Innocent Ltd. Report

Innocent was founded by three college friends: Adam Balon, Richard Reed and Jonathan Wright back in 1999. As Reed said “They were and investors worst nightmare because they had no experience or knowledge of the smoothie market, the only clear idea they has was to prepare a healthy, tasty fruit drink that people will be willing to pay”

After six month of testing recipes they decided to do a marketing analysis to see if people liked the product and were disposed to buy it again for that they made 2.000 orange, pineapple and banana smoothies and sold them at the musical festival “jazz on the green”, they asked the costumers to through the empty bottles in the YES bin if they like the product and will buy it again if not to put it in the NO bin. The result was that they sold all their smoothies and the YES bin was full. Nine month later and with an investment of £250,000 from a business angel, Mario Pinto the first innocent smoothies were sold to the sandwich unit in their old office.

After that the company hasn't stop growing, with more than £100 million in turnovers, 275 employees, offices across Europe and an average of two million smoothies sold per week. “innocent” is the number one smoothie brand and the fastest growing food and drink company in the UK, also is the only company that has appeared in the “Sunday times Fast Track 100” for four consecutive years. Innocent founders intentions are to become “Europe's favorite little juice company” and for 2030 “The earth favorite little food company”.

Innocent SWOT analysis

STRENGHTS

Good product

Innocents smoothies are characterize for being made with natural and fresh fruits and is a product that has only an 8 day shelf life which guaranty a high quality product.

Innovative products and creative marketing

Innocent is being innovative by launching to the market new flavor (only in 2003 they launch 9 different recipes in three different categories). In addition to help keep the costumers interested they have 32 different types of labels in circulation and they change them every three months.

Environmental company

They start in 2003 using 25% PCR (post consumer recycle) plastic in its bottles, now they had change their one liter smoothie into a lighter cartons with no membrane lid that will help save 20 tones of plastic and 400 tones of carton a year. Also now it is possible to recycle a 100% of their packaging, furthermore they only buy fruits from plantation approved by the “Rainforest alliance” and they use renewable electricity in their business.

Development and Training plan

At innocent there is a three different level of training for the employees:

  • “all of us” these are basic courses for all the employees.
  • “Knitting” these are specific courses for everyone at the management level
  • “Whatever it takes” these are job or need-specific courses and include everything.

Good communication with costumers and retailers

Innocent stills keep a one to one communication with their suppliers offering them direct support, also has the best retailers data base that helps manage the communication but not only with the big supermarket chains but also with the small corner shops that were the ones that help build the brand.

With costumers they keep in touch by email, letters, postcards etc, also they have the ‘banana phone' were costumers can call and give their opinion. And they have an open door policy with their costumers

Sophisticated supply chain

Innocent offers unique terms of distribution and sales such as their product only has eight days shelf life, they offered a service to retailers of orders on daily basis, these gives the brand two advantages zero wastages and maximizes product availability. These terms has given innocent a 98% successful delivery rate.

WEAKNESSES

Loss of “innocence”

Innocent last October faced a complain from ASA involving one brand of their portfolio, ‘This Water', because they said the advertisement of the was of the product was false. Their allegation was that the information given by innocent said the product only contain water and juice, bur the truth was it also contain 42g of sugar.

For some consumer innocents partnerships and deals with McDonalds and Coca Cola is a signal that they are becoming a big corporation and forgetting their principal goals.

Loss of originality

Even though innocence is always changing their labels and introducing new products to the market in some other aspects they have become very monotonous one example is the “Regents Park Fruitstock Festival” people love it but is the same every year.

Loss of transparent

Innocent is growing and everybody can see it but they want us to believe that they still are “three mates and a juicer” when the truth is that they have become a multinational corporation, even though growing is not a bad thing don't being honest with their costumers is. So they just should remember what the original purpose of innocent was and stick to the basics.

“Innocent” a market driven organization

“innocent” has being described as a market driven organization not only for their innovative products or their marketing differentiation but specially for their relationship with their costumers, “innocent” has an open door policy were they encourage their costumers to make a visit to the “Fruit Tower”, the “banana phone” is were costumers can call the company to keep in touch with them also give their opinion of the product and in which way it can being improved, furthermore at innocent office you can find a wall were they paste all the emails, postcards, letters etc that they received from their costumers. For “innocent” founders costumers are one of the most important factors for the company's fast growth that's why they are so interested on knowing their opinions so in that way they can satisfied their needs and wants. In bad times this relationship with costumers has being advantageous because they were able to response to costumers enquires and gives the reasons of why they took those decisions for the business. One example is what Richard Reed, one of ‘innocent' co-founder, said about their partnership with McDonalds:

“I think definitely was the right thing to do, our business is selling smoothies and here is a family restaurant that has been criticized for selling unhealthy food, who are now asking for sell healthy food, for me I felt irresponsible to say no. I knew to some people it would sound wrong, but we are doing what we thing is right.

