Professional Documents
Culture Documents
Team Member:
Kornkamon APILIKITSMAI
Lalintip LAOTHAMATAS
Jin WEN
Yujing LI
Yueyue LI
Chengyuan QIAN
5 Dec 2010
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CONTENT
Abstract
Innocent as an ethics driven company developed it first ethical strategy, 100% natural
drink, from the beginning of its business, mainly for commercial reason. After
realizing the change of consumer behaviour, it launched the other four ethical
sharing profits respectively. Operating business along with social responsibility results
Introduction
Innocent Ltd., which produces smoothies with 100% natural fruit and vegetable, was
founded in 1998 by three young Cambridge university friends; Adam Balon, Richard
Reed and Jonathan Wright (InnocentDrinks, 2010a). From 1999 to 2008, Innocent’s
actual revenue grew from 0.25million pound to about 100million pound. In 2009,
Innocent maintained its leader position in smoothie market, accounting for 80% of
market share (Mintel, 2010). Furthermore, Innocent was ranked to be the most ethical
Innocent is now facing a reputation challenge as it sold the majority of its shares to
In order to analyze its outstanding accomplishment, this report will first discuss the
Then, it will follow by an evaluation of how successful these strategies are to the
company in both tangible and intangible aspects. Finally, the consumer responses for
the Coca-Cola issue will be investigated in further discussion and conclusion are
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drawn.
This strategy was initiated from business aspect to grasp opportunity in soft drink
market in the UK. Combining the trend of health conscious and the popularity of
smoothie in the US, the three friends found that there was a room for them to enter
this market segment. Considering fruit juice market in the UK, the consumption per
capita at that time, 23.2 litres, was one-thirds less than that in the US (36.5 litres in
1998). What’s more, the smoothie industry was just at the beginning (Euromonitor,
n.d), which was dominated by the biggest smoothie company in the UK, PJs, failed in
terms of taste by using concentrates rather than fresh fruit (Brown and Grayson,
2008). Therefore, it was an opportunity to fill the gap in this market by launching a
brand which makes better tasted smoothies with fresh fruit. In order to differentiate
the brand, the three friends also decided to use this as their unique selling point. They
claimed that every provided product is made from 100% pure and fresh fruit, which
contains:
No added sugar
No concentrates
No sweeteners
No preservatives
It was actually a great time to launch this strategy since right after that the UK’s
National Health Service’s introduced the ‘5-a-day’ campaign to drive the population
to eat at least five portions of fruit and vegetables daily (Euromonitor, n.d,). People
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then quickly realized that having a bottle of 100% natural smoothie was easier to
reach this quota. Hence, the sales revenue easily exceeded its original business plan
and thus, the strategy proved to be successful at this first place (Brown and Grayson,
2008).
Sustainable Ingredients
initiated sustainable strategies to restate its brand image as a healthy product and
ethical company towards ethical consumerism trend. A triple growth in ethical food
and drink spending in the United Kingdom (Table 1) evidently shows a fast growing
behavior as Mintel International Group Ltd (2003) showed that child labour, animal
testing, and exploitation of developing countries, accounting for 51%, 47%, and 31%
respectively (Table 2), are the most influential factor discouraging customers from
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Source: Ethical Consumer Research Association, 2009
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In 2003, a fair trading for the Third world, ensuring fair price and creating more
bargaining power for producers, became a vital factor among ethical consumers,
consumers are willing to pay a premium for ethical products; therefore, it is essential
that the company have to control their production process including raw material
sourcing.
During 2007, food mile was a new concern for ethical shoppers in Britain (Mintel
source their raw material from local suppliers. This trend became stronger during
credit crunch in 2008 as the local products were perceived as another support for
domestic farmers and economics as well as a relief for the concern about food miles.
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Being aware of the concerns about the ethical sourcing, Innocent has aligned its
sourcing policy to address all these issues. Firstly, Innocent set its own minimum
standards for their suppliers, covering social and environmental concerns; for
example, minimum wage, child labour, land clearing and water pollution. These
livelihoods and agriculture, and concerns not only environment but also people by
guiding farmers towards sustainability and preventing them from destroying their
local environment (InnocentDrinks, 2010c). For local source and food miles concern,
Innocent tries to source its ingredients mainly from Europe; therefore, it transports its
ingredients mainly by land or sea rather than airplane. However, the constraints of
higher cost of organic and local products, together with limited product type certified
in ethical organization are the main obstacles for innocent to fully comply with
Sustainable Packaging
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According to a new study from BeveragePulse.com (Marketing Charts, 2010), 94% of
respondents in the research concerned about environmental issues with 49% of them
rated themselves as very concerned (Figure 1). At the same time, 58.9% of the
industry executives believed that environmental concern was the most important drive
packaging (Business insights, n.d.). It is clear that the beverage industry is reacting to
From another research (Wrap, n.d.) which was applied at Boots, 78% of all
respondents said that they would have more positive perception of the product or
manufacturer which was using recycled plastic as package. What’s more, the research
also found out that customers were more willing to buy recycled plastic packaged
products. One of the most typical case is that consumers are buying less bottled water
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today than they did one year ago based on the environmental concerns. Among these
consumers, nearly 60% of them directly pointed out that the environmental issue was
the main reason why they bought less (Market Charts, 2010).
