Today’s class will involve developing your skills in answering case studies.
Here is the case study we will use:
Case Study: Innocent Drinks
Innocent Drinks is a company that makes smoothies, juice and veg pots, sold in supermarkets, coffee shops and various other outlets. The company sells over two million smoothies per week. Innocent is over 90% owned by The Coca Cola Company. Innocent was founded by three Cambridge University graduates: Richard Reed, Adam Balon and Jon Wright, then working in consulting and advertising. In 1999, after spending six months working on smoothie recipes and £500 on fruit, the trio sold their drinks from a stall at a music festival in London. People were asked to put their empty bottles in a ‘yes’ or ‘no’ bin depending on whether they thought the three should quit their jobs to make smoothies. At the end of the festival the ‘YES’ bin was full, with only three cups in the ‘NO’ bin, so they went to their work the next day and resigned. After quitting their jobs, the three struggled to find investment, but eventually had a lucky break when Maurice Pinto, a wealthy American businessman, decided to invest £250,000. In total, it took fifteen months from the initial idea to taking the product to market.
Revenue for the company declined in 2008 as a result of the global financial crisis which led to an overall loss of £8.6m. On 6 April 2009, Innocent Drinks announced on its website an agreement to sell a stake of 10-20% to The Cocal Cola Company, with the three founders retaining operational control for £30 million. As a result of the takeover Ethical Consumer magazine reduced their ethical rating for the company. In April 2010, Coca-Cola increased its stake in the company to 58% from 18% for about £65 million. In February 2013 Coca-Cola increased their stake to over 90%, leaving the three founders with a small minority holding. Innocent say their brand identity is nothing less than their entire business, everything from the products to the adverts, how they answer the “banana phone” to the way they interact with customers.
Smoothies are Innocent’s primary product. The Innocent smoothie consists of whole crushed fruit and juices, but other ingredients such as carrots and ginger have been used in some drinks. Innocent also makes smoothies, fruit tubes and juice for kids; a not-from-concentrate juice range; and noodle pots and veg pots, a range of ready meals. Innocent launched a new range of ‘super smoothies’ in March 2014.
Innocent gives 10% of its profits to charity, the majority of which goes to the Innocent foundation, a UK registered charity set up in 2004. The Innocent foundation’s aim is to help the world’s hungry by providing grants to charities and projects helping communities on a sustainable path to a better life where they can escape poverty and hunger. The Innocent foundation provides funding for four different types of project to help the world’s hungry: seed funding, local food poverty, breakthrough development and emergency relief. Since the foundation was set up it has given over £2.4m to 55 projects, helping reach over 530,000 people
Innocent say “We want our packaging to have the lowest possible impact on the world around us.
Our starting point is to understand the carbon impact of all our various packaging components.
Our toolkit for reducing carbon looks a little like this:
• Use less: as little material as possible per pack
• Don’t use up new stuff: as much recycled or renewable material as possible
• Close the loop: materials and pack formats that are easy to recycle
• Lower its impact: deliberately avoiding high carbon materials”
What is the core competency of this organisation?
What is the sustainable competitive advantage of this organisation?
Is this a socially responsible organisation, and why?
Create a SWOT ANALYSIS for the organisation.
Based on your understanding of the Case Study, create new strategies for the organisation, using the strategy types below.
- Forward integration
- Backward integration
- Market Penetration
- Market Development
- Product Development
- Related Diversification
- Horizontal integration
Which alternative strategies do you believe are the best choice for this organisation, and why?
Comment on the suitability of this product for expansion globally.
[innocent drinks case study]