Coke's Innocent buy-out offers threats and opportunities
Innocent will gain the benefit of Coca-Cola’s 126 years of brand management experience and considerable marketing budget following a deal to take near total ownership of the company. But there are concerns its “entrepreneurial brand spirit” could be diluted and stretched too far with new product launches.
Coca-Cola has increased its stake in Innocent Drinks to almost 100 per cent, in a move that will fuel further innovation and international expansion. Original founders Richard Reed, Adam Balon and Jon Wright stepping back from the day to day running of the business but will remain on Innocent’s executive committee.
A new CEO will be named in April but the majority of senior staff are expected to remain the same. No Coca-Cola marketers are expected to join Innocent and it is thought the chain of command will not be altered to make Innocent marketing team, lead by Douglas Lamont, report to Coca-Cola’s team.
Coca-Cola first bought an 18 per cent stake in Innocent in 2009, increasing it to 60 per cent in 2010. In that time the brand, which was founded 13 years ago, has doubled in size, expanded its range and launched in international markets. It was also able to take advantage of Coca-Cola’s Olympic sponsorship and become the official smoothie of the London 2012 Games.
The change in shareholding is certain to affect the Innocent brand in some way but observers are split on how. last year the brand outlined plans to re-emphasise its entrepreneurial spirit through grass-roots marketing channels as it becomes more mainstream.
Andrew Marsden, former Britvic marketing director and currently brand consultant, says: “The question is how do you scale a small brand that’s been build on being small and entrepreneurial?”
He cites Unilever’s management of the Ben & Jerry’s brand since acquiring it in 2001 as an example of successful balancing of corporate ownership of an entrepreneurial brand.
“Coke are used to managing brands - they are a fantastic brand management company and will be hoping that they have absorbed enough of the entrepreneurial spirit of the brand. At one level though, in every brand’s history they have gone from being entrepreneurial to being a brand with scale, and Coke has that brand management ability,” he says.
However, the company’s recent move into the ready meal market and the launch of ranges including Asian-inspired noodle pots, is seen by some as an example of Coke’s influence on diluting Innocent’s original values.
Zoe Best, associate director at consumer insight firm River Research, says: “Coke want to grow the company but have to be careful not to dilute the brand too much. It’s already started to happen. What the consumer sees from the brand is already becoming less clear and it will continue to happen. [Some new] products don’t seem to fit with the brand value and I wonder if that’s because Coke has taken over. It’s trying to grow by trading on the success of the brand but it’s being diluted.”
Richard Reed reiterated to Marketing Week Innocent will continue to operate as a standalone business “in the same unique Innocent way just as before” adding Coca-Cola’s involvement helps the brand do more of the things that make it Innocent in the first place.
The existing leadership team will continue to have a “hands off” relationship with Coca-Cola, he says, as it has since Coca-Cola first bought a stake in the business.
Reed says: “[Coca Cola] can help us with our aim of getting juices, smoothies and veg pots to more people in more places - and to protect our values as we expand. Both Innocent and Coca-Cola are 100% committed to protecting the Innocent brand and its values and everything we stand for remains as true as ever.”