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Dublin: 15 °C Thursday 23 October, 2014

17 questions for the co-founder of Innocent (the smoothie people)

Richard Reed on the Coke connection, accessing credit and getting to Rio 2016.

Image: Innocent

HEADING TO THE Innocent pop-up ‘goodness’ headquarters during the week, laden down with a nasty winter cough felt diabolical.

Filled to the brim with cheery, attractive college students asking for ‘goodness’ pledges, the shop should be a bright spot on a dreary day, but with my coughing and spluttering, I felt like I was ruining the tone.

There to meet Richard Reed, one of the founders of the juice and smoothie brand which seems to have taken over the fresh shelves in our supermarkets overnight, I presumed he would judge my ill-health and immune system. I obviously hadn’t been getting my five-a-day over the festive period.

On cue, a handsome, sun-tanned entrepreneur enters. Decked in casual chinos and a rather expensive-looking suede coat, he is exactly what I imagined.

Luckily he doesn’t condemn me – just hands over a pomegranate smoothie and offers me a seat in a tent. Yep, this interview is going to be conducted in an indoor tent, fitted out with heaters and deck chairs, as well as ordinary seats for those of us not inclined to recline.

So, it seems like a good time to ask about the importance of these gimmicks that Innocent is widely-known for: the cutesy schtick they write on their bottles, the astro-turf covered delivery vans and the campaigns such as this ‘goodness’ pop-up store.

“We are absolutely about the product,” counters Reed. “Ninety-five per cent of our strategy is about the contents in our bottles. We didn’t invent the smoothie, we just made a better one by using non-concentrated fruits. Therefore it tasted better and was more nutritionally loaded. We made it better in a way that was meaningful to the consumer. That is what you have to do – be better than your competitor.

“Product is king. There is no point in having an idea but a lousy execution. We had a strong idea after spotting a gap in the market. But the product had to match. If they didn’t taste good, then it wouldn’t have worked.

“The Innocent brand and the ethos of the company is that we talk in a natural, pure way…These fun things spread the message and get people to try the products. It is the final 10 per cent.”

You mentioned your competitors? Who exactly are they?

“With smoothies, we have 80 per cent market share. It’s not that we’ve never had competition. Since our launch, we’ve had 11 different multi-national brands launch against us. Coke tried twice, Tropicana tried twice, Danone tried – all the big companies have tried but none of their products ever worked because they compromised on the ingredients to make them more profitable. Consumers bought them and thought they don’t taste very nice.

“The profit margin we make is so much less than a multi-national would expect to make. They look at the market, and they make the cost cheaper. As soon as you start putting sugar or preservatives into a smoothie, then you’ve broken the promise of what a smoothie is. It makes sense on the spreadsheet but not in real life. A smoothie has to be natural, delicious, healthy – or people aren’t going to buy them.”

Some people argue that smoothies aren’t as healthy as they purport to be?

“It’s fruit. There is nothing added. Nothing taken away. It is just crushed up fruit in a bottle. If you think fruit is not good for you, then you’ve simply got your nutritional facts wrong.

I am biased here because I work for Innocent but I get incensed when I see articles that say there is as much sugar in a smoothie as there is in a can of Coca-Cola. It is so deeply misleading nutritionally. Fizzy soda is basically sugar, water and flavourings. There is no nutritionally content at all, just calories.

“People present it that way because it is much more sensationalised. I do worry that some people will think they can have a can of fizzy drink and it is the same as a bottle of crushed up fruit, with all those minerals, vitamins and fibre. That’s not how it works.”

You brought up Coca-Cola. Their large investment almost three years ago raised some eyebrows. Have you won some of the detractors back?

“I would like to think [we have won people back]. We said at the time that some people will be fine with it, some people won’t care and some people will be against it. To the people who were against it, we said, there’s three things we’ve always been about – making natural, healthy food; pushing higher standards in terms of how the business conducts itself in terms of social climate and standards; and to raise money for charity by giving 10 per cent of profits towards charitable causes.

“Those are the three things that Innocent stands for. We are only ever going to do more of those things by taking the investment. Without it, we probably would have gone out of business. We needed that money to fund the international growth. Now, we’re double the size we were then.

