For any brand that cracks its home market as fast as smoothie producer Innocent Drinks, the dilemma of whether to grow the business by extending the brand to new products domestically or seeking out new shores must be a gamble taken with some trepidation.
But Innocent’s entrepreneurial founders Richard Reed, Adam Balon and Jon Wright can point to the fact that measured risk has long been the backbone of Innocents culture, and the appointment of Jamie Mitchell as UK managing director (MW last week) should leave them more time to focus on European success.
In the eight years since the three founders quit their jobs to start the smoothies company, they have seen profits and market share currently 60% of the exploding smoothie market and 11% of the chilled juice market (AC Nielsen) increase at almost heart-stopping pace. Innocent’s 2006 turnover will be 70m, double 2005s figure, and the company now sells 1 million smoothies every week.
Several industry experts and rivals some of whom have seen their bids to buy the company knocked back see this latest bid for growth as an over-confident mistake. The brand relies heavily on a quirky, amusing voice that in consumers’ eyes distinguishes it from rivals, as much as the fact that it is made entirely from natural fruit juices rather than concentrates.
The offbeat copy that appears on all product packaging and advertising gives the brand an engaging, home spun and fun character that has been imitated but rarely matched by others.
Innocent may face its first real obstacle in attempting to translate that all-important voice into European markets where consumers may fail to understand the joke.
Innocent has had offices in France and Benelux for 18 months, but last week launched in Copenhagen. Further expansion onto the continent is to follow, beginning next year with Germany and Austria.
One source says the industry has long been “waiting for the smoothie bubble to burst”. He suggests Innocent has not done its homework on European soft drink consumption particularly with juices which he says is not as high as in the UK. He adds: “The European soft-drinks market is more about waters than carbonates and juice drinks, largely because when temperatures exceed 20 degrees, thin drinks like water and iced tea go through the roof, and drinks like juices go through the floor.”
Much of advertising and messaging behind UK brands fails to strike a chord elsewhere. It took years of research before Britvic Soft Drinks launched the Robinsons squash brand in Denmark and Sweden (MW February 23) where studies showed that while it would bomb in many countries, Danish and Swedish families drink highly concentrated squash round the dinner table.
As part of its research, Britvic also tested its Tango fizzy drink brand in Europe and showed European consumer groups the “Youve Been Tangoed!” campaign that achieved iconic status in the UK advertising world in the 1990s. In Europe, however, the ads were misunderstood and roundly rejected.
Such cultural misunderstandings would be easy to come by for Innocent. In promoting its Smoothies for Kids range, one bottle label lists the many good reasons for having children, including: “They put things in perspective, you can dress them in hats that have ears on them and you can watch them eat worms in the back garden,” finally urging consumers to “go make some kids”.
A Bit of Bottle
Fearless as the entrepreneurial company is, there is recognition within Innocent that making such an edgy brand work in Europe will not be easy. Dan Germain, the companys head of creative, is largely responsible for Innocent’s voice, including the copy on the packaging. He admits: “We’re not sure if its going to work or if they’ll like our English jokes. If they don’t, then we’ll need to find someone funnier than we are.”
Though Germain gives training to the European creative teams in writing the labelling copy, he stresses Innocent UK affords its new offices full autonomy and creative licence a decision that displays much trust as it offers ample opportunity for Innocent abroad to evolve very differently from Innocent in the UK.
Germain adds: “Our teams abroad are going to know better what touches a nerve in their countries; I don’t know what makes Danish people laugh. Really, though, it comes down to the drinks. I can’t put a percentage on how crucial the accompanying words are to Innocent drinkers but people wouldn’t buy the stuff if it tasted like shit. There are things about the European markets we know and some we don’t, but we’re sure they’ll all appreciate a company selling natural, healthy drinks honestly and openly.”
UK managing director-elect Mitchell agrees, arguing that the European market, where demand for natural and healthy products matches that at home, is “extremely ripe”.
He stresses that where larger packaged goods companies often spend years and millions of pounds researching a new proposition before launching it, Innocent prefers a method “veering towards the venture capitalist approach”.
“Weve done basic research,” he says, “but we intend to use the methods that served us so well in the UK. Get straight on the ground and start selling, make it work, learn about the cultural differences as we go, start small and use lots of free sampling to get the brand known.”
The facts bear him out Innocent launched in Benelux at the beginning of the year. By December, the company will be selling 20,000 cases of drinks per week in The Netherlands, Belgium and Luxembourg, equal to an annual revenue of 7m.
Sales outside of the UK now account for 8% of Innocent’s revenue, a figure growing rapidly. “There are differences between us and consumers elsewhere in Europe,” says Mitchell, “but they are vastly outweighed by the similarities.”
Mitchell admits that though grassroots growth will be Innocent’s starting point in Europe, the company will be pushing more aggressively than it did when launching in the UK. “You have to decide at which point you’re going to advertise and move into supermarkets and so on,” he adds. “We waited three years in the UK to go into supermarkets, while in Benelux it might be next year. First we have to educate and excite consumers about smoothies.”
According to Mitchell, the expansion will rely on a plan with clear milestones, and if those are not reached then “tough calls” could be made. He states: “Entrepreneurship is all about risks and we cant be ashamed to say something didn’t work.” However, Innocent is already considering the long-term future and the possibility of an assault on the US market. It will need to continue its success across the UK and into Europe if those plans are ever to come to fruition.