Innocently juicy

Posted on 8 Jun 2011 by The Manufacturer

Roberto Priolo on how Innocent became a £130m smoothies company in 12 years.

When Coca Cola invested in Innocent Drinks in 2009, the fans of the British quintessentially anti-corporate smoothie company were quite disappointed. They feared Innocent would be sucked into the corporate money-making machine and stop being the green, responsible, customer-driven business they had grown to love.

Over two years since the deal, however, Innocent still believes Coca Cola, which now has a 58% stake, is a hands-off majority shareholder: part of the agreement was that the founders of the company would still be able to run it the way they wanted, pursuing their goal of becoming “earth’s favourite little healthy food and drinks company”.

Coke’s intervention effectively allowed Innocent to expand into the European market, where it recently overtook Chiquita. However, this wouldn’t have been possible without a solid strategy, a successful idea and a committed staff.

Within 13 years, Innocent went from supplying a few delies in West London to becoming a £130m company with over 65,000 distribution points, and one of the UK’s 10 most influential brands according to the Guardian newspaper.

It took a lot of work to reach such impressive results. To begin with, it took Innocent over five years to break through the £10m barrier, while finding the right partners and perfecting the products.

Steve Spall, operations director at Innocent, said: “After five years of slow growth, thanks to a number of measures we put into place between the supply chain at the back end and marketing and sales at the front end, we experienced a phenomenal, tenfold growth in four years, reaching a £110m turnover.”

In the early days, Innocent partnered with Sunjuice, which dealt with the sourcing and manufacturing part of the business. As the requirement to scale up came forward, Innocent understood they needed a longer shelf life for its products, which required investment in new technology and new packaging lines. The company also had to become more specialised in fruit and be more focused on how it was processed and where it was sourced from. Only this way would it be able to make colour, flavour and ripeness survive.

“We also needed more capacity it wasn’t possible for Sunjuice to invest in. We had to find other partners to work on other parts of the process, from blending to storage and transport. The key thing is to get from blended to pasturised and packed within 24 hours,” Spall said.

The company, which defines itself as a ‘manufacturing integrator’, did a vertical disintegration of the supply chain and became an integrator of different partners. It now successfully produces and distributes a quarter of a billion consumer units per year.

Although it is quite a large company, Innocent is still faithful to one of its main beliefs, which is to develop great core skills and outsource the rest. It decided to keep working as part of a network, rather than consolidating the entire business and operations under one roof. Spall added: “What we found is that having a set of close partners we really trust gives us a lot of flexibility in terms of changing formats, volumes, or recipes, without having to carry the capital cost.” By being demanding with partners, the business ensures they are reliable and able to adapt to new customer requirements.

In many ways, Innocent is the ideal company. It certainly is to its employees and its customers. Members of staff work in a friendly, stimulating environment (the Fruit Towers, in London) where, very much like at Google’s, they can not only work but also rest, play, eat together. Customers, on the other hand, are always guaranteed a natural product, made without sugar, flavourings or preservatives, delivered to them by wacky vans that look like cows.

Innocent’s approach to business can be summarised with RALF, the company’s set of principles (the acronym stands for Resilient, Agile, Lean and Flexible) that is used to try and design the network in a way that every part can be tested. When Sunjuice went bust in 2008, this single point of failure created major problems. Spall explained: “With RALF, we can predict demand and adapt easily to new requirements without leaving partners exposed and having lots of equipment unused.”

Flexibility is another important part of Innocent: since the flavour is so crucial the company is always looking for new varieties of fruit. In the long term, as global warming increases, the threat will be their availability. This may be one of the reasons behind Innocent’s commendable environmental performance, which is now an important part of the brand. The company doesn’t airfreight, uses sustainable products (grown by thousands of suppliers around the world, preferably those certified by independent environmental and social organisations) and sustainable packaging (using recycled or recyclable materials as much as possible).

With the recent injection of capital from Coca Cola, Innocent seems poised for even more success. The company’s target is to double its turnover over the next few years. Ambitious as it may sound, Innocent can achieve this goal without changing its nature, provided Coke remains the supportive, unintrusive investor it’s been so far.