Europe’s favourite smoothie brand considers expanding into the Russian soft drinks market. Richard, Jon and Adam, the three co- founders of innocent were sitting in the board room at innocent’s headquarters Fruit Towers discussing the international expansion they could achieve thanks to the injection of cash from and global experience of the Coca Cola Company . With the goal of becoming the biggest small drinks company in the world, they are currently operating in 15 European countries and they have set their sights on launching in a BRIC market. They have decided to commission a firm of consultants to consider the viability of Russia as a market in which to launch their smoothies. The beginnings
Richard Reed, Jon Wright and Adam Balon met at Cambridge university and in 1998, four years after leaving university they agreed that they wanted to make it easy for people to do themselves some good and they came up with a product that was intended to make their busy and often unhealthy lives in central London a bit easier. All three were keen consumers of smoothies and knew that two smoothie manufacturers were growing strongly in the US. As a result they felt that smoothies were the answer: delicious natural fruit crushed up and put into bottles that could be grabbed on the way to work. The firm was set up in 1999 having spent £500 on fruit, turned it into smoothies and sold them at a small London music festival. At this time, the fruit juice market in the UK was huge whereas the smoothie market was in its infancy.
The biggest UK smoothie company was then PJs with a turnover of just under £3million in three years. innocent felt PJs smoothies failed to taste as good as homemade smoothies because they used concentrates rather than fresh fruit. However, despite this, PJs were doing well with a high priced product and growing rapidly and the founders felt the UK smoothie market looked promising and decided to do some research whilst continuing their jobs. Rather than a questionnaire or survey they set up a stall – bales of hay and some ice buckets to keep the drinks cold – at a London music festival.
A sign asked “Should we give up our jobs and make these smoothies?” Customers voted by putting their empty bottles in either the yes or the no bin. At the end of the weekend the yes bin was full and the decision was made to take sabbaticals from their marketing and consulting jobs to sell their pre-packed smoothies through grocers and independent stores in the UK. Further research was undertaken to test different ingredients. The favourite was 1 ½ freshly squeezed oranges, a crushed banana and ¼ pressed pineapple. The new smoothies retailed for the same price as PJs but in a smaller bottle ( 250ml vs. 350 ml).
As the technology required to make smoothies was inexpensive, the capital investment was low hence reducing the risk. Furthermore, research into distribution costs indicated that sales efforts should focus on London-based independents and alternative channels for the first eighteen months with a move to multiples later. In January 1999 the team secured investment from Maurice Pinto a successful entrepreneur who received 20% shares for his £235k investment . Three months later the first pallet of smoothies was delivered from Nottingham.
The holding company was called Fresh Trading and the brand name was “innocent” reflecting the founders’ belief in the purity of their product which was the main point of differentiation from all competitive offerings. The new company benefited greatly from increased consumer concern for healthier eating and lifestyles and the UK media’s interest in the subject. By year four of their business plan (2002) sales stood at £6 million exceeding their original forecast and by 2010 innocent had sales of £110 million and a 78% share of the UK smoothie market. (Appendices 1 and 2). Innocent is still very much associated with smoothies but the company has since diversified its range and today’s product lines include juices, purees and veg pots (see Appendix 3).
Diversification has been important in the company’s growth story. Innocent is the number-one smoothies brand in the UK and in many of the European territories where the product has sold, however much of the company’s growth has been maintained by new lines as the smoothie market has become commoditised. In order to maintain volumes in the smoothie market innocent have concentrated on innovation in flavours and launched big take home tetra packs, smoothies for children and innocent thickies with probiotic yoghurt. Today, Europe’s favourite smoothie company is selling their natural healthy product in 15 countries and employs over 250 people across Europe. In just over a decade, innocent has established itself as an iconic British company with a market leading position in its home territory and across much of Europe. The innocent brand:
From the outset, innocent has delighted its customers with its straightforward almost irreverent approach to business using a simple, down-to-earth communications techniques that mirror the no-nonsense honesty of the innocent brand and its products. Instinct played a big part in the development of the Innocent logo and packaging. The founders wanted to show that the product was fun and good for you. They did not have a sophisticated marketing plan but were clear that it had to taste and look good and that it needed to stand out on café shelves. Innocent’s primary target market was young urban professionals and research amongst this group led to the apple with a halo logo being chosen as the one that most clearly illustrated Innocent’s core values. (Appendix 4) At the outset marketing had not had a real budget and was very simple.
