The rub-off effect of ethical companies’ reputations

Feature1You often hear the tale of the big, bad business wolf gobbling up the easy prey of a smaller, ethically focused brand. The quirky, likeable little company is portrayed as selling out to the corporate money-making monster, while the larger one imposes innovation-strangling structure on its new acquisition.

Coca-Cola has just taken a minority stake worth £30m in Innocent drinks, the smoothie brand set up by three university friends 11 years ago. It joins a list of deals including Cadbury buying Green & Black’s, Unilever snapping up Ben & Jerry’s and Clorox purchasing Burt’s Bees.

But the acquisition may not be as controversial as it first appears. Marketers of smaller businesses are spotting another trend: rather than selling out to larger corporations, little brands are selling in their ideas to the bigger businesses – showing the corporate parent that it is possible to have principles and personality as well as profit.

Richard Reed, co-founder of Innocent, says of the deal with Coke: “In some small ways, we may be able to influence their thinking.”

Jamie Mitchell, former managing director at Innocent, says he believes that the relationship between a smaller brand and its corporate parent can benefit both businesses by helping to pass around best practice.

He uses Unilever’s acquisition of ice cream brand Ben & Jerry’s as a good example: “By having that brand as part of the organisation, knowledge will get shared and people’s passions infuse even in the deepest darkest bureaucracy.”

Ben & Jerry’s European brand director Helen Jones admits she was wary when the multinational first bought her brand. Ben & Jerry’s is known for its ethical activism and as its first employee outside the US, Jones had once run the international business from her spare bedroom.

She explains: “At the time it was a slightly unnerving period because we had been this very unique business founded by two guys. We were moving from one extreme to another to be owned by a multinational.”

But far from selling out, her colleague at Unilever, former UK chairman Gavin Neath, likens Ben & Jerry’s to a Vatican state within Unilever, promoting its political views and cheeky personality despite the corporation’s neutral political stance.

Neath, global communications director who is in charge of its global sustainability communications agenda, goes one step further. He says not only has Ben & Jerry’s had an influence on the larger business in terms of fostering an innovative and ethically minded culture, but it has even affected the company’s mainstream marketing.

Neath explains: “The single most important area is in the influence it has had on brand marketing; thinking about where values-led marketing can lead you and the benefits it can offer. Ben and Jerry’s was an early pioneer of this, doing it in an entirely intuitive way.”

Unilever has taken a marketing value of the ice cream brand and turned it into a company philosophy, which has been termed “brand imprint” (see box). “It’s a way of getting brands to think more broadly about what they do,” adds Neath.

While Ben & Jerry’s is having this dramatic effect on the corporation as a whole, Jones says her division is still able to assert its autonomy and retain its culture, even while its attitudes bleed out into the wider business. She says: “We had created this culture around this small entrepreneurial business and I think that both sides thought that should be protected.”

There have also been benefits for Ben & Jerry’s being part of Unilever in terms of its production processes. It has moved the production of its ice cream from Vermont in the US to Europe, and a sustainable dairy programme has been pioneered with the help of Unilever, enabling Ben & Jerry’s to move towards its aim of being “climate neutral”. All of these projects, admits Jones, would have taken years without the backing of a big corporation.

Paul Cowper, brand director at Added Value, which has worked with Cadbury, confirms that the way big brother companies are working with the little brother brands has changed dramatically. He says that it has been recognised that the smaller entrepreneurial companies are able to bring their quirks to a company whose creases have been ironed out.

“The little brands have something fundamentally different about them, and big brands have figured that this is what makes these brands excel. These big businesses are not just buying the intellectual property, they are buying much more,” he suggests.

Cadbury announced last month that it would be using Fairtrade cocoa for its flagship Dairy Milk product. In 2005, it took over smaller, organic business Green & Black’s, which received the first-ever Fairtrade mark on its packaging for its Maya Gold bar, 15 years ago.

Green & Black’s director Mark Palmer, who has overseen the chocolate brand and its wider distribution globally, says that while he thinks Cadbury has always had good trade standards, owning Green & Black’s has enabled it to talk more publicly about its operations. It has seen how receptive consumers are to the messages about fair trade from its smaller organic division.

He explains: “When Green & Black’s looked at possible industry partners, we were hugely impressed by the work Cadbury was doing with its long-standing community projects with cocoa growers in Ghana. Perhaps prompted just a little through its involvement with Green & Black’s, Cadbury has learned to talk more confidently about that great work.”

For some smaller brands, they are able to have an influence over larger brands not through being bought but simply through tie-ups. Two years ago, fast-food chain McDonald’s signed up smoothie brand Innocent to offer a fruit-based alternative to cola and water for its consumers.

At the time, there were angry reactions from some consumers who felt that Innocent had sold out by being stocked in the restaurants. But McDonald’s was keen to offer a wider range of healthy foods, and Mitchell, who signed the deal with McDonald’s, says the impact of its healthy offers on the chain – as well as the wider distribution – was worth it. He argues: “I’d rather be on the inside helping a group improve itself and improve the healthiness of its products. I’d rather be on the inside helping that happen than shouting on the outside.”

Mitchell says he understands why some consumers were confused by the idea of a brand like Innocent, which promotes itself with a child-like naivety and strong ethical streak, signing a deal with McDonald’s. But he argues that it was the strong principles held by Innocent that allowed McDonald’s to talk about health with conviction, which made sense for both businesses.

Some branding consultants believe that these alliances are likely to become more visible in future as larger companies see the benefits of publicly learning from smaller brands.

 “They want to make their partnerships visible to consumers because they realise that the power of their brands is also actually who they are linking up with,” says Melanie McShane, a strategist at Wolff Olins.

She adds that in a sector such as finance, which needs to build trust with its recession-scarred consumers, larger brands could help rehabilitate themselves through either buying up or creating alliances with smaller companies. “They have really lost touch with what consumers value. It would be really interesting if we see the big banking brands take a share in some of the more innovative financial brands,” she says.

With so many large companies exposed to the recession on a global scale through multinational operations, any edge that a small, innovative division, unit or business can offer is more pertinent to brands than ever before. Whether small businesses can become leaders of marketing excellence and sustainability or simply bring new perspective to large ones, it can become a partnership with benefits for all.

McShane says: “People do have a fear that large brands will somehow disable that consumer connection with smaller brands; actually, what is happening is that large brands are trying to find a way of getting in touch with us.”

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