innocent smoothies business plan

Green Business: Innocent

Peter salisbury.

A cool new product that has swallowed the lion’s share of its domestic market with clever branding, solid sellable ethics and green credentials are a mix, which everyone from the biggest multinational corporations to the smallest start-up firms would pretty much kill for. However, as the co-founders of Innocent Drinks found out during 2008 financial crisis, even this dream combination doesn’t mean that a company is untouchable.

When the global financial crisis brought banks and businesses around the world to their knees, credit dried up and consumers cut back on luxury items; among them, Innocent’s pure fruit smoothies. The company returned an overall loss of £8.6m in 2008, wiping out every penny of profit the company had made since it was founded by three friends a decade earlier. In a tough trading environment, it is yet to return to profit.

‘We say at the moment that we aren’t a business, we are a fruit distribution charity,’ says Richard Reed, one of the company’s three co-founders, current co-CEO and brand director. ‘It costs us more to run than we get from doing it. We lost money in 2008; we lost money in 2009; we lost money in 2010 and we are going to lose money again in 2011. Fact.’ Rare is the CEO, or co-CEOs for that matter, who will happily tell journalists that they expect their company to run four consecutive years of losses and still remain afloat. But then Innocent has never really been a conventional sort of business.

Founded in 1999 by Reed and two of his friends from Cambridge University, Adam Balon and Jon Wright, the trio were in their mid-20s, and already bored by the corporate grind, when they revisited the idea of starting up their own company. Innocent was born. ‘We had never done anything like this before, and everyone we knew was saying it wasn’t going to work,’ says Reed. ‘On our business plan we said that within six years we would be turning over £6m a year, and I thought there was no chance.’ Innocent made a £3.6m profit in 2005 on revenues of more than £37m.

Sitting in the meeting room of Innocent’s headquarters, Fruit Towers - in reality a slightly prosaic lot in a West London business park, which has been kitted out with grocer’s grass, medina sofas and park benches giving it the atmosphere of a hip dot-com era start-up - Reed exudes energy and enthusiasm. Veering off at tangents - better health means better sex; self-heating bathtubs are a bad business idea - he makes it easy to see where the company’s simple-yet-clever marketing nous comes from. Child-like enthusiasm meets a solid business brain; carefully thought-out lines are dropped carelessly into tirades against the UK’s VAT system which taxes Innocent for the smoothies it makes but doesn’t impose a levy on their ingredients.

In that first business plan, the three ‘hippies with calculators’ also outlined principles that the company has stuck by to this day. Innocent would produce natural drinks, using sustainable ingredients, packaging and production methods, and would share the profit wherever possible, donating 10 per cent of its profits to charity. Keeping those principles while growing the business has been a learning experience for the Innocent co-founders, who have watched the company expand from three people in 1999 to 260 today.

For its smoothies - Innocent has also produced orange juice and a range of ‘veg pot’ ready meals since 2008, and recently added apple juice to its range - the company has to source fruit from around 30 countries across the globe. Suppliers puree the fruit and freeze it in the country of origin. The puree is then shipped to the UK, where it is blended and packaged into those instantly recognisable Innocent cartons and bottles, before being distributed to shops across Europe, where the smoothies need to be chilled constantly. The drinks only have a shelf life of 30 to 40 days, so the potential for waste is high.

As a result, a can of Coca Cola has a lower carbon footprint. In 2009, the UK’s Carbon Trust found that 170 grams of carbon were emitted during the production of a 330ml can of Coke while a 250ml Innocent smoothie caused emissions of 209 grams. There have also been questions raised about Innocent's use of non-organic fruit in its products; a strange oversight for a company whose main selling point is its green credentials. So what does Innocent have to say? Not surprisingly, it’s something they’re working on. ‘We aim to be a sustainable business in what we do,’ says Jessica Sansom, head of sustainability at Innocent and one of two sustainability experts and four agronomists Innocent employs to advise its suppliers. ‘But we do have a product. We have chosen to produce smoothies, so it’s about asking how we can make sure that they are as sustainable as they can be in every aspect, from how you grow the fruit to how you transport it to how you produce it to what kind of packaging you put it in.’

This has meant a complete review of the manufacturing process for its food and drink products, from the way the fruit is grown - including the crucial question of water use - to lightweighting and increasing the recycled content of packaging, while working with blending and packing plants to help reduce their energy efficiency and waste. ‘We have a completely vested interest in doing what we can for fruit to be grown more sustainably because our business is 100 per cent based around fruit,’ says Reed. ‘If the fruit harvest fails, where are we then?’

The company’s suppliers shouldn’t mind the help on offer. According to Sansom, the manufacturer who packages Innocent’s children’s smoothies has increased its on-site recycling rate from 30 to 97 per cent. Working with their suppliers to encourage efficiencies in energy, water and waste has helped another contractor to cut energy usage by 10 per cent, producing significant cost savings.