Dan Germain, a school friend of the founders who joined them in 1999 to deliver juice to retailers had commented that the labels on the bottles were boring. The founders decided to liven them up with off-beat messages. One of the first was written by Richard. “We’re not saying that there’s anything wrong with having a gym workout, it’s just, you know, all a bit of an effort really, isn’t it? If I were you, I’d just have an innocent smoothie instead. They’re 100% pure fruit, they’re made with fresh rather than concentrated juice and they contain no additives whatsoever.
As a result they taste good and do you good. And you don’t need to take a communal shower afterwards.” Like many small businesses, many of innocent’s most successful promotional activities started as one-off, opportunistic events. These included putting woollen hats on the bottles in winter. Initially the hats were knitted by 40 grannies recruited by the company’s website in return for 20p per bottle donated to their favourites charities.
This soon became a fully-fledged cause related marketing campaign called SuperGran run with the charity Age Concern, generating £80k for the latter in 2005 and £115k a year later. It was run simultaneously with Age Concern’s fight the freeze campaign which highlighted the plight of older people in winter. For each woolly hat-wearing smoothie sold in Sainsbury’s stores nationwide, innocent gave 50p to Age Concern to fund programmes providing hot meals, room thermometers, blankets, safety checking of electric blankets and advice on how to handle rising energy costs.
The SuperGran campaign resulted in a record breaking rise in sales for innocent smoothies and innocent’s biggest ever week of unit sales in Sansburys. Furthermore the campaign encouraged unprecedented involvement from innocent consumers with over 230,000 hats knitted and £300k of PR generated across the campaign. SuperGran illustrated innocent’s strong brand equity and the team’s ability to bring it to life through good story telling.
It created awareness and distinctiveness despite little absolute marketing investment at the outset. This brand equity helped define the brand’s values in the beginning and later on informed the sustainability strategy the company adopted. Their good-natured brand character allowed them to bring this to life for consumers in a way that was entirely consistent with the brand. Overall marketing skilfully interweaved an informal, irreverent, tongue-in cheek “conversation” with customers with an increasingly overt commitment to sustainability. The two were integrated, emphasising that commitment to responsible business did not have to be earnest and dull.
The strong branding has ignited growth as innocent has an unique and informational way of presenting itself and its eccentricity and has captured the hearts and wallets of the British Public. The fun messages on the labels became a regular feature of innocent’s shoestring marketing, along with visually arresting delivery vehicles and the distribution of free samples in locations like London’s Covent Garden, where large numbers of potential customers congregated. Company vans were designed to promote the company’s pastoral image.
Summer jazz festivals called Fruitstock were run for several years in London public parks, replaced in 2007 by the Innocent village fete. All of these low cost activities created media interest in the company. As early as the autumn of 1999, the BBC Food and Drink programme called innocent “The UKs best smoothies” and the company was referred to as more of a cult than a brand. Fan mail from satisfied customers was plastered all over the reception area Fruit Towers in West London. From 2001, the company ran a blog and in 2005 Richard Reed began contributing a monthly column to a national British newspaper (The Guardian) This eccentric approach is also used with retailers who receive regular communications from innocent such as a newsletter that combines product information with fun stories.
The customers and partners are known as “friends” Innocent has emerged from the outset as a brand that encourages customer engagement, using a straightforward communications approach that extends to every area of the company’s activities: its branding, its cow print and grass covered vehicles and its interactive website. In each case, innocent has maximised the impact of design and branding to communicate a set of clearly defined values, strengthening the relationship with its customers and creating a community of consumers that grows bigger every year. Critical to the company’s success to date has been its employment strategy, striving to employ experts in every relevant field from ethical procurement to web design. The founders believe that if you have truly inspiring and motivated people around you, you can do anything.
Sales took off significantly in 2003 as innocent moved in to a wider range of retail outlets giving innocent a 60% share in 2005 in the fast-growing UK market for smoothies estimated at £70 million that year. This placed innocent well ahead of PJs (£13 million sales) and private label brand £20 million. Eleven other smoothie brands came and went during this period and the smoothie market continued to grow. At the beginning of 2008, innocent was selling 2 million smoothies per week. Further sector growth was coming from supermarket own label smoothies Social Corporate Responsibility and values
As a business Innocent want to leave things better than they find them this is reflected in everything they do. The founders launched a company whose business strategy incorporated their social values from the outset and they ensured that as Innocent grew from a start-up with three founders to a medium-sized company, all new employees understood and shared the corporate values of the organisation. The core principle is stated as: “Create a business we can be proud of” They broke this principle down into five simple values, each reflecting what the company is, how they do things and where they would like to be in the future.