Rough with the Smooth

With floor-to-ceiling glass windows, green Astroturf carpets and picnic tables that transform a walk through an office lobby into a stroll in the park, Innocent’s canalside HQ in Ladbroke Grove is the physical expression of one of the UK’s most distinctive brands. A sign on their juice development kitchen announces ‘This is where the magic happens’, while behind a ping-pong table a wall is covered in baby photos – none of the 200 or so employees are spared.

‘Fruit Towers’, as the office is known, echoes the childlike naivety, or arguably faux-naivety, of Innocent’s branding. It feels more like a community than a corporation, or perhaps a strange religion whose followers worship oranges and bananas. There’s barely a capital letter in sight.

In 1998, university friends Adam Balon, Jon Wright and Richard Reed invested £500 in fruit and sold smoothies at a music festival. They asked customers if they should quit their jobs in advertising to start a business and the results were almost unanimous. Within a year, a business plan had come together but securing funding was proving tricky. The trio sent pleading emails to everyone they knew: ‘Does anyone know anyone rich?’ The unorthodox strategy worked. American businessman Maurice Pinto liked the idea and invested the £230,000 needed to get Innocent up and running.

In its second year, Innocent turned over £1m. By 2004 it was making more than that in profits. Everything went smoothly until 2008 when the company lost more money than it had made in its first 10 years combined; a pre-tax profit of £10m in 2007 became a £9.1m loss the following year.

“It was an annus horribilis – a terrible, rubbish year,” says Richard Reed, ensconced in a first-floor conference room. “The smoothie market contracted and our slice of a now-smaller pie got smaller due to competitors launching against us; the price of fruit went up due to countries such as Russia and China becoming major importers; and the exchange rate collapsed so fruit became more expensive because we’re buying in dollars and we’ve just lost 25 percent against the currency. After 10 years of nothing but good luck, it felt like all our bad luck came at once.”

One of these competitors, PepsiCo, was gearing up for a battle. It launched a range of smoothies under its Tropicana label, which prompted Innocent to introduce its own orange juice. Such changing dynamics in a potentially lucrative market lured PepsiCo’s arch-nemesis into the game. Coca-Cola bought 30 percent of the company in 2009, and upped its stake to 58 percent the following year.

Eyebrows were raised. Innocent had traded off its playful reputation: the unironic company name and the halo on the logo, the labels that chatted to you like an old friend, the pledge to donate 10 percent of profits to charity, and the irreverent approach to capitalism; an early brochure cheerily declared, ‘We just want to produce lovely drinks, and save up enough for a day out at the seaside.’

With Coca-Cola’s backing and a product range expanding to include flavoured water, kids’ drinks and Veg Pots – a first foray into the food market – Innocent is approaching both the economic downturn and increased competition with aggression and ambition. But what became of that wide-eyed idealism? “We’ve only become more innocent as we’ve become bigger,” Reed insists. “With more resources and better access we can get higher quality fruit and give more money to charity.”

The Coca-Cola deal wasn’t the first time Innocent had been accused of selling its soul. In 2007, the company did a tie-in with McDonald’s, who included Innocent smoothies in their Happy Meals. “We got slammed,” remembers Reed. “We knew it didn’t sound right but we’re not in the business of doing what sounds right. We’re in the business of doing what is right and if McDonald’s want to stock healthy drinks for kids then we’re all over that. People were against it but it’s inverted snobbery, plain and simple.”

A deal with a multinational often accused of selling unhealthy drinks to children caused an even bigger furore. “I genuinely do rate and respect Coca-Cola as a business,” argues Reed. “We have a great relationship with them, as hands-off as hands-off could ever be – just four two-hour meetings a year and we’ve retained full control of the business. We separated owning shares from voting rights, which is unusual but it shows amazing awareness on their part. They understand that giving away 10 percent of our profits is part of the DNA of our brand and that this is a sacred thing.”

Asked about persistent rumours that Innocent’s founders will soon sell the entire company to Coca-Cola, Reed smiles and shrugs his arms. “There’s no plan,” he says. For the time being, they’re taking advantage of the prosaic benefits of being in an odd couple, such as more competitive advertising rates and cheaper plastic caps. And there’s a real belief that the plucky outsider can teach the soft drinks giant a few tricks, too. “We have much to learn from them but we hope the tail can sometimes wag the dog and we’re already starting to see it in terms of sustainable agriculture,” says Reed. “They’re all over our sustainability experts to learn about procurement of oranges and such things.”

The company may have changed but the brand remains the same. Coca-Cola aren’t mentioned on Innocent’s labels, which “talk to you like a friend, minus the swearing.” It’s an approach that prefigured social media’s huge impact on customer relations. Today, everyone from HM Revenue & Customs to British Gas has piled into Facebook and Twitter, aiming to engage their customers in the kind of friendly chat Innocent has pioneered since its inception.

The company’s approach to social media, Reed says, is a natural extension of their labels, which continue to invite customers to ‘pop into Fruit Towers or call the bananaphone’. As for a digital strategy, Reed claims they’ve never had one. “We’ve employed people who are interested and interesting and it’s just happened that some of them have been into the new things happening online," he says.

While there have been numerous Innocent marketing campaigns, some more successful than others, the early realisation that the side of their bottles was “a little billboard that reached the most targeted audience imaginable” demonstrated a talent for letting a strong brand generate its own publicity. An Innocent recipe book that sold around 200,000 copies was a particularly successful piece of in-house marketing. And as official juice and smoothie provider to the Olympics, Innocent is now reviving its annual summer fête in Regent’s Park to coincide with London 2012. But perhaps the most significant recent coup is a new BBC show to be presented by Reed called Be Your Own Boss, in which he’ll hunt for a young British entrepreneur to offer £1m of his personal wealth as an investment.

“The show fits with our vibe as benevolent capitalists who believe in making money but also want to do good by helping other people get their businesses running,” Reed says, adding that he dislikes seeing entrepreneurship on TV represented by “grumpy old men in suits being rude to people.” He’ll only invest in companies, he says, that help make the world a slightly better place.

He’s aware that people may question the integrity of a co-founder of a company worth around £180m preaching about ethics and responsibility. “It’s been said that we’re hippies with calculators and that nails it,” he says. “I don’t want to be disingenuous. I don’t sit around hugging people and ‘om’-ing to the sunset, but I don’t sit around counting my money either.”