated, “I didn’t want to do what the bread companies and the gas companies did; I wanted to be different.”
Despite claims of being healthier than carbonated soft drinks, Snapple and AriZona continued to be high in sweetness and caloric content by the time Goldman went for his now famous run. Honest Tea was a departure from this composition.
“The iced tea industry before Honest Tea was very high calorie – and it only got sweeter,” says Goldman. “The intent [of these beverage companies] was to offer an alternative to soft drinks but not necessarily to replace them with anything much healthier,” he adds.
Honest Tea ended up appealing to adults and grew a loyal following, which included then-President Barack Obama. After experiencing significant growth, the Covid-19 pandemic tore through the world and decimated supply chains. After the pandemic, Coca-Cola Inc., which had bought Honest Tea from Goldman and Nalebuff, decided to discontinue it.
Goldman elaborates on his “gut punch” reaction to this decision: “[Coca-Cola] told me that they were evaluating all product lines and determined that Honest Tea was underperforming in the portfolio. Honest Tea had a complex supply chain and challenges persisted post-Covid. Of course, the brand was competing for shelf space against Coca-Cola’s other products. So, they made the decision to discontinue it.”
By then, Goldman had moved on to the board of Beyond Meat, a plant-based food company, thinking he had left the beverage industry behind. He had also started Eat the Change, a nutrient-dense food company that focused on snacks. But, with so many loyal customers and former employees of Honest Tea lamenting the fall of the label, in late 2022, Goldman and his cohort from Eat the Change, Spike Mendelsohm, along with Honest Tea co-founder Barry Nalebuff, revived the concept in a new product under the Eat the Change umbrella called Just Iced Tea.
Like its predecessor, the beverage contained moderate sweetness (and a completely unsweetened version is available). They couldn’t use any of the trademarked slogans that had helped Honest Tea connect with the public. “So, we came up with ‘Just Sweet Enough,’ and we think it works even better,” Goldman says.
While Just Iced Tea sources from India (Assam and Tamil Nadu states) and China (Zhejiang and Jiangxi provinces), most of the tea leaves come from Cha de Magoma, the largest organic tea plantation in the world, located in the East African nation of Mozambique. “[Mozambique] had just come out of a civil war. So, the plantation, which had been a conventional one, was inoperative for a long period of time," explains Goldman. "When it came back into use, the period of stagnation actually made it more conducive to convert to organic [cultivation], allowing a revival in the terroir, and the time for the plants to rid themselves of chemical residue."
Hence, Just Iced Tea is certified organic. It is also Fair Trade certified in both the sourcing of leaf and sweeteners. “The workers decide democratically how the Fair Trade premium is spent for maximum collective benefit,” Goldman says.
Just Iced Tea continues Goldman’s mission of planet-friendly sourcing and healthy product development. It is a credo that has earned him the moniker of “activist-entrepreneur.”
Moreover, the new brand has benefited from the legacy of the old one. They leveraged the retail network that had been created when Honest Tea was being sold, and the historical link to it has worked in their favor. “Vendors contacted us and asked how they could get their hands on the product, saying, ‘we’ve got the customers – they want what you’re selling because they miss Honest Tea,'” Goldman recalls.
Goldman says that returning to an industry segment that he is known for transforming has aided the success of the new venture. “With Honest Tea, when we started, there was nothing in the space, and we were ahead of our time. Then we spent over two decades building the space – and that has paid off with Just Iced Tea. In a sense, we’ve just leveraged this development," says Goldman. "Tazo Tea came up but then they left the market around the same time as Honest Tea, leaving a vacuum."
Goldman mentions Coca-Cola products Gold Peak Tea and Peace Tea as competitors but says Just Iced Tea is no mere replica of them – or even Honest Tea. “Peace tea is a more traditional iced tea, but I suspect that Gold Peak has taken over some of the brewing systems that Honest Tea left behind,” claims Goldman (perhaps explaining its similarity to the old Honest Tea brand).
The sweeter Peace Tea seems to be going after the AriZona segment by matching sweetness and coming out with a 23 oz can that is quite similar in look to AriZona’s signature can.
With Honest Tea momentum behind them, it’s no wonder that after less than three years of being in business, Just Ice Tea has already overtaken Peace Tea in market share.
Just Iced Tea was first offered in glass bottles. Then, cans were introduced to help make the product more portable. The product line has quite a range of flavors, including: Peach Oolong, Lemon Tea, Raspberry Tea, Half and Half Lemonade, Honey Green Tea, Morrocan Mint Tea, Berry Hibiscus Herbal Tea, Lemon Ginger Herbal Tea, Lewi’s Lemon Tea, Orange Mango Herbal Infusion, Mango White Tea, and their newly launched Dragon Tea, which contains passion fruit juice and agave as sweetener. In fact, all the bottled teas are sweetened with agave. They also have an unsweetened range consisting of: Original Black Tea, Original Green Tea, and Golden Oolong.
According to PR team member Sophie Schaffler, about ten percent of the teas are unsweetened with the rest being “just sweet enough.” “Our top-sellers are our peach oolong tea, half and half, and third is honey green,” she says.
Determining the sweetness level is key in developing each flavor of Just Iced Tea. This is more art than science. “The sweetness level is arrived at internally just by employees of the company," says Goldman, "An example is peach tea, which already has some natural sweetness to it. We decided to add just enough to bring out the natural sweetness of peach just a little more, but with other teas we may need to use slightly more sweetener. We’re basically guided by our palates."
Their production process is a far cry from industrial laboratory concoctions. “We filter our water, then bring it to a boil (or just slightly lower for green teas)," says Schaffler. "We then take tea leaves and infuse them in the water. We let them steep for four to six minutes, and then we filter out the tea leaves and add in sweetener, juice concentrate, and any organic flavoring that might be in the recipe.”
Read part 2, which covers today's iced tea market.
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