What I love know is that you can go to a McDonalds and the smoothie is and option in your happy meal and for no extra money you can give your child an ‘innocent' smoothie that gets a portion of fruit into the as opposed to a drink of fizzy cola that just does not”.

Macro environment analysis (PEST)

POLITICAL

VAT relief from smoothies

innocent is going to tribunals to try to get their smoothies relief from paying VAT because according to the UK and European Law fruit juices are consider luxury items and for that have to pay indirect tax, Richard Reed has said “that is absurd that fast food items are excluded from VAT while his own company drinks which contains healthy components such as two portions of fruits are fully taxed”.

Furthermore there is a high probability that innocent will lost their campaign because of litigation that had the similar argument failed to establish the same point in 2007 when “Kalron Foods High Court decision which ruled Smoothies constitute a drink and therefore be subject to the standard rate”. This is because there are a lot of different points of view about what is and what is not considered basic food.

Economic

Economic crisis

Made in 2008 innocent sales decreased a 20% in comparison with 2007 sales, these is because people are searching for cheaper alternatives in juices and smoothies.

New competitors

That has enterer the market with similar product at lower prices.

Expensive raw materials

Innocent smoothies use expensive raw materials witch increases the final price of the product.

Social

Health-consciousness

People are being more health-conscious about the consequence of bad alimental habits, also trends for healthy eating habits are demanding more natural product

Environmental consciousness

People are more willing to pay for products that are made from recycling materials even though they are more expensive, and also costumers are more loyal to companies that take care of environmental issues

Technology

Green technology

‘innocent' uses renewable electricity in their offices, also their bottles are a hundred percent recyclable and they are implementing green fuel in the company vehicles.

Sustainable development

They buy their bananas from farms that are approved by the rainforest alliance; means “innocent” encourage reforestation programs.

Main opportunities and threats that might affect ‘innocent' in the next five years

OPPORTUNITIES

  1. First there is global trend that encourages people to take more care about their health and one of the main points for achieving that is eating healthier and natural food, ‘innocent' smoothies, juices and other brands have that characteristic and also they have a good know reputation.
  2. Second with the partnership that ‘innocent' has made with McDonalds they have introduced their brand in a world wide know fast food chain, that has being able to entered to almost all countries in the world and had being able to adapt their products to the specials needs of every country. Also McDonalds is target to satisfied the needs of every member of the family, as ‘innocent' has become part of this it would help the brand not only to maintain their position as the number one brand of smoothies in the UK but also to consolidates their brand in other counties were they had already enter the market as well as entering new potential market in other countries of the world.
  3. Third when they made the deal with Coca Cola for selling them ‘innocent' shares for £30 million they not did it simply for the money they will win and with that be able to recovered from 2008 turnover decreased, but also because Coca Cola has the best distribution canal and as McDonalds is all over the world, for a small brands as ‘innocent', comparing it with large corporation, these is a deal that could make them achieved one of their goals that is to become “The earth favorite little food company” in a shorter period of time, and this is not only because of the distribution canal but also because ‘innocent' brand will count with the backing of “Coca Cola” reputation in countries were ‘innocent' is unknown and with that people will feel more enthusiastic to try it.
  4. Fourth as the demand of healthy food and drinks is growing as well as the ‘innocent' product portfolio with the launch of ‘innocent squeezes' that are healthy snacks, ‘innocent orange juice' and other brands. They are going to be able to gain market in other areas and expand their brand and there are still consumers that still will pay higher prices for good quality brands or products.

THREATS

Economic downturn

In 2008 made the entire smoothie market had a downturn of 1 percent, but for ‘innocent' that meant a sales decreased of 20% in comparison with 2007, this was mainly because people started searching for lower cost products. Because of this ‘innocent' is facing a mayor dilemma if they reduced their prices their costumers will think they had being overcharged for the product since they start in 1999 and that can ruin the brand image, but given that the prices of raw material had increased and the company have had a decreased in turnovers they have to seek for a solution and recovered the market they had already lost. A solution that was given by “Joe Thomas” in an article he wrote for the marketing magazine was:

“To hold on prices, ‘innocent' products are not cheap but they delivered a true health benefit”

New competitors

Since ‘innocent' entered the market the brand was able to become the number one brand of smoothies in the UK, but given the high price of the product some credible competitors have entered the market and they are offering the consumers similar products at a lower price. ‘innocent' direct competitor in the UK is Pepsi Co brand “Tropicana” had made a change in direction of their product and now they are putting on the market a new line of healthier juices and also a line of smoothies at a low price witch has the intention to win “innocents” market and recovered their place as UK number one brand of juices.

Success based

“innocent” fast growth was based on a period of economic boom and the brand didn't had any significant competitors, so now they have to deal with all these external factors with out loosing the company values and their way of doing business, because there still are costumers that are loyal to the brand.

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