Smoothie operators sell out to Coke

Have the founders of the Innocent label compromised their ethics by taking £30m from a corporate giant? Martin Hickman investigates

As 160 Innocent staff stood on the artificial grass in the "chill-out room" of their headquarters, Fruit Towers, yesterday, they were about to receive some news that not all of them found as palatable as their smoothies. A stake in the London smoothie-maker had been sold to the world's biggest soft drinks company and symbol of ruthless US capitalism, Coca-Cola.

For the three founders Richard Reed, Jon Wright and Adam Balon, who met at St John's College, Cambridge, the £30m funding from the US drinks giant will propel the company's fledgling move into Europe and fight off multinational companies determined to replicate its success in Britain.

For some Innocent customers, going into business with a fizzy drinks company which puts eight teaspoons of sugar into 300ml cans of its best-selling drink will not be the most auspicious of partnerships for a social enterprise which prides itself on its wholesomeness and independence.

By selling between 10 and 20 per cent of its business to Coca-Cola, Innocent is following a slew of niche brands into the arms of larger companies. Since the boom in ethical consumption at the end of the 1990s, the organic soup and sauce maker Seeds of Change has been taken over by Mars, Rachel's Organics by the US dairy giant Dean Foods and organic chocolate company Green & Black's by the mass-market organisation Cadbury.

The premium sandwich maker Pret A Manger (which had a dalliance with McDonald's), the speciality crispmakers Tyrrell's and Kettle, and health food maker Dorset Cereals have all been gobbled up by private equity companies.

Ben & Jerry's, the quirky Vermont company whose ice cream comes with chunky political slogans, was scooped up by the conglomerate Unilever, which makes everything from Persil to Flora. In the most famous case of all, in 2006 ethical pioneer Anita Roddick sold her Body Shop chain to the French cosmetic giant L'Oréal, which she had accused three years earlier of making women feel bad about their bodies.

In all the cases, the entrepreneurs, who received multimillion-pound payouts, argued that a big company's money and expertise was vital to spreading their ethical message. Yesterday, Innocent was no different, explaining that Coca-Cola's funds and 120 years of business experience distinguished it from two other fund-raising offers on the table. "They're only a minority investor but we have got someone on the end of the line that we can ring for advice," said Richard Reed. "To have cash and expertise rather than just cash to use seemed a good move."

Unlike other "sell-outs", the founders will not be pocketing the cash; instead, it will fund offices, staff and marketing across Europe to push the company's smoothies and new veg-pots.

Only 20 per cent of the company's £103m sales last year came from the Continent, where it operates in 13 countries. Most of the time it is second, third or fourth behind the banana giant Chiquita or Tropicana, which is owned by Pepsico, Coca-Cola's arch rival.

"On Continental Europe, only 20 per cent of supermarkets have smoothies," said Reed. "But the big boys, Chiquita and Tropicana, are moving in quickly. We could carry on doing it piecemeal; the reality was we didn't have the luxury of time in Europe, because everyone has seen what we have done in the UK."

With Coca-Cola's money, Innocent will launch in Spain and Italy and seek to improve its position across Europe, and eventually the world; it is trademarked in every country apart from those in sub-Saharan Africa.

In return for its £30m, Coke will attend quarterly investment meetings but the loudest voices will still be those of the founders, who will have stakes of 20 per cent each, the staff, who have 10 per cent, and Maurice Pinto, the initial investor, who has the rest.

Britain's top smoothie maker promised to continue donating 10 per cent of its profits to good causes.

Whatever the merits of the investment, Innocent acknowledged that some customers would feel uneasy about leaping into bed with Coke, which is often vaunted as one of the brashest examples of American consumerism.

How the move will turn out in the long run remains to be seen. Where companies have surrendered their business to a bigger partner, their fortunes have been mixed. In an interview with The Independent last year, Ben & Jerry's founder Jerry Greenfield acknowledged that Unilever had kept the business a separate division, but he still rued his lack of control.

