by Modwenna Rees-Mogg, Founder of AngelNews
There must be quite a few VCs and angels kicking themselves for ignoring the plan that crossed their desks ten years ago. Fresh Trading Ltd was a start-up planning to enter the branded fresh smoothies market using an outsourced production system, led by a team of three friends with ex strategic and management consulting careers behind them. Many reading this synopsis will have agreed those investors’ rejections were justified given this particularly risky combination of characteristics. The reason they were wrong of course is that they turned away the business that is now Innocent Drinks, a great angel success story with sales in excess of £100m, over 250 employees and offices across Europe.
Luckily for the innocent founders, their employees, customers, suppliers and the UK taxman, one shrewd angel Maurice Pinto saw the quality of the opportunity and the intrinsic qualities of the team and backed them. What did he see that others didn’t?
Perhaps it was the way they thought about how to make a business on a boot-strapped model or perhaps it was a genius route to achieving the 40% profit margin necessary to making the business viable — selling their premium product in a 250ml bottle rather than the industry standard 330ml bottle, thus reducing the production costs to meet the necessary margin, rather than reducing the quality of the product?
Or maybe it was their innovative approach to market research? Innocent’s now famous experiment to see if there was demand for their new product, by selling a sample batch at a festival and asking people to throw the empty bottles into one of two buckets — one saying Yes they should and another saying No they shouldn’t, will go down in history as pure genius.
The importance of a good plan, but a great PR story
I have no doubt that Innocent Drinks has faced uchallenges over the last decade, but to its immense credit its public face has been consistently clear and strong. Behind this, appears to be its strong values — ranging from the quality of the product to the steady building of the brand. It has a website that tells its story in with a light touch. And it turns little mistakes such as a spelling error on a label into a PR advantage rather than an excuse for its enemies to kick it.
Why a background in “big business” is valuable
The founders of Innocent, Adam Balon, Richard Reed and Jon Wright had previously had careers with the best names in their sectors ranging from McKinsey and Bain to BMP. This has meant they have not had to cede control of the business as it has grown from a start-up to a major corporation. There is always help available to get through the early stages of a business, but dealing with it when it really does have major growth to achieve needs people with the understanding how to overcome the challenges. The lesson for investors is that you need to look behind the words to the people and their likely ability to fulfill their dream, not just in the early days, but over the long term.
Simplicity, but quality is the answer
Innocent has stuck to its knitting — its product range has remained based on core values and continues to be so. It took a decade for Innocent to move into vegetables from fruit. That is the ultimate definition of focus. By concentrating on its core product, fruit smoothies, and brand, and selling more and more of it across Europe it has achieved its growth. It has also taken care of its supply chain, particularly the sources of raw ingredients.
One risky strategy it adopted was to outsource production in the early days, but this meant that the team did not have to become experts in production, nor did they face the capital costs and stress of building a manufacturing base themselves. Again showing that you have to compromise, but this is well worth it if it enables you to maintain focus.
Where are they now — dancing with the devil?
Earlier this year, Innocent took a £30m investment from Coca Cola to enable its further expansion. Following in the footsteps of Pret a Manger, this move may have ruffled a few feathers from the purists, but will ensure that the company can now expand globally and I suspect is just one step in a much longer journey for Innocent and, significantly, the founders remain in charge and continue to enjoy the fruits (excuse the pun) of their success.
Modwenna Rees-Mogg, Founder of AngelNews, will be speaking at Fresh Business Thinking LIVE! – One Power Packed Business Learning Experience
If you own or run a business then you have to wear many hats and you need access to the very best advice and information to ensure business survival and growth.
Imagine if for one-day you could have access to all the expertise normally reserved for big businesses.
Experts in; Raising finance, Employment Law, Internet Marketing, Sales, Technology and much more.
It would be like an MBA in one day!
When you attend this ultimate business event, you’ll join hundreds of fellow entrepreneurs for one day of hands-on training, practical research, proven case studies and expert panels.
Register now for £95 – Book before 30th June and save £100!