Has Innocent sold out?

Innocent sells 30 Million GBP share to Coca-Cola

by Michael Smith

Coca-Cola has bought a £30m stake in Innocent, the British fruit drink and "smoothie" maker renowned for its ethical ethos.

While this, according to Innocent, is just a minority stake in the company the warming from Ben Cohen, one of the founders of Ben & Jerry's, who were bought out by Unilever some time ago is, "don't do it?!"

Innocent says the minority investment will allow further European expansion.
Richard Reed of Innocent, however, says that they will continue to run Innocent and that this is a good move so they can expand into Europe, etc. Is expansion really worth it?What will happen when the board decides that they want to sell more shares to Coca-Cola or if and when Coca-Cola manages to acquire a great deal more of shares than they have presently?

What till happen is simple: Coke will run the show, whatever Mr. Reed may say and claim now and that will, as in the case with Ben & Jerry's Ice Cream, the end of the real involvement of the running of the company of those that set it up and who have brought the ethics into it.

The same, in a way, has happened to Green & Black Chocolate. Ever since they are owned someone other than the original founders the company has started to change course, albeit ever so incremental.

The firm was set up in 1999 by three friends who spent £500 on fruit, turned it into smoothies and sold them at a small London music festival.

Despite this investment from the drinks giant Coca-Cola the founders of “Innocent Smoothies” insist that its "socially and environmentally-aware" stance will not be compromise by this and that hey will continue to lead and run the company, based in Shepherd's Bush, west London, and its production practices will be unchanged.

None of the invested cash, so it is said, will be paid out to shareholders.

Innocent says that the investment of £30m from The Coca-Cola Company will be used to take Innocent to the next level of success in innovation and expansion across Europe. An expansion that, in my opinion, may lead to the demise of the core values of the company, whether the owners and spokespeople wish to admit to this or not. If this is not going to happen then miracles are still possible.

Richard Reed, co-founder of Innocent said: ‘We’re excited by this minority investment as it enables us to do more of what we are here to do – get natural, healthy products to as many people as possible. All the money is coming into the business to fund our European expansion and the founders will continue to lead and run the company – we will be the same people, in the same offices, making the same products in the same way. Every promise that innocent has made – about making only natural healthy products, pioneering the use of better, socially and environmentally aware ingredients, packaging and production techniques, donating money to charity and having a point of view on the world – will remain. We’ll just get to do them even more.

We chose Coca-Cola as an investor because as well as providing the funds which will allow us to increase our investment in the brand both in the UK and internationally, they can help us get our products out to more people in more places. They have been in business for over 120 years, so there will be things we can learn from them. And in some small ways, we may be able to influence their thinking too.’

James Quincey, Group Business Unit President for Coca-Cola Europe commented on the investment: ‘We are delighted to have the opportunity to invest in Innocent’s future. We have long admired their brand, their products and their unique approach to business.”

Well I do not doubt that they have “long admired their brand” and I am also certain that they have long hoped to get their hands on this particular brand, idea and company.

He continued: “Our investment will support Innocent in helping more consumers enjoy their products and for the business to expand across Europe.”

Right, sure, and with a company like Coca-Cola and its record we all believe that too. They really must think everyone just fell off the turnip wagon.

This is not the first time a smaller company has been acquired by an unexpected buyer, even though in this case it is said to be “just” a minority stake. But we all know how quickly a minority stake can become a majority shareholding and then...

In 2005, organic chocolate maker Green & Black's was bought by Cadbury Schweppes.

It was Green & Black's who introduced the first Fairtrade product in the UK when it launched its Maya Gold chocolate in 1994.

At the time, Cadbury's had opposed the principle of fixing the prices it pays to cocoa farmers, though it has since committed to Fairtrade agreements of its own. But it did not do this from its own free choice but only because of consumer pressure. Conscious consumers were voting with the pocketbooks and were switching to other brands that were committed to Fairtrade and had signed up to the right groups. That left Cadbury Schweppes with only one option; to also go Fairtrade at least with some types of their chocolate.

Originally, in the very beginning, Cadbury's, much like Rowtree. Were set up on very ethical principles by their respective founders. But we all know what has happened now.

And in 2000, sceptics asked if Ben & Jerry's, the ice cream maker renowned for its social and environmental values, was selling out after being bought by the global giant Unilever. According to Ben Cohen they more than likely, inadvertently, did.

How far this is going to go with Innocent Smoothies remains to be seem, obviously. It is early days yet but...

© M Smith (Veshengro), 2009