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The End of Innocence?

Optimize Blog - April 12, 2010 - 0 comments

The BBC was quick this morning to advise that Coca-Cola has upped its stake in the UK drinks firm Innocent, who specialize in natural smoothies and is the UK’s number one fruit smoothies brand.
The US drinks giant already had an 18% stake purchased last year but has subsequently upped its stake for an undisclosed fee to 58%. Innocent prides itself in being ethically aware and in fact donates 10% of its profits to charity.
Innocent was formed by three friends who started out selling their natural fruit juice drinks at music festivals having spent $1,000 on some basic fruit.   The initial success persuaded them to give up their jobs and go into business together. Co-founder Richard Reid has always been clear on the values of the company – 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 – but it has needed additional capital to expand into Europe and other global markets and this prompted the initial sale of an 18% stake last year.
Innocent employs 275 people, has a turnover of more than £100m and sells about two million smoothies per week. It already supplies retailers as far afield as the Netherlands, Denmark, Germany and Austria.
But is this increase to a 58% stake creating an uneasy partnership as after all Coca-Cola was recently told to correct an advertising campaign in Australia because its claims that Coke did not make you fat or rot your teeth were deemed “misleading”?
Whilst the Innocent partners claim that nothing has changed and that this sale is due to one of the founders wishing to retire, one cannot help but be rather incredulous of their assertion that the deal gives no new rights to Coke even at a 58% shareholding and that there will be no change or loss of control.
There are precedence of course in terms of unlikely partnerships and probably the most famous being the sale of Ben & Jerry’s to Unilever back in 2000.
The end of Innocent as a standalone entity is just another example of the type of business deal that a company has to undertake even when operating in a relatively niche environment. If you want to grow and expand you often need to seek coalitions and in capital constrained times the banks are no longer the obvious choice.
As always, choosing the right partner in business is key and only time will tell if the three innovators from Britain will be able to retain control and overall direction of the Innocent company and brand.

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