By the end of Innocent’s annus horribilis, 2008, its parent company Fresh Trading, which also owns the This Water brand, had £2.3m of cash in hand and was owed £17.1m by its customers, with £21.7m of debts to pay off by the end of the year. To continue trading, it needed cash, and quickly, or it would need to shut down all of its operations abroad - the UK business remained profitable, while the company’s losses largely stemmed from its German, French and Dutch subsidiaries. It was a question of massive retrenchment or bringing in another investor.

‘We needed a sugar daddy,’ says Reed. ‘We have a 30 year vision for the company and we aren’t done yet.’ Coca-Cola offered £30m for an 18 per cent share of Fresh Trading. It also promised, unlike other potential suitors, to remain a hands-off investor, and agreed to a contractual stipulation that it would not interfere with the way the business was run. The deal was announced in April 2009, and in 2010 Coca Cola took a further 40 per cent of the company, although the partners remain in charge of the business and its strategy.

It was, Reed says, the best deal on the table, and he maintains that the partners had had no ethical qualms about working with the company after an investigation into them, despite recurring claims by organisations and publications, including The Ecologist , that Coca Cola has caused major environmental damage at factories in India and Mexico among others.

Reed says that he is hugely impressed by Coke’s charitable donations and commitment to sustainable principles. Today, the company, which gives away around $100m to charity every year, is working with Greenpeace to change the way it refrigerates its soft drinks and is committed to using only hydrofluorocarbon-free fridges by 2015.

The difference between the early months of 2008 and today, Reed explains, is that the company didn’t expect to lose money and, crucially, it couldn’t afford it. Now, with the investment from Coca Cola, it can, and it plans to grow its business abroad. Innocent will return to profit in 2012, says Reed, and will continue to pursue its 30 year plan: to become Europe’s favourite little food and drinks company by 2020 and the world’s favourite food and drinks company by 2030 while retaining its core principles.

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Brand story hero–innocent drinks, in our brand story hero series, we shine a regular spotlight on different brands that we think tell their story well. here we take a look at innocent drinks, a food and beverage company..

Brand: Innocent Drinks

Industry: Food & Beverage

Products: Smoothies, juices, coconut water, flavoured sparkling water

Founders: Richard Reed, Adam Balon and Jon Wright

Year founded: 1998

Mission: ‘Tastes Good, Does Good’

If you could like help telling your brand story, organisation a consultation with us here.

Their story.

In 1998, three college friends decided to undertake a social experiment, placing their future careers in the hands of the public.

Richard Reed, Adam Balon and Jon Wright brought £500 worth of fruit to a music festival in London.

They set up a stall and sold the fruit as smoothies while asking their customers to take part in a vote. Instead of offering a three-page corporate questionnaire, they decided to just ask the one very simple question. “Should we give up our day jobs to make smoothies?” Customers had to choose one option. Dump their empty smoothie cup into a bin marked ‘yes’, or a bin marked ‘no’. By the end of the day, their ‘yes’ bin was overflowing.

The next day the three men had quit their jobs. The company was set in motion.

After a 15 month struggle to get investors interested, the trio caught the eye of an American businessman, Maurice Pinto. Pinto invested £250,000 into the company.

April 1999 saw innocent open for business as they began selling smoothies to a café across the road from their HQ. They launched with three smoothie recipes, with only one recipe surviving to this day.

Within a year innocent expanded to their first overseas office, based in Dublin (and by office, they actually set up in one of their employee’s sheds.)

They secured a trial listing in 10 British Waitrose stores. The innocent staff went and bought a load of their own products to make sure the sales went well. They did, and the innocent smoothies started selling across all Waitrose shops in the UK.

From the beginning, the company had philanthropy at the heart of their company. However, they did not realise how much they were actually donating to various charities. In 2003, innocent nearly led themselves to file for bankruptcy as the start-up was donating almost 46% of their profits.

As a result of this, the company then set up their own charity, ‘the innocent foundation’ that supports farming NGOs in developing countries. 10% of the company profits are now being donated.

2004 was also the year that ‘Supergran’ was born, now known as the ‘The Big Knit.’ This is where bottles of innocent smoothies are kitted out with their own individually knitted hats in aid of charity. They also further expanded internationally with offices opening in Paris and Amsterdam.

The company expanded into juices, then super juices and anything that involved blended fruit.

Between 2005 and 2008, the company made huge strides. They launched their first TV ad, their workforce grew to 100 people, they opened offices in Denmark, Austria and Germany. They also expanded into the food business as they launched veg pots to the market.

Along came the recession, and after years of steady success and multiple mistakes, the brand’s profits were down, and they had to start letting employees go.

In 2009, Coca-Cola became shareholders in innocent, buying an 18% stake in the company, furthering their hold in the company. Soon afterwards, in 2010, they bought out a further 38%.

By 2014, Coca-Cola owned over 90% of shares in innocent, Coca-Coca completed its takeover in 2013 as part of a deal that reportedly valued Innocent at £320 million. The three former founders stepped down from their positions.

The company went from strength to strength with innocent becoming the number one chilled juice brand in Germany, Austria and Denmark.