Green & Black's founder Craig Sams felt that giving the company access to Cadbury's money and expertise had helped sell more organic chocolate bars without lowering quality.

According to Ruth Mortimer, the associate editor of Marketing Week magazine, businesses who take over smaller, niche brands are too smart to kill off their new acquisition's attributes. "I don't think most shoppers will be especially concerned as long as they see no obvious differences in the way that Innocent behaves or communicates," she said.

"Green & Black's has gone from strength to strength since it was acquired by Cadbury and people haven't stopped buying Ben & Jerry's now it is owned by Unilever. Pret A Manger once had a stake taken by McDonald's and has also gone on to flourish."

Manchester-based Ethical Consumer magazine, however, immediately downgraded Innocent's ethical score from 12.5 out of 20 to 6.5, putting it towards the bottom of smoothie makers. Editor Rob Harrison said Coke scored poorly for its record on water extraction in India, human rights in Columbia, environmental reporting and marketing of sugary drinks to children.

In a market dominated by multinationals, Richard Reed said he felt safer with Coke by his side. "We have got an older brother. We are still on the programme to fight the bullies but we have got this older brother to call to the school gate to sort them out," he said.

Sold out? Ethical chains that lost their independence

Ben and Jerry's (2000)

Founded by hippies Jerry Greenfield and Ben Cohen, the ice-cream maker famous for funky flavours like Cherry Garcia and Chubby Hubby was bought by Anglo-Dutch household products giant Unilever for £175m in 2000. Unilever has kept the business separate and stuck to many of Ben and Jerry's original Fairtrade ideals but did not promise to maintain forever the company tradition of giving 7.5 per cent of profits to good causes.

Pret A Manger (2001)

A third of Pret A Manger, the upmarket sandwich maker opposed to "obscure chemicals, additives and preservatives", was sold to fast food giant McDonald's, which uses 78 E numbers in its own branded food. Private equity company Bridgepoint bought all of Pret for £345m last year, making at least £50m each for its founders Julian Metcalfe and Sinclair Beecham.

Green & Black's (2005)

Green & Black's, which started life in 1991, was named after its gourmet credentials: organic (green) and high-cocoa (black). Organic pioneer Craig Sams and his wife Jo Fairley felt the best way foward was by selling the company to mass market chocolate-maker Cadbury for an undisclosed sum.

Body Shop (2006)

Ethical business Anita Roddick was criticised by animal welfare campaigners in 2006 for selling Body Shop, which campaigned against animal testing, to French beauty corporation L'Oréal, which admitted "a very small" number of ingredients in L'Oréal products had been tested on animals. In 2003, Dame Anita condemned L'Oréal in particular and the beauty industry in general, saying that it promoted "unattainable ideals and sabotages self-esteem". Roddick and her husband, Gordon, who founded the company in 1976, earned £130m from the £652m sale.

Abel & Cole (2007)

Keith Abel, founder of one of Britain's most popular organic box schemes, started out selling potatoes door to door. He cashed in some of his chips two years ago when he sold a multimillion-pound stake in the company to Phoenix Equity Partners.

Tyrrell's (2008)

William Chase made national headlines in 2006 for demanding Tesco stop selling his crisps. Chase, who grew the potatoes for his crisps on his Herefordshire farm, last year sold the business to private equity company, Langholm Capital, for almost £40m. You still cannot buy Tyrrell's in Tesco.

Property
pets
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
Sport
football
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Food & Drink

    Recruitment Genius: Technical Supervisor

    £24800 - £29000 per annum: Recruitment Genius: As one of London's leading Muse...

    Recruitment Genius: Centre Manager

    £14000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

    Guru Careers: Accountant

    £28 - 45k (DOE): Guru Careers: An Accountant is needed to take control of the ...

    Recruitment Genius: Hotel Assistant Manager

    £18000 - £20000 per annum: Recruitment Genius: This hotel in Chadderton is a p...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk