Innocent Drinks

A. The main facts about the activities of the company.

Innocent Drinks is a London based company, which was founded in 1999 and operates in the Food&Beverages industry. It employs 260 people in Europe, sells its products in 15 countries, and generates revenues of 200m GBP annually. Innocent’s operating areas are smoothies, juices, and since 2008 also “veg pots”.
Innocent Drinks has a unique founding story as this quote illustrates:
„We started innocent in 1999 after selling our smoothies at a music festival. We put up a big sign asking people if they thought we should give up our jobs to make smoothies, and put a bin saying ’Yes’ and a bin saying ’No" in front of the stall. Then we got people to vote with their empties. At the end of the weekend, the ’Yes’ bin was full, so we resigned from our jobs the next day and got cracking.“
The Cambridge graduates Richard Reed, Adam Balon and Jon Wright founded Innocent together and now form the executive board of Innocent Drinks. Their mission when founding the company was to make it „easy for people to do themselves some good (whilst making it taste nice too)“ which enabled them to quickly become market leader in the fast-growing smoothy market. The company’s success is supported by its five values: „be natural, be entrepreneurial, be responsible, be commercial, and be generous“. These five values are situated in different places in the company’s buildings to remind each and every employee how business is conducted at Innocent.
The basic production concept of the smoothies is to ship the frozen puree from the county of origin of the fruits to the UK where it is blended and packaged before being distributed to the various sales destinations.
But innocent does more than the mere production and sale of smoothies. They dedicate a lot to ethical business, to charity, to humanity. In this sense the Innocent Foundation was established in 2004 with the goal of supporting social projects in the countries from which Innocent Drinks source their fruits. It is financed by Innocent Drinks and therefore also by the consumers. They invest in 40 different projects around the world, e.g. two Rural Technology Centers in Bangladesh that help families build their skills and overcome the risk of malnutrition.

B. The Ethical challenges this company is addressing.

Donation vs. Business Stability
Innocent Drinks is committed to charity and has been right from the start. The company put charity, their will to help others, their ethical responsibility above everything else, which in 2008 nearly bankrupt Innocent, since they did not keep enough to themselves, for the company to survive. This illustrates very well the challenge Innocent Drinks is facing concerning the trade-off between donation and business stability.
The company is facing a challenge in terms of how to use their earnings. On the one hand they are motivated and committed to donate high proportions i.e. 10% of their profits or at least 250.000 GBP, in times of less revenues. On the other hand, they have to think about the company’s survival. The drawbacks of this policy are the huge outflows of capital, which make it harder to sustain in years of a crisis.
Environmental Footprint vs. Fresh Products
Innocent Drinks is not only committed to charitable organizations, but also to sustainability, to reducing their environmental footprint as much as possible. The production and distribution of smoothies, from the point of growing the fruits needed until the point in time when the product reaches the customer, entails a high rate of carbon emission and fresh water usage, as well as high waste production due to the short expiration period of smoothies. Overall, this leads to 209g of carbon emissions per 250ml Innocent smoothy and can account for up to 810l of fresh water per 250ml of smoothy. Innocent is aware of its impact on the environment and is constantly trying to improve and reduce the ramifications.
The company already managed to reduce carbon emissions by 21% through more efficient packaging, whilst keeping the product fresh for as long as possible, and therefore keeping the waste production to a minimum. In order to reduce the use of water Innocent analyzed the entire value chain and is consistently working on reducing the main drivers of water consumption. Furthermore, in order to serve society, Innocent implemented projects such as “drinks for the homeless”, which cooperates with FareShare and “taste not waste”, a project to do good with unwanted fruit. These projects also reduce the waste production whilst supporting people in need.
Ethical Suppliers vs. Costs
Innocent selects its suppliers according to their responsibility towards criteria like employee treatment and environmental sustainability. The smoothie‘s ingredients are purchased by thousands of different farms from all over the world. Consequently, there are differences in the practices of the suppliers. In order to circumvent any difficulties or unethical practices Innocent has set up a number of minimum standards covering environmental- and social issues for its non-certified suppliers. Nevertheless, Innocent favors suppliers certified by independent organizations, such as the Rainforest Alliance. For the products of these accredited suppliers, Innocent accepts to pay a price premium. By doing so they take a stance on the trade off between ethical suppliers and costs.

C. What makes you believe this company is really ethical and why you trust it?

A number of companies nowadays put some or even a lot emphasis on ethics, on sustainability, on the environment. But then the question is raised, what makes Innocent different, what makes it inspiring?
Innocent is committed to the quest of leaving the world a better place than they find it, by continuously striving for improvement of sustainability and human value in terms of production, distribution, and overall welfare. And, as we have seen, this commitment to ethical responsibility goes way beyond what may be expected from a company. Innocent does not stop where other people cannot look. They know, and act on the belief, that ethical responsibility and the path to leaving the world a better place, the path to success, as opposed to only the mere attainment of their goals, starts at home: „When we’re all old and grey and sitting in our rocking chairs, we want to be able to look back and be really proud of the business we all helped to create. We think the best way of achieving this is by living the values that are closest to our hearts.”
Therefore, in addition to all the external work Innocent takes on in order to improve the world, they are committed to providing their employees with the best working environment possible.
With the dedication to continuously improving the corporate culture, the employee commitment, the feeling of belonging, of security, of honesty, and of course the fun of doing your job, Innocent has implemented different actions that surely evoke a sense of family. There are several aspects in which this value of a family member is placed on every employee, not the least of which is the daily breakfast at the office. Several company meetings and weekend nature trips to foster the Innocent spirit, followed by the traditional Friday beers at the office, and the opportunity for each employee to work with one of the foundation’s projects for a week’s time, to name a few, are measures the company takes to help their employees feel at home. One of the most inspiring internal measures, we find, are the three quarterly scholarships Innocent gives away in order to enable a few employees to do something they have always dreamed of.
Apart from the commitment the company has towards its employees, it is important to the Innocent family to be in close touch with its Innocent drinkers. At Innocent one can see honesty in communication and democracy in action during the AGM, A Grown-up Meeting. This meeting is held once a year, where 150 customers attend, ask questions, express their thoughts on e.g. products, learn something about business, and get to taste some new inventions. One can see that Innocent is in a continuous learning process, which they like to share with their customers. This was also made clear in 2009, their 10th anniversary, where Innocent published a book, enlightening the world of the things they have learned so far. Innocent says itself: “we aren’t perfect, but we’re trying to do the right thing”.
So, why do we think Innocent is truly ethical and inspiring? Why do we trust them?
It is not only due to the ethical responsibility and the commitment the Innocent family carries in their hearts and lives by on a day-to-day basis, but also due to the inspiration and devotion to what is right, to what is ethical, which gave distinction to the company from day one.
As Richard Reed, one of the Innocent founders, said: “The whole of Innocent is about proving that there is profit in ethics.”

D.The possible challenges facing the company in the future and how you think this company may improve.

Coca Cola recently increased their shares of Innocent to over 90% - threat or chance?
After the acquisition of Innocent by Coca Cola was published there was huge criticism against this transaction because fans feared that the Innocent values would be violated. They argued that Innocent had sold its soul and that the fairy tail was over.
Innocent explained that this step was necessary because a „sugar daddy“ was needed in order to carry on their business. From the company’s point of view, the Coca Cola deal of 30m GBP for an 18% share, in the first place, was the best deal on the table because Coca Cola promised not to intervene in the business activities of Innocent. To clarify this both companies released a statement saying that they are 100% committed to protect the Innocent brand value and that everything they stand for remains as true as ever.
We think Innocent could improve its damaged image by full transparency, i.e. reveal what happens with their earnings; how much is transferred to Coca Cola and how much to Innocent Donation.
Customers pay for charity.
As already mentioned, Innocent transfers big portions of its profits into the Innocent Foundation. But is that only their commitment to sustainability? Obviously, the high rates of donation must be financed somehow. In this case, the customers are the ones who pay the mark-up in the first place. Why is that? Because instead of donating parts of its profits Innocent could also reduce the price of its product, as other price taking companies do.
As a future challenge we see the higher price of Innocent Drinks compared to its competitors that are already entering the market aggressively. In order not to loose market share, in order to keep its customer base and even reach new ones, Innocent should work on the communication with people. The company should clarify that by purchasing an Innocent product every customer is doing good, is participating in making the world a little bit better.