Despite threats from the anti-sugar lobby over the sugar content in their products, innocent maintain that there is absolutely no added sugar, and that the sugar content contained is due to the high amount of naturally occurring sugars that is present in fruit.

From a very humble office of cardboard box desks, and a ceiling that wasn’t tall enough for them to stand up straight in, to selling the company and product to conglomerate Coca-Cola, Reed, Balon and Wright’s story is one of success. Their humble start-up grew into a global company that continues to execute their brand story well.

Find out how your brand can become a Brand Story Hero by requesting a consultation.

Their Storytelling Lessons

Lesson #1 building a community around your story.

The idea for innocent was founded at a festival when the founding trio sold their first smoothies. Taking inspiration from this, the company run an ‘innocent unplugged’ annually. The festival encourages disconnecting from technology and reconnecting with those around you. It encourages creativity and includes large-scale dance classes and healthy, fresh food. A taster of the festival can be seen below.

The company are very much community based. They frequently bring customers into HQ to test out new recipes, tour the towers, and give their feedback in a casual setting rather than a clinical corporate environment. Innocent encourage interactions with their community and are engaged and interactive both online and off.

Lesson #2 Show, and tell the story

The use of colourful fruit makes the products look fresh and healthy.

The cinematography in their marketing YouTube videos features authentic and emotive content. It portrays normal people and their stories that relate to their customers’ own lives, rather than just a scripted corporate pitch about how great their product is.

In 2016, innocent launched their ‘hungry grass vans’. The vans went on tour promoting innocent’s recipe book “filling your family with good stuff.” Using the #grassyvantastic they encouraged customers to share photos of the vans across their social media platforms. This marketing van is a visual representation of their brand story.

Lesson #3 Success from simplicity.

Richard Reed, Adam Balon and Jon Wright knew they wanted to create a company together, but didn’t know how or what they were going to create. They threw around ideas regarding outlandish complicated tech products, but they knew deep down that while these may be convenient, they would not appeal to the masses.

Instead, they went back to basics and decided to target an something that was of importance to everyone on this earth. Health.

Fruit and vegetables don’t just hit a specific age group or target audience. The idea of fresh and healthy food appeals to everyone.

By taking this simple factor in consideration and adding their twist of fun, the innocent brand is now a worldwide success story.

Their story foundation is something that everyone has in common enabling them to build their brand story, and that brand story has led to their success today.

Their Story Tools

1) ‘innocent timeline’.

Their website features an ‘ innocent timeline ’ that displays the highs and lows of the story of the company, how it developed from a three man start-up to the multinational company it is today.

This timeline also features on the walls of innocent HQ, and includes everything from their very first business plan to the story of their packaging and everything in between.

Below is a video of Dan Germain the Group Head of Brand and Creative who gives a history tour of their London HQ.

Their brand ethos and story has remained true to how the company was started — with a lot of hard work while not taking themselves too seriously.

2) The Big Knit

From day one, charity giving was a big part of the company’s story.

In their almost 20 years of business, the innocent foundation has committed nearly 4 million euro. This has directly helped over 750,000 people.

Ever pick up a drink from the fridges in the supermarket and see a bottle with a knitted hat on it and wonder what it’s about?

Here in Ireland, innocent run an annual ‘ Big Knit ’. People can find the knitting patterns online, then submit their small knitted hats for bottles of innocent smoothies. These are sold during the month of October, donating 30c to Age Action Ireland for every hat sold. They explain that “as many as 25,000 older people’s lives are at risk because of the cold. And we wanted to help.”

I'm mad about these lil hats on Innocent Smoothies! Such a fantastic marketing idea and for such an amazing cause too ( @AgeAction ). Kudos, @innocentIreland 👏🏻 pic.twitter.com/mqzaKS2YtX — Rach 🇸🇩 (@bonjourrachel) October 12, 2017

The company use social media platforms to their full advantage as innocent have a strong presence on Twitter, Facebook, LinkedIn, YouTube, Pinterest and Flickr.

Their Twitter account, in particular is an excellent tool for sharing their brand story. They have high levels of interaction (including sharing ‘jokes’ with their customers as seen below), witty graphics, and they make the most of hashtags, images and videos. They use their Twitter account as an extension of their brand story. The use of social media means that people tweeting their products spreads their message to a larger audience. This acts as a form of customer marketing.

Why didn’t the skeleton go to the dance?… He had no body to go with pic.twitter.com/PQEx1dyBzc — innocent Ireland (@innocentIreland) October 13, 2017

4) Packaging

Due to a lack of financial resources, for the first five years the company depended on their physical products to carry out their PR and marketing.

They used doodles, fun facts and stories to fill the blank spaces on their bottles. This creates quirky and individual packaging that would look eye-catching on a shelf. This marketing tactic is still in use today, along with their logo being a distinctive feature across all their products.

5) Humorous content

The innocent website is almost over-whelming with how much information it has available to sift through. They have press snippets, previous advertising campaigns, a blog, books, and videos.