From the research discussed above, it is believed that recyclable plastic is the most
significant ethical packaging innovation for the next five years (Wrap, n.d.). As a
response to this new trend, started from 2003, Innocent began to use bottles which
were made by 25% recycled plastic and then improved them to 50% in 2006. In 2007,
they became the world’s first company that uses a 100% recycled plastic bottles for
packaging which was the significant progress they had made. Meanwhile, Innocent
lightened its cartons which saved 100 tones of paper per year with a reduction of
its ethical concerns into other environmental issues which included global warming
Sustainable Production
Innocent became famous for its ethical business practices especially 100% fresh
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has increasingly developed among consumers. According to Carvalho and Burgess
(2005), concern for global warming was brought up to consumers’ daily lives by
media during 1999 – 2000 (Figure 2); therefore, consumers could sense the urgent of
the issue.
From the graph, it can be seen that from 1999 to 2001, newspapers had increasingly
published articles about climate change which can be implied that consumer
awareness would increase accordingly (Figure 2). In 2006, consumer awareness for
global warming became stronger (Figure 3); therefore, they were likely to consider
brands which attached with carbon reduction (Bristow and Glynn, 2006).
Additionally, environmental issue and green lifestyle has turned into mainstream since
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2006 (Osman 2006, cited by Atkinson 2007),. It is possible that global warming were
As well as consumers, many businesses also started to put environmental issue as one
of their priority as Financial Times (cited by Muldoon 2005) stated that a variety of
Since global warming has been increasingly perceived as a critical issue, to response
to this trend as well as to expand its sustainable framework, Innocent adopted its
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sustainable production strategy in 2006 (InnocentDrinks, 2010f). This strategy aims to
By promptly adopting this strategy, Innocent not only enhanced its credibility but also
account brand, which can reduce their carbon footprint. Since at the beginning,
Innocent has drawn its ethical image in consumer’s perception through sustainable
and natural ingredients, which contribute to its brand essence of sustainable business.
Innocent has probably stepped to a fully ethical business process, which has
(2007) claimed that consumer not only shifted in their attitude but also their behaviour
and, they were trying to adapt themselves into ethically purchasing. It seems that
Sharing Profits
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These campaigns were developed because of the changing consumer behaviours.
Some interviews have shown that people’s charity awareness is quite strong , as one
interviewee stated ‘giving to charity gave a “warm glow” feeling and made the
individual “feel better about themselves”, regardless of the nature of the charity’
(Smeaton et al., 2004). This trend can also be seen from the increasing donation
have increased from 300 million to 700 million during last 20 years.
Figure 5.UK Charitable donations for overseas development and total household
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Source: Atkinson, A.B. et.al., 2008
This high awareness now has transferred to the consumer behavior which impact on
the firms now. Holt,D.B. (2004) revealed that consumers made the purchase decision
based on three dimensions: quality signal; global myth and social responsibility.
Consumers expect companies to link the social problems to the daily operation. If
more willing to buy their products. Another research (The Shape Edge, 2006 )
indicated that 46% of consumers said that involving in cause related marketing
campaign make them feel better when using the product. Hence, Innocent launched
Firstly, it founded the Innocent Foundation which would improve its brand image by
giving a minimum of 10% of profits to charitable project such as helping HIV sufferer
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(InnocentDrinks, 2010g). Through sharing the profits, Innocent allowed consumers to
Another campaign is the ‘Big Knit’, a cause related marketing campaign which each
woolly hat-wearing smoothie sold, Innocent gave 50p to Age Concern to support
older people during winter. In order to get more consumers involved and spread the
word wider, they also encourage consumers to knit for the ‘Big Knit’.
Nowadays, consumers would like more information about the charity organization
which they donate. They expect the companies to listen to them. They also want more
Innocent developed an official website to inform and update their charity campaign
which enable consumer to know more about the Innocent Foundation and also
recommend project and NGOs through the website. Moreover, videos and pictures
from visiting their foundation project reassure where the money is going.
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Source: Kohlberg, L. and Hersh, R.H., 1977
According to this model, individuals adopt moral activity by the virtue of personal
gain in the pre-conventional level (Lovell, 1997). It is probably implied that 100%
natural strategy was implemented to differentiate and compete against the key player
in the market, PJ Smoothie, in 1998. Seemingly, this strategy can be defined in stage
high quality product to gain sales in the same way as ‘you scratch my back, I’ll
scratch yours’ (Lovell, 1997). After adopting other sustainable strategies such as
tried to create ‘good boy/nice girl’ image (Lovell, 1997). However, a gap of becoming
improve and execute its ethical practice consistently and completely. For instance, it
could expand its ingredients sourcing from ethical organization as currently only 2 of
40 different types of its ingredients were sourced from Rainforest Alliance, while the
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minimum standard has applied to the rest, constraining by cost of others ethical
Innocent concerns more on financial cost or own interest than the ethical practice.
