A loss of innocence?

As Innocent Drinks develops the brand internationally, it faces a tricky task of expanding while staying true to its ethical beliefs. By Mark Choueke

Innocent Drinks, maker of Innocent Smoothies, has reached a crossroads and many in the industry are watching carefully to see how the ethical drinks brand manages the jump from leader of a niche market to mainstream global player.

Innocent has made a name for itself through producing smoothies made from whole fruit, rather than fruit concentrate and water like many of its rivals, and has been a huge success. Since its creation in 1998, Innocent’s topline revenue has increased from &£300,000 in its first year to &£37m in 2005, growing 130 per cent in the past 12 months alone. The company – set up by three university friends – was ranked as the third-fastest growing unquoted company in the UK last year (FastTrack 100).

Such rapid growth has its consequences, including attracting the attentions of multinational corporations looking for an easy acquisition. For the likes of PepsiCo or Coca-Cola, the right choice of a small but thriving brand with a market presence would make for a relatively low-risk, inexpensive gambit.

Many entrepreneurial “ethical brands” have reached the same point as Innocent in their development. All too often, however, they have wilted under the pressures of rapid growth and are now owned or controlled by bigger and better-established brands. Ben & Jerry’s (Unilever), Linda McCartney (HJ Heinz), P&J Smoothies (PepsiCo) and Green & Black’s (Cadbury), have all been swallowed up by larger rivals following years of establishing themselves as niche, but successful, players.

Innocent marketing director Richard Reed admits there have been approaches, but refutes the idea that a sale would ever be necessary. “There will never be a situation where we would sell because we were unable to take our expansion forward. If we ever sold, it would be because it was the right option, not because it was unavoidable,” adds Reed.

While 90 per cent of its market remains in the UK, Reed says Innocent’s aim is to become Europe’s biggest juice drink company. Innocent has recently opened offices in Amsterdam, Dublin and Paris. Reed says: “The next five or ten years are about expanding on the Continent, little by little, while protecting the core values and product.”

Innocent’s growth has been aided by the emergence of the smoothies sector, which itself has grown rapidly in recent years. Innocent’s share of the &£34.9m UK smoothies market is 60 per cent by value, up from 45 per cent last year (ACNielsen). But Reed claims “copper-bottomed” business systems are in place to ensure Innocent copes with the pressures of growth and that everybody in the supply chain, from fruit growers to bottlers, shares the same ambitions.

However, industry experts believe that if Innocent refuses to sell its name and enlist the necessary marketing expertise needed to see the brand go global, it may be forced to dilute the fun, ethical, “home-made” personality of the brand if it is to break into the mass market.

There are other concerns too. One industry source says Innocent still has the feel of a start-up: for instance, Reed boasts that the growing staff at the London headquarters – “Fruit Towers” as he calls it – incorporates “great business minds, university graduates, scientists and hippies”. The company is proud of its ethical roots and has set up a grant-giving charity, the Innocent Foundation, which invests in the countries from which Innocent sources its ingredients. It also runs Fairshare, a programme of distributing fresh food and drinks to the homeless and runs an annual festival for families, Fruitstock, in London every summer.

As part of its plans to break into the mainstream, Innocent appointed HHCL/Red Cell to create a television advertisement earlier this year (MW December 2, 2004), but eventually rejected the agency’s work, choosing to use a cute, inexpensive campaign produced in house. HHCL client services director Jason Cobbold says: “Agencies are accustomed to shaping the voice and personality of a brand – something very tightly controlled by a few top people at Innocent. That will be a challenge as it expands. One needs to make adjustments to the brand voice as the market broadens.”

But Reed remains bullish, saying: “Innocent is successful because of what the brand stands for: quality, health and taste, delivered responsibly and ethically to consumers. Anyone who thinks that is not a mass-market proposition has lost touch with the mass market – as a nation we’ve never been more interested in eating healthy delicious food

Facts and Figures

lnnocent was set up in 1998 by three university friends: Richard Reed, Jon Wright and Adam Balon

lnnocent’s topline revenue rose from &£300,000 in the first year to &£37m in 2005

The total value of the UK soft drinks market increased by 0.9 per cent

year on year from 2003 to 2004. During the same period the smoothie market increased by 42.3 per cent

Smoothies showed more year- on-year growth from 2004 to 2005, with the value of smoothies sales increasing 62.2 per cent against a soft drinks market which increased its value by three per cent

The amount we spend on smoothies has more than doubled in two years, rising from &£15m in 2003 to &£34.9m in 2005

In 2003, the money spent on smoothies represented 0.5 per cent of total soft drinks sales, compared with 1.1 per cent in 2005

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