Not so Innocent anymore: smoothie business strikes deal with soft drink giant
Published:09-April-2009
By Datamonitor staff writer
Innocent Drinks is to receive GBP30 million from Coca-Cola to help the company expand further in Europe. The company will remain independent, but the founders will need to ensure that Innocent's ethical principles are not compromised in the public eye through the involvement of a global corporation primarily known for the production of carbonates, currently perceived as unhealthy.
Coca-Cola has secured a deal to acquire a minority stake in the UK-based smoothie maker Innocent Drinks. A sum of GBP30 million will be paid by Coca-Cola in return for a stake in Innocent, reported to be "between 10% and 20%". Innocent advises that the investment will be used to fund further expansion across mainland Europe, and will provide the company with access to Coca-Cola's extensive global distribution network.
Innocent was founded in 1999 by three students who have built the brand on a strong ethical founding. The company has striven to use environmentally friendly production methods and actively encourages and acts on feedback from its customers. The founders have published a statement on the company website stressing that Innocent will continue to function as a standalone company with the same principles as before.
This is not the first time that Innocent has entered into business with a global corporation. In 2007, the company announced a deal with McDonald's that saw Innocent smoothies offered in selected outlets of the fast food chain in the UK. The deal was abandoned after a trial period, but the company's strong ethical image was tarnished in the eyes of some consumers, as it was seen to be looking to increase profits through an association with a fast-food chain linked with obesity and other unethical practices.
From the perspective of Coca-Cola, the stake in Innocent could help the company's overall image. The carbonated beverages that the company is most associated with have gained a bad reputation in recent years over their high sugar content and their alleged adverse effects on the global obesity epidemic, along with links to tooth decay. An association with an ethical and health-oriented company such as Innocent has the potential to improve the company's brand image. However, the more cynical consumer may see this as an attempt at a 'quick fix' for Coca-Cola as it continues to focus on its core products.
The deal would undoubtedly seem to provide benefits for both parties. However, Innocent runs the risk of ostracizing some of its more loyal consumers, who may feel that the mere presence of Coca-Cola dilutes the ethical ethos of Innocent. This is by no means the first deal that has seen an ethical company receive investment from a global corporation, and while some companies have benefitted from deals such as this, success is not always guaranteed. The investment represents a good opportunity for Innocent to expand, but it must ensure that it continues to work by its self-defined ethical principles, or risk losing many of the loyal consumers that helped to establish the brand.
