How Innocent and Coke have influenced each other
Coca-Cola first announced it was to take a near 100 per cent stake in Innocent Drinks a year ago to the day tomorrow (22 February). When the increased investment first came to light, observers expressed concerns that Innocent’s entrepreneurial brand spirit could become diluted under its new owner, but the brand insists “very little has changed” since Coke became its majority shareholder.
Video: Innocent’s latest TV ad “Chain of Good”
That said, there has been rather a lot of change at Fruit Towers HQ over the past 12 months. Innocent co-founders Richard Reed, Adam Balon and Jon Wright stepped away from the day to day running of the business after the Coke announcement, but they have remained shareholders and now sit on the company’s executive committee.
Former group marketing and innovation director Douglas Lamont stepped up to take the CEO position, and European marketing head and former Red Bull marketer Franz Bruckner moved in to Lamont’s previous role. Subsequently, Coke’s investment and Innocent’s ongoing sales growth across Europe allowed it to embark on a marketing hiring spree and the creation of several new roles within the team.
How Innocent is boosting Coke
Innocent’s sales continue to grow. In Coca-Cola’s fiscal full-year 2013 results, announced earlier this week, the company said the consolidation of the Innocent-branded juice and smoothies business contributed “significantly” to net revenues in the quarter and the year. It contributed less meaningfully to the company’s profit due to the higher costs associated with selling Innocent products and Coca-Cola’s ongoing level of investment as it looks to build and expand the business.
Lamont told Marketing Week that beyond revenues, Innocent has also had a specific impact on Coca-Cola’s business in the area of sustainability. Innocent’s head of sustainability, Jessica Sansom, is now a member of Coca-Cola’s global sustainable agriculture team and is working with Coke on its global approach to sustainable sourcing for ingredients, including the development of standards, as well as auditing documents. The two are also working together on joint projects such as defining sustainable sourcing for apple juicing and climate adaption for mango growers in India.
“We continue to do things in a uniquely Innocent way”
The investment may have changed the way Coke approaches sustainability, but Lamont insists it has not changed the way Innocent operates.
He adds: “We continue to remain a standalone business, run by a home-grown Innocent team, doing things in a uniquely Innocent way. Our three founders remain as shareholders, in full support of the business.
”Being entrepreneurial is at the heart of everything we do and it remains one of the five values we are absolutely committed to as a business – they’re also written on the wall of our kitchen in case we ever forget what they are.”
But do consumers feel the same way? When Coke first invested in Innocent back in 2009, concerns were raised from consumers then about the impact it would have on the smoothie brand’s values and operations. But Lamont says that feedback did not escalate in 2013.
“We think this is probably because many people thought Coke became our majority shareholder when they first invested in 2009, and, as we promised back then, we haven’t changed the things we do, make or say in any way, so there is little to react to,” Lamont says.
Will Innocent change in the years to come?
But that may not always be the case. Andrew Marsden, former marketing director of soft drinks company Britvic and currently an international brand consultant, says Coca-Cola’s recent results showed that while Innocent is certainly shifting smoothies and juices in their millions, the margins are shorter than on some other products, which will mean the brand will “inevitably” have to change in some way to become a profitable part of the Coke portfolio.
He adds: “Coca-Cola has some big scale global brands to try to manage and alongside that is a small, not very profitable one [in Innocent]. That’s a lot of time and dedication and brand refocusing to make work. And in these type of acquisitions, when you lose the entrepreneurs you also lose that bit of personality and passion – it becomes a product that’s just part of a range. The jury is still out as to whether Coca-Cola can maintain the same level of focus Innocent needs in the long-term as much as its larger brands.”
But in the short term, Innocent has proven it has continued to stick to its roots, according to Michelle Li, research executive at River Research.
She adds: “We have seen a decrease in the risk of Innocent losing its most loyal customers who believe in the ethical values of the brand, as a direct result of the continuation of Innocent’s charity work and campaigns. Despite being acquired by the biggest soft drink company in the world, Innocent has proved to the public that it hasn’t lost its brand identity, which is critical to the recent success of the brand.”
This said, Li adds Innocent’s ability to maintain its brand legacy in social responsibility and incorporating the healthy concept into the Coca-Cola family will be crucial to the long-term future of the brand.
