Innocent Drinks risks destroying its carefully cultivated ethical image through the deal it struck last week with fast food chain McDonald’s (marketingweek.co.uk last week) in its latest bid to boost sales and profits.
The smoothie maker has been accused of “selling out” and forging a “Faustian pact” through the deal (marketingweek.co.uk last week). It will use its drinks, say the critics, to lure children into buying chips and burgers from one of the world’s most reviled purveyors of junk food.
The deal has already led to a backlash from a number of Innocent’s consumers and will certainly damage its brand values, but observers are also sceptical about the commercial benefits the drinks company will reap. Some wonder whether Innocent, in all its wide-eyed innocence, is about to get taken for a ride by McDonald’s.
The burger chain stands to vastly improve its image by forging a link with a brand so strongly linked to health and quality. In the recent Marketing Week BrandIndex Best Brand Performers 2007 survey McDonald’s came bottom out of nearly 700 brands in public perceptions of quality. So the only way is up.
Much to lose
Innocent, by contrast, was the second biggest riser in terms of quality (after Magners cider) and has much to lose through its association with the burger chain.
Under the tie-up, which was first mooted by McDonald’s last year, the fast-food company will add Innocent’s Strawberries, Blackberries and Raspberries smoothie to its Happy Meals.
The meals offer children a choice of cheese burgers, fish fingers, chicken breasts and fries, dairy ice cream with chocolate sauce and Smarties and milk shakes. The chain has recently added some healthier options such as crunchy carrot sticks and fresh fruit bags. With an Innocent Smoothie included, the meals will be priced at £2.19, 20p more than current Happy Meals.
The initiative is being trialed alongside Pepsico’s Tropicana Go in 80 McDonald’s outlets in Yorkshire and north-east England.
Innocent admits it was expecting a backlash and it hasn’t been disappointed. “Tainted brand” and “terrible idea” are two of the less hostile comments posted on Innocent’s website in response to the McDonald’s deal.
Parallels will inevitably be drawn with other “sell-outs” by companies with an ethical positioning, such as Green & Black’s sale to Cadbury’s, the Body Shop to L’Oréal and Pret A Manger’s sale of a stake to McDonald’s. Everybody, it seems, has their price.
Reaction, though, has not been universally negative and some have congratulated Innocent for offering healthier options for children at McDonald’s and attempting to drive change in corporate and consumer behaviour.
The smoothie maker, in typical Innocent fashion, has already mounted a strong PR defence over its decision, explaining the rationale behind its decision on its website.
It claims that 72% of its regular drinkers actively want Innocent to be sold in McDonald’s and, moreover, says it will try to win around those who have questioned the deal.
Jamie Mitchell, UK managing director of Innocent Drinks, says the decision was not an easy one to reach. He claims that what swung it was the combination of commercial incentives twinned with the benefits of providing healthier food for children.
“I think it’s one of those decision you treat carefully. We have a mission to get kids drinking as healthily as possible. The commercial rationale is pretty clear/ you get to introduce your product to new customers.
“We are not here to defend or attack McDonald’s. But it is not our ethics and principles that are up for sale,” says Mitchell.
He is also quick to dismiss suggestions that the deal bears any resemblance to The Body Shop one with L’Oréal. “We are trialing drinks. There is a fundamental difference between that and selling the company.”
It will almost certainly result in the addition of a new healthy product in McDonald’s. Pepsico’s Tropicana orange juice and McDonald’s semi-skimmed organic milk, for instance, were rolled out across the UK after similar trials.
As Jill McDonald, senior vice-president, chief marketing officer for northern Europe at McDonald’s, says: “We do not trial things unless there is a good chance of success.”
The Innocent smoothie, she points out, was chosen following market research involving 15 other soft drinks as McDonald’s looked to refresh its menus.
McDonald is also keen to point out what she terms the similarities between the two companies. “We are both open and transparent about sourcing and we both want to make fruit and veg easily accessible to kids,” she says.
Innocent, on the other hand, is more circumspect about similarities, though admits it has seen a great improvement in terms of McDonald’s transparency and its work with charities. Mitchell admits, though, that “fundamentally we have different values”.
The benefits of the tie-up, observers say, favour McDonald’s, with this deal its latest salvo in boosting its health and social responsibility credentials. For Innocent, they believe, the advantages are less apparent. For instance, Jenny Fors, associated director of Added Value, says: “The virtuous circle will work in favour of McDonald’s with values such as naturalness, realness, healthiness, friendliness, transparency and truth coming back to the McDonald’s brand.
“Innocent, on the other hand, does not seem to have much more to gain from this other than volume. The circle doesn’t seem to be that virtuous. But volume is never a bad thing. And more fruit to the people can only be good.”
The worst case scenario for Innocent, analysts say, is the double whammy of sales of its smoothies not meeting expectations and the tainting of the brand.
Mitchell, though, refutes such suggestions. He says: “I do not think the brand is going to get tarnished. If sales do not go off, then we will not roll out.”
The long-term goal is for Innocent Smoothies to be rolled out through domestic and international McDonald’s outlets. Mitchell says: “We are a European and international business. My focus is to make this work in the UK. But we do want to have the same sort of distribution in international and European markets.”
Innocent has long harboured ambitions to crack the US market but it will need to continue its success across the UK and into Europe if those plans are ever to come to fruition.
In the UK, Innocent already distributes through multiples like Tesco and Asda – a route which has helped power growth in its smoothie brands. Innocent’s turnover was about £70m last year, double its 2005 figure, and the company now sells around 1 million smoothies every week.
Some have questioned, in the light of such growth, why Innocent needs to jump into bed with McDonald’s.
Andy Nairn, planning director at Miles Calcroft Briginshaw Duffy, says: “I think it was unfortunate because Innocent is a brand that is held in such high regard. There must have been lots of other opportunities for Innocent, because part of its strategy had been to expand internationally. So surely it could have followed this strategy.”
Not so, says Mitchell. “The grocers have served us brilliantly to get us served in the home. But most impulse purchasers do not happen in groceries.”
Whatever the risks, the owners of Innocent Drinks think they are on to a winner. The tie-up with McDonald’s is a calculated risk but one they evidently think is worth taking.