Evaluation
Evaluation of the success of ethical strategies will be discussed from two aspects
Tangible Evaluation
elevation raises consumers’ buying interests by satisfying physiological need and self-
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Source: Fame, 2010
most ethical strategies were launched. This implied that ethical strategies could be
considered as one of the factors that contributed to growing revenue. For instance, the
revenue increase almost 100% in 2004 after Innocent Foundation was launched In
2007, the revenue peaked at 112 millions when sustainable package (100% recycled
plastic) and sustainable production (reduce carbon footprint) were introduced in the
company’s practice.
Also, those strategies created unique selling point, which helped Innocent to maintain
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its market share in the smoothie market as shown in Figure 8.
The most successful ethical campaign which should be mentioned is the Big Knit. It
creates not only a good image of Innocent but also establishes a close relationship
with customers. The high involvement of the Big Knit could be seen from the
numbers of the woolly hats Innocent received from figure 9. Moreover, this campaign
resulted in a significant increase in sales over a short period and raised nearly
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Source: InnocentDrinks, 2008c
Intangible Evaluation
Regarding intangible benefit, which is delivered from ethical strategy, the three-
legged green bar stool test will be used as a framework to evaluate Innocent’s brand
aspect. First of all, to clarify the framework, the brand will be able to stand out with
its ethical practices by three legs; approachable, believable and doable (Howell,
2009).
Approachable
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make educated choice (Howell, 2009). Innocent’s approachable leg is firmly stood by
its engagement with the consumers through a huge variety of contact points such as
Banana Phone, the hotline. Another way to show their transparency is working with
carbon footprint practice. Also, Innocent created its web blog to update their news and
activities to consumers.
Believable
For Innocent, it started with a high quality smoothie that contains 100% fresh fruit
then it perpetually developed the ethical strategies. At the same time, consumers have
from various organisations such as 2009 Barclays Green Leaders in Business Award
Doable
Along with its growth in the market, Innocent expanded its ethical strategies in each
process from choosing fair suppliers, developing 100% recyclable package, adopting
and cause related marketing campaign, especially ‘The Big Knit’, Innocent involves
consumers and raises money to charities (InnocentDrinks, 2010k). Seemingly, all the
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its approachable, believable and doable legs. As a result, its consistency of conducting
ethical practices has paid off. This is shown not only from a large amount of awards
they granted but also their good reputation among consumers. Nowadays, Innocent is
Further discussion
almost 60% (BBC, 2010). Meanwhile, the founders of Innocent claimed that they
from public. And there are two reasons why the acquisition has led to such an impact
to Innocent.
The first and biggest reason is from the unethical brand image of Coca-Cola. As Mark
Thomas (2008) pointed out in his book, Belching Out the Devil, Coca-Cola has an
unethical history; for example, child labor issue in El Salvador and the breach of anti-
Secondly, most consumers questioned whether Innocent would continue its ethical
route when it became bigger. Longenecker et al. (2005) indicated that small
companies had its own unique characteristics. In other words, small firms are likely to
be owner-managed and much more flexible than big corporations. After the
shows three types of Innocent consumer). First of all, Enthusiasts had the highest
involvement to join the discussion and most strict to moral standard. They were
evoked by their own ethical knowledge and had strong perceptions in terms of this
association. They didn’t like Coca-Cola’s brand image and even boycotted this
acquisition. One of the massages left by disgruntled consumer Lorraine said ‘Another
customer lost. I really didn't mind paying the extra money for an ethical product, but
them treated it as a new chance for Innocent to expand. In some cases they were
loyalty customers of Coca-Cola as well. Some other people prefer Innocent smoothie
just because it is made of 100 percent pure fruit and contains abundant nutrition.
Additionally, it seems that Disengaged don’t care about acquisition. As it can be seen
from Innocent website, they were big fans of those two brands and didn’t care about
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Consumers of Innocent
Drinks
Enthusias
ts
companies
Expectations of
Mainstrea
m
Disengag
ed
Activism
Source:
most of the customers are Mainstream and Enthusiast who have high expectation of
company’s ethical strategies. The acquisition with Coca-Cola might disappoint some
(Belfasttelegraph, 2009).
Apparently, Innocent has tried to convince their consumers to believe that they would
continue ethical strategies and control the whole company as they used to do through
announcement. But from public aspect, some people considered that Innocent was not
so ‘innocent’ any more. Comparing with the abandoned deal with McDonald’s
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Therefore, Innocent may come up with communication plan to assure consumers that
Conclusion
Innocent has extremely succeeded in its five ethical strategies as most customers
perceived Innocent as one of the most responsible companies, both social and
strategies created effective brand value to Innocent and differentiated the company
from its competitors. Its ethical policy not only strengthens their ethical image and
reputation, but also creates a good practice for others companies. Those unique selling
points significantly enhance buying interests from customers and it can be seen from a
progressive increase in revenue in the last 10 years by almost hundred percent as well
as numerous awards relating to ethics. Although Innocent has already been recognized
as one of the most ethical companies, the consistent improvement and strictly
ethical awareness which would benefit to both the society and the company which
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