CASE STUDY: INNOCENT DRINKS

We approach to welcome twenty-first century. Everyone is happy because world is going to be better. The horrible illnesses and problems of population, poverty and wars started to disappear. World starts to change and everybody think: Yes, maybe tomorrow it will be better. People go to their jobs and they earn money. The most important for them it is to have a good car, big home with swimming pool. Only a few people think what happens with our environment，with trees, with rivers, with woods. Now everyone is busy and not many people see that everything what is round us is going to die.

Have you ever asked yourself how environment can be damaged? Do you think about it when you leave the light in your room when you go out? Do you read a note on the packets of some products that you buy in supermarket? I'm sure that you don't. You don't want to waste your time so you use deodorant with CFC, you throw the rubbish into the sea and you don't mind when all lights at your home are switched on, do you? So, you see that everyone damages environment although he is unaware of it.

Now the most important dangers are: sun's radiation, devorestation and pollution. Sun's radiation is bad, very bad for our skin. If the ozone layer disappeared we would have burns and our skin wouldn't be just like before. The burns of sun\'s radiation leave horrible scars and later we could have problems. So the scientists scream: use less electricity, don't smoke, use fewer products with CFC. All these things damage the ozone layer, which protects us from sun's radiation. We should use bicycles, we shouldn't burn forests, we should throw litter on beaches. We should be "green" and protect our planet. We have to use ozone friendly things because holes in the ozone layer might become bigger.

The ethic/social responsibilities on the other hand are about asking the question “What is right and wrong? Good and bad?” in business transactions ( Weiss, W. J. 1998). Although no one “best” definition of business ethics exists, the consensus is that business ethics requires reasoning and judgment based on both principles and beliefs for making choices that balance economic self-interests against social and welfare claims. In the world of business one was not expected to be quite as honest and fair as in other areas of life.

On the other hand, indeed the demand (Friedman, 1962) that the only responsibility of business is to make maximum profits for the shareholder is must as laden with ethical commitments as the pluralistic argument that business must be socially responsible to a wider constituency of stakeholders (Nash, 1990).

CASE STUDY: INNOCENT DRINKS  

The Overall Review

It’s about making life a little bit easier, a little bit better.

- Richard

Although people in nowadays tend to pay more and more attention on healthy issues, with faster and faster life speed and more and more pressure, it is more like that work hard, and go back have some fast convenient food such as potato salad. Innocent believes that there is something about modern living that makes it hard to be healthy, so the basic idea behind the business story is to help people treat themselves with something good and healthy in an easier way.

However, turn these healthy ideas into actual business was not easy. For example, the high price and relatively short shelf life means the business was not seems attractive at the beginning, and the founders found it was difficult to find investors. The three founders of Innocent finally managed to finance enough fund from an American business man, and established the company in 1999. In the past eight years, the company has enjoyed a very fast growing speed and now have a 20% slice of the market with a retail value of about £ 50 m, according to market researchers AC Nielsen.

Innocent Drinks – Truths

- Annual revenue:

2003 - £ 11m

2004 - £17m

2005 - £ 38m

2006 - £ 80m

2007 (projected) - £ 120m

- 183 employees in six offices (London, Manchester, Dublin, Paris, Amsterdam, and Copenhagen).

- UK smoothies market share: 65%

The Environmental Policies and Practices

An area where Innocent is pressurising suppliers is in converting to green electricity. It has also worked with its UK bottle manufacturer to increase the percentage of recycled plastic in its containers, which now stands at 50%. A target of 100% is “totally achievable”, Reed says.

While companies such as Tesco talk tough on climate change, Innocent is leading the way in calculating its carbon footprint. It has commissioned two comprehensive life-cycle “carbon audits” for all of its 24 recipes, from the Edinburgh Centre for Climate Management and the Carbon Trust. The studies even factor in the emissions associated with keeping a carton in a domestic fridge.

The Ethical and Social Policies and Practices

As the basic idea of the business is to help people living a more healthy life, it was said that now Innocent Drinks is more of a cult than a brand. Innocent have laid down a model for ethical and social responsible business. From the first day, the company has used only natural ingredients, run all operations on green electricity and committed 10% of profits to charity. Their ethical business philosophy can be seen from many aspects of their business practices, and following we are going to take some examples.

The Business Itself – Insisting Making Healthy Drinks

Where Innocent founders are most content with the company’s performance is in making products that are natural and nutritional, the idea of marking such drinks is a rarity among food manufacturers.

Healthy eating comes at a cost. A one litre carton of Innocent smoothie on the shelves has a high price of £3.29. But the company’s managers insist this is a small price to pay, saying: “People in the future are going to think we were crazy to stuff a load of chemicals down our gullets, just to save, what? The difference between a natural food and a processed equivalent on an average item is going to be 20p to 30p.”

Higher costs come from premiums Innocent pays for certified products, such as bananas meeting the Rainforest Alliance’s sustainability standards. Innocent bans airfreighted fruit, and pays further premiums for local produce – but only if it makes commercial sense. For example, the company buys apples from Germany because they are half the price of home grown UK equivalents (£250 per tonne instead of £500). Given these numbers, saving food miles was not an option, says Reed. “I couldn’t justify that. When you’re talking about 100% difference for the same apple juice – we’re getting it from Germany.” Despite the brand’s cuddly exterior, Innocent’s founders remain commercially realistic. And they are not afraid to use buyer power to make suppliers change their ways.

Green Marketing Promotion

Innocent’s advertising tried not only promote their products but also a healthy life style. One example can be seen as their 2007 press advert – 7 ways to have a slightly better 2007, which including:

• get some exercise that will help you live longer;
• have holiday in the UK;
• eat well and prosper, such as innocent smoothies that made from lots of crushed fruit and fruit juice with no concentrates, additives or preservatives;
• do good things, and Innocent is giving 10% of their profits to their charity, the innocent foundation;
• make your own, spend more time in the kitchen, and maybe start with your own smoothies;
• stay in touch with your parents;
• and do some other stuff to enjoy the best of each season.

The Corporation Culture

The ethical business ideas of build a fair world and sign importance to human needs were embraced in the business’s culture and hence their management practices. In their office in Fruit Towers, fans’ mails cover the walls. Their consumers are welcomed to pop by to the company, and each visitor is offered smoothies from a fridge with the question, ‘Are you a committed drinker?’; and denim-clad executives meet in rooms where glass fronts bear the words, ‘blah, blah, blah…’ The approach is unconventional. But it gets results. In eight years Innocent has grown from nothing to sales of £80 million in 2006, selling one million smoothies every week. Even more surprising, it has done so in a way that puts other food and drink manufacturers to shame.

EVALUATION OF CURRENT ENVIRONMENTAL AND ETHICAL/SOCIAL POLICIES

Innocent Drinks has been regarded as model of ethical business. Their strategies in concerning of ethical business can be concluded in – firstly, make 100% natural products that are 100% good for people. Secondly, procure ingredients ethically. And thirdly, use ecologically sound packaging materials. Fourthly, reduce and offset carbon emissions across entire business system. Fifthly, lead by example at Fruit Towers by doing good things. And finally, give 10% of their profits each year to charities in the countries where their fruit comes from. These practices internally cultivate a good corporate culture that encourages employees’ involvement and characteristics such as loyalty, honesty, integrity, etc.

Externally, for the benefits of the company, such practices help to build and reinforce their brand image. And in concerning of business’s ethical/social responsibilities, they helped to build a better world. For example, the green marketing promotion practices such as 7 ways to have a better 2007, are in consist with the notion of two stages green consumerism, and help to make consumers becomes more of a green conserver.

Further more, their active role in social responsible activities, such as establish of innocent fund, also benefit the corporate as help to reinforce their brand personality.

RECOMMENDATIONS

“We get badged as being an ethical business; it’s not a badge we put on ourselves. I know where that comes from and it’s great people think of us in that way. But we’re a thousand miles off being as good as we want to be.”

- Richard Reed

As almost the best and purest smoothies in UK market, Innocent does not use organic or locally sourced ingredients. Their argument is that it would raise the price of their drinks, and will finally result in push them out of their current market. While it is a good reason to maintain the business’s sustainability, this practice is not consist with their philosophy that get more people drinking pure and healthy fruit juice than to only get the ‘well-off’ drinking organic, pure and healthy fruit juice. We're sure they were thinking about the health of our bodies as well as the health of their profit margin! What Innocent did instead was to set up the  which supports charities specifically in the countries where they source their ingredients.

For example in Brazil they are working with  to promote conservation of Atlantic Rainforest. In Uganda they are working with KIDA to educate, train and fund local communities in a bee-keeping project so they can earn an income from the honey. In India they are working with on agricultural initiatives for women. These projects seem like a productive way of putting something sustainable back in to the communities which are working to supply your business. It is also interesting that while their juices are very healthy, but don't seem very environmentally friendly, behind the scenes most of the projects they are involved in are in fact environmentally based. The question is does the environmental impact of their food miles outweigh their other sustainable initiatives?

Further more, Innocent now uses 25% recycled plastic in their bottles which is claimed to be ‘the most technology will allow’, but they are working towards a 100%. They also have a 'how to recycle our products' page on their website. And while they might not use local ingredients it doesn’t mean that they don’t like them. Innocent are now sponsoring local fruit and vegetable competitions around the country. Furthermore the company car is electric and they buy their energy from . Innocent is renowned for its excellent business model, and their great working environment, as well a being rather witty marketers. We think they should also be well known for finding interesting ways to be sustainable whilst running a successful business, although we still think that they might be able to introduce an organic Innocent range just for the extra fussy among us!

CONCLUSION

Although the co-founder of Innocent, Richard Reed, claims there still is thousands miles far away from the ethical business in their mind, the company has already been regarded as the best practice in industry. From this case we can see that although many managers see the trend of green business as a ‘threat’ or ‘disadvantages’, for example, it involves higher cost, more complex operation and management process, there are actually many opportunities generated from this new change of whole business world. It is time for managers to change – while the most prior goal is maximum stakeholders’ benefits and profits, they should consider to achieve this goal in ‘green’ and ethical way.

BIBIOGRAPHY AND REFERENCES

Friedman, M. 1962, Capitalism and Freedom, University of Chicago Press: Chicago, IL.

Nash, L.L. 1990, Good Internationals Aside: A Manager’s Guide to Resolving Ethical Problems: Harvard Business School Press, Boston, MA

Weiss W. J 1998, Business ethics: A Stakeholder and Issues Management Approach, The Dryden Press

INTERNET SOURCES:

Innocent Drinks – What Makes A Sustainable Smoothie?

Interviews / Q&A's:
The Big Interview: Richard Reed, Innocent Drinks – From raspberries to riches

Just an Innocent business?

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