Innocent Drinks: Richard Reed

Innocent Drinks has come of age. It’s hard to detect. After all, the founding values remain intact. The founders remain in charge. The products are largely the same. Yet one of the UK’s most feted brands has and is facing a series of challenges.

Innocent has left behind its start-up existence. The workforce is 187-strong, it has 65% of its domestic market, and a layer of senior management, including a UK MD, has been woven into the business’ close-knit fabric in recent months.

More than that, turnover is set to punch through £100m and Europe is thirsty for more as the business enters its 10th year. In many ways, the world has changed around Innocent. Its humble start-up story (involving ‘yes’ and ‘no’ bins at a festival), its puritanical approach to product and its company ethics and values have been imitated beyond flattery.

The snipers have gathered and sniped, sneering that the founders’ reported £120,000-a-year salaries are not so innocent. And the Midas touch has not been present in every pursuit, notably a debut on the BBC’s Watchdog last month when called to account over exploding smoothies.

Internally, too, everything is writ frighteningly large: recruitment, retention, discipline, expansion. Each one poses its own set of questions. Founders Richard Reed, Jon Wright and Adam Balon have their work cut out. And they couldn’t be more excited… if perhaps a little scared. Like the products, that would only be natural.

The responsibility to maintain and accelerate momentum is apparent in all Reed says. Innocent Drinks has numerous stated aims, all simply put but highly ambitious. One – to become the world’s most sustainable company – is laudable, but surely impossible to measure. Whether it is or not is up for discussion.

Challenge: installing values

What isn’t is Reed’s fervour for achieving the plaudit. “We’re a long way from it, man,” he admits. “Don’t get me wrong, we’re better at it than other companies. We punch above our weight – abso-fucking-lutely. But it’s no time for champagne.”

In practice, the Innocent ethos – penned by Reed, Wright, Balon and 45 staff in 2003, and now further developed and driven by Richard Reed’s ‘Sustainability Squad’ – is built around indelible principles: procuring ethically, reducing and offsetting carbon emissions, recycling and putting something back through charitable giving.

Its fruit suppliers have to meet minimum International Labour Organisation standards and premium rates are paid to Rainforest Alliance-accredited or local farms. Electricity comes from green renewable sources. Fleet vehicles are powered either by bio fuels, LPG or hybrid. CO2 emissions are measured each month and are offset by 120% to be carbon negative across the business.

Bottles are made from 50% post-consumer recycled (PCR) plastic. Innocent was the first UK company to do this. A 75% version is planned for later this year – a world first – and the intent is there to go to 100% PCR alongside totally biodegradable corn starch bottles. Plastic weighs less than glass, meaning 40% less fuel is used in transporting products. Paper comes from farmed and constantly regenerated trees. Inks are solvent-free and boxes are made from recycled paper.

A full 10% of profit goes into community projects through the Innocent Foundation, which administers grants for communities in fruit source countries. Excess stock goes to the homeless and knitting mini-hats for drinks raises additional cash for charity coffers. You’d think commercial imperatives would suffer. And it could be argued they do unless you really believed the products would continue to be bought in the same volumes if Innocent ditched the whole do-gooding lot.

Either it’s a sacrifice or a highly astute move. Both, suggests Reed. Brand-building, recruitment, retention and sales are all linked to the ethos. Staff must be imbued with the right traits.

“We’re about growth and profit as a business. Our people have to be equally commercial and altruistic,” he says. “It’s a hard mix to find because people tend to over-index in one. They’re either too far off in hippy-dom or too far off in Wall Street. But find them, incentivise, reward and encourage them to deliver in these areas and it’s dynamite.”

How many companies financially remunerate against CO2 reduction, greater ethics in procurement and improving product-packaging technologies? Answer: Not many.

Challenge: going greener

Innocent has a headstart on the rest of the business world, which is now scrabbling to gain green credence. About time, too, says Reed. “Let’s face it, capitalism is the main reason we’re facing the issues we face as a global community. If capitalism’s got us into this hole, shouldn’t it get us out? Businesses are doing what they’re doing because they realise value creation and value protection is the driving force.”

Stepping off his soapbox because Innocent’s “not about preaching”, Reed claims to be focused on what happens at home. So what does this mean for Innocent’s green agenda? “You go from measuring your carbon across your business system to starting to communicate it to people on packs, so that people are informed about how much CO2 is involved in making each bottle you pick up. We’re going to be the first company in the world to do it. You can always do more, man.”

The educational and medical programmes for growers and pickers could also move up a gear, he adds, and the company is investing in a full-size screen for video conferencing as part of its conference phones set-up to cut back on flights to its European empire.

It’s clearly a challenge for a brand expected to be holier than thou to find new levels. He cites bananas from Costa Rica as a case in point. “They can’t grow in the UK. They’re coming on a boat, which will be running primarily on diesel, which emits CO2. So what do I do? To truly take carbon out of the business system, fruit from Costa Rica would have to stop. But that would mean no bananas.

“No bananas, no smoothies. Am I going to make that decision? No, I’m not. Am I going to find a way to get them here more efficiently? Absolutely right. We can all talk abut the little things and that’s the right place to start. But what happens when you get through that? That’s the bit I don’t know.”

Challenge recruitment and retention

Richard Reed certainly isn’t the first entrepreneur to say it, but getting the right people represents the “single biggest challenge for the business”. It’s not a new conundrum but one that’s exacerbated with the fast growth of the last few years. Since 2003, Innocent has gone from its base of 48 staff to 187. Last year, one member a week joined its Fruit Towers office in London. The company needed twice that figure.

It’s a stark choice – take risks and hire or hold out