Coke near Honest Tea stake deal - report

NEW YORK (CNNMoney.com) -- Coca-Cola Co. is close to making an investment in up-and-coming soft drink maker Honest Tea for an undisclosed amount, according to a published report.

The move, reported by Beverage Digest, would allow Coca-Cola to expand its beverage selection amid slumping cola sales.

Bethesda, Md.-based Honest Tea makes organic tea drinks, as well as juices and a line of beverages for children. In its eighth year in business, Honest Tea posted $13.5 million in annual sales.

"Honest is a very small brand, but has attracted attention due to its organic positioning," John D. Sicher, editor of Beverage Digest, told CNNMoney.com in an e-mail Wednesday. "Linking up would be a positive for Coke."

Both a Coca-Cola spokesman and an Honest Tea spokeswoman declined comment on the report.

Honest Tea would join Coke's line of noncarbonated beverages in North America, including Glaceau's Vitamin Water, Fuze and Campbell's.

Although Coca-Cola sells Nestea and Gold Peak tea drinks, it still remains behind PepsiCo (PEP, Fortune 500), privately held Arizona, and Cadbury Schweppes (CSG) in take-home market share for the segment.

As consumer tastes shift from carbonated soft drinks toward water, juices and teas, Coca-Cola said it expects overall revenue will increase in the high-single-digit percentage range due to changes in its product mix in 2008.

Coca-Cola (KO, Fortune 500) shares fell 31 cents to $62.90 in morning trading.