“Everything we stood for, we’ve got to do more of. We got to keep control of the business and I think right now, we’re more Innocent than we’ve ever been. I’ve got more people focussed on the supply chain in terms of sustainably sourcing fruits, we’re giving more to charity and we’re doing more of these kooky, fun things that have a bit of heart and meaning and purpose to them – trying to help people to be healthy.”

But how silent are they?

“To an incredible degree. We have four two-hour meetings a year. We see very little of them, but of what we have seen, we absolutely love them.

They are the most honest, trustworthy, bright, decent guys to do business with.

“They’ve seen it as, ‘We’re running Coke, we’re not going to try to run Innocent’.

“Innocent is its own stand-alone business. There is nothing that Coke does that Innocent does. Their business is cans of fizzy drink that don’t need to be refrigerated, whereas ours are fresh-made everyday and need to be chilled.They turn off their fridges at night to save electricity. So we can’t use Coke fridges. Coke vans aren’t refrigerated so we can’t get delivered by them. There is no synergies across … we are stand alone separate businesses.”

You must have been somewhat concerned initially though?

“As we got closer to the deal, we got to like them more and more. But from the first meeting, they were very open about it. They said they loved the brand and the philosophy but they didn’t want to get involved in the running of it. They said they wanted to support what we do. They have been true to their word.

“They, themselves, were nervous about getting involved in Innocent because they thought they might mess it up.

“We find them smart and decent guys. We like going to them, they have been running a consumer-facing popular brand for the past 126 years – they know things. We don’t claim to know it all.”

Is transparency important to the business?

“Our business only exists because people buy the products. It’s not like they are made to. Our business rests on people choosing to buy the product. The consumer has the absolute right to know everything – they should know exactly what is in the product, where does it come from, who is the people who make it. There should be full transparency and we’re big believers in that. I don’t know, consciously, of anything that we know that we haven’t told people.

“There is no question that we won’t answer. If we’re not proud of something, we won’t do it.

We knew [the Coke investment] would be controversial but from the day we signed the paper, we put it on the website, we said this is the day and it will annoy some people. Most people trusted us – what were we going to do, start fizzing up smoothies?

Innocent talks a lot about its social responsibilities and the money it gives to charity. Is that Corporate Social Responsibility (CSR) tag something businesses have to do now or do you mean it?

“There was a phase 15 years ago, that CSR was something you had to do. You had tobacco companies sponsoring children’s playgrounds and you thought, the world has gone completely mad. Now though, I really do believe people don’t want to work for something bad or improper.

“It’s part of human nature that we want to make things better.

“People get the fact, for hard commercial reasons, as well as right-brained spiritual reasons, it makes more sense to actually care and consider and to use less and give more.

“I’m really optimistic how businesses have started to realise there’s a massive opportunity, as well as a responsibility to make the world a bit better rather than just sucking up what you can and spit out what you don’t want.

“You’re not going to win at business without the best people and you’re never going to get the best talent if you don’t have a business that people won’t be ashamed of saying they work for at a party. There is so much power in tapping into people’s positive sides.

“I believe that in the next 100 years, businesses will be the primary source of solving the world’s issues. Certainly, we created some of them but I think we have started to realise we need to clean up the mess we helped create.”

So, how much exactly has Innocent given to charity? You say it is 10 per cent of profits? What happens if you don’t make any?

“By March 2013, we’ll  have given £3 million to charity. We haven’t been profitable since 2007 but we passed a little internal resolution so even in years we don’t make a profit, we give £250,000.

“Actually, weirdly, if you add up the profits of the entire time we’ve been in business, the charitable donation is about 60 per cent of what we’ve made in terms of net profit.”

Is it true you almost bankrupted the firm by giving away too much too early?

“There are times when you have to think long-term. I want to give 10 per cent of a bigger pie. It was a dumb thing to do in our second year – we gave 46 per cent of our profits to charity and that wasn’t enough to fund the growth and keep the business liquid. If we had kept doing that, we wouldn’t be the size that we are now.

We think 10 per cent is a good thing. If every company did it, the world would be a fundamentally different. Hopefully there will be more in the future.”

When you were growing in those initial years, was Ireland a natural choice for the first overseas office?

“Ireland, out of all the markets, has the most amazing story. When we set up the business, we never had an idea or aspirations to go beyond the UK. We really perceived the business as something that would be selling to the local shops in London. We didn’t have the sense of the potential of it.

“Within 18 months, we were getting calls from people from Dublin who wanted to stock us. That made us think differently. Then a couple of guys approached us and they fancied giving it a go. They took some smoothies, borrowed a van and went around trying to sell some boxes.

“They got some listings. The first office was in Pete Oden’s shed in his back garden. Now, it’s grown to a team of eight people and 12 weeks ago we became the number one juice brand in Ireland. That’s the first country that happened in. We’ve always been number two to Tropicana.”

Did the whole business evolve like that?

“The truth is, we had a business plan to raise money that said we would be turning over £6 million by our fifth year of business. We never really thought we were going to do it. It was an academic exercise – you have to put in some impressive numbers. I personally didn’t think we were going to get to that but in our fifth year, we did turn over £6 million.

“It is all trial and error.

“This will sound ridiculous but our business plan only provided for smoothies in little bottles. We had never thought of one litre cartons for supermarkets. It took us four years to come up with smoothies for kids – which is so obvious. A huge amount was done in-flight rather than pre-flight, which is the same in most businesses.”

Turning over millions within five years sounds nice, but is it a realistic plan for would-be entrepreneurs in the recession-ravaged Ireland of 2013?

“I think it is realistic. That is the right word. I would approach everything with a realistic mindset. Most businesses fail – that is something to be aware of but not something to be ashamed of.

“I say to people at the beginning of their career, if I’m interviewing someone for a job and on their CV it says that they started a business but they didn’t go the whole distance – it still gives them a massive plus point for me. It shows that they took initiative and got out there.

“If you’re business fails, that sucks, of course. But it’s common, normal and not something to be ashamed of. You’ll have learned so much from it. You’ll come out of it in a much greater skills and abilities than if you hadn’t done it in the first place. You can either win small or win big. I don’t think you can lose.

“That said, I don’t want to be disingenuous….if you have a mortgage and you got a family to support and you give up your paid job and you go into business that fails, there is going to be some math that bites you on the backside.

There is no reward without risk in life. The thing to do is to try and find where the rewards are as big as possible in relation to the risks. As long as you don’t bet the family home.

“I’m not saying it will work for everyone but I do think everyone is capable of it and should consider it. People should do it if they want to when they feel ready.”

“The macro-economic climate should not be a reason not to do it. When you start a small business, the macro-economic environment is really not going to affect whether you succeed or fail. What will is the quality of your idea, how hard you work at it, how well you execute it. There are plenty of businesses that fail when we’re in boom times and there’s plenty of businesses that succeed when we’re in down times. It is quality of idea and execution.”

In today’s business climate, access to credit is an issue. You had similar problems when getting Innocent off the ground. (Eventually they captured an investor, a Mr. Pinto, after all the regular routes were blocked). What would your advice to people be?

“I met a lady recently who had an idea for an online business. She needed £250,000 to start it up –  which is a lot of money to get a hold of. Every investor and bank she got in front of said no. She rang me the other day, and said, ‘I raised that money in two weeks’. She did it by getting friends and family – and a wider group of people – to buy tiny bits of shares and she now had £220,000 from people taking £5k or £10k worth.

“The world is open to that now.

“There are also websites like Seeder and Kickstart. You can actually crowd source your funds – get people to put in a 100 quid at a time, 1000 quid at a time. I’m not saying it is easy but there are things in the digital world now that weren’t available 15 years ago. I do think that is exciting.”

So, what’s next for Innocent?

“We have a single mission – to get natural and healthy food to as many people and places as possible. So that will continue through new products and new places.

“We want to be in Rio by 2016.”

Yes, you were the official smoothie of London 2012, right?

“It was an amazing benefit we get from Coca-Cola – we were the official smoothie and juice of the Olympics which meant all our smoothies and juices were sold all across the Olympic Park. It meant that all the athletes got free smoothies and juices. And it meant we got to go see loads of events.”

You get to enjoy the perks of owning a successful business then?

“I’m sat here with a suntan.”

Company hopes to make doing good deeds that little bit sweeter

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