Two well-known specialty tea companies made the September issue of Inc. magazine’s Fastest 500/5000 list. Honest Tea of Bethesda, Md., ranked 1,336 on this year’s list of the fastest growing companies in the nation. Teavana Holdings of Atlanta, Ga., was ranked 1,646.
Honest Tea grew 215 percent in the past three years ending in 2010, earning $71.7 million. The company, which was founded in 1998, first appeared on the list in 2003 at No. 117, on earnings of $3.8 million. It now employs 96.
Teavana’s three-year growth was 164 percent from $47.2 million in 2007. The company earned $124.7 million in 2010 and employed 1,819. The specialty tea retailer was founded in 1997 and operates 161 stores in 34 states. It completed a successful IPO in July and is listed on the NYSE (TEA).
Honest Tea co-founder Seth Goldman recalled the early days of the company in a recent presentation at the Bethesda Green Business Incubator.
“When we launched Honest Tea back in 1998, we got our first order for 15,000 bottles from the local Whole Foods region. We had a customer, but we didn’t have the cash on hand to buy the bottles, the tea, or pay the co-packer to make the finished product. So we raised about $500,000 from the only people who couldn’t say no – ourselves, our parents, my sister, and my co-founder Barry’s college friends,” said Goldman. Honest Tea co-founder Barry Nalebuff is a professor at the Yale School of Management who now serves on the company’s advisory board.
The first batches were brewed in Goldman’s kitchen. The firm sold 360,000 bottles in its first year. It was acquired by the Coca-Cola Company in 2011 after an initial investment of $43 million in 2008.
The firm’s organic and fair trade teas are now available at 75,000 distribution outlets. Honest Tea sold more than 100 million bottles last year and Goldman projects 30 percent sales growth in 2011.
Teavana was founded in 1997 by Andrew Mack, and his wife, Nancy Mack. According to the company they were inspired by their international travels and passion for tea. “Their vision was to introduce consumers to the global tea lifestyle, highlighting the aromas, textures, tastes and healthful qualities of loose-leaf teas, while enlightening them on the origin of each tea,”
In 2004 the company partnered with Parallel Investment Partners to obtain equity capital, strategic advice and began a rapid expansion to become the nation’s largest chain of tea merchants. Sales grew from $33.8 million in fiscal 2006 to $124.7 million in fiscal 2010, representing a 38.6 percent compound annual growth rate. Store count rose from 47 to 161. The company reported net income of $12 million in fiscal 2010, representing a 126.9% growth rate over fiscal 2009. Sales averaged nearly $1000 per square foot with comparable sales growth between 2009 and 2010 of 8.7 percent. The typical location grossed $862,000 in 2010.
Companies on this year’s Inc. 5000 list report having created 350,000 jobs in the past three years, and aggregate revenue among the honorees reached $366 billion, up 14 percent from last year. Complete results of the Inc. 5000, including company profiles and an interactive database that can be sorted by industry, region and other criteria, can be found at www.inc.com/5000. “Now, more than ever, we depend on Inc. 500/5000 companies to spur innovation, provide jobs, and drive the economy forward,” says Inc. magazine Editor Jane Berentson. “Growth companies, not large corporations, are where the action is.”