... Return to previous page

An Innocent expansion

14 April 2009

An Innocent expansion

Last week’s announcement from smoothie firm Innocent that it had sold a minority stake to Coca-Cola for £30m prompted a cacophony of column inches, tweets and blogs from commentators, many of whom expressed anger at the whiff of hypocrisy coming from the company’s co-founders.

Advertising executive Richard Reed and business consultants Jon Wright and Adam Balon founded the company ten years ago, placing a socially responsible and sustainable message at the heart of its marketing right from the start.

It’s worked a treat, and Innocent’s cuddly mixture of ethical standards and fun has become something of a gold standard in entrepreneurial marketing. For all but the most cynical, giving 10% of profits to good causes, a commitment to supporting charities for the elderly and the homeless, as well as environmental responsibility through the ethical sourcing of fruit and the sustainable use of materials, is also laudable in its own right.

At best, the sale of between 10% and 20% of the company to Coca-Cola to fund a European expansion looks a poor fit for a brand admired by so many for its very difference to the ubiquity of the fizzy drinks brands loathed by nutritionists and dentists alike.

If that’s the only complaint, the founders would be forgiven for being bemused by the response to the sale, even if it is, as many suspect, to pave the way for an eventual exit.

Selling out to a giant is nothing new for entrepreneurs, even if the acquirer’s reputation does jar with the brand the founder has worked so hard to establish.

Founders have the right to decide what’s best for their business and their own future, and for all the talk of a business being their ‘baby’, if the right offer came along at the right time, most would be prepared to sell. As one technology entrepreneur put it, “you wouldn’t sell one of your children if you got a good offer from IBM”. But you might sell your business.

However, Innocent’s case does feel a little different. There’s the name for starters.

If you place a Google-style ‘don’t be evil’ mantra at the heart of your company’s identity and then get into bed with a giant associated with poor labour practices and environmental irresponsibility (and much worse if you believe Mark Thomas’ incendiary expose of the firm, Belching Out The Devil), it looks extremely hypocritical.

The founders protestations of innocence (sorry) were rather weak: "Every promise that Innocent has made, about making only natural healthy products, pioneering the use of better, socially and environmentally aware ingredients, packaging and production techniques, donating money to charity and having a point of view on the world will remain," said co-founder Richard Reed. "We'll just get to do them even more."

Maybe so, but we were left with no clue as to how they felt about their company contributing to profits allegedly made through ethically questionable business practices.

Rather depressingly, if you ignore the morale question, it looks like a good move. The brand is almost certainly strong enough to ride out the current storm of criticism without any major impact on the bottom line.

For all of their moralising, consumers will still buy the product if they like the taste. Upmarket sandwich chain Pret a Manger didn’t suffer from plummeting sales after McDonald’s controversial investment, after all.

The £30m investment will take Innocent a long way into Europe and Coca-Cola’s production and distribution network should come in handy too. Innocent may well be a European giant in a few years’ time, but I doubt the cuddly ethical message will remain as central to its marketing.

James Hurley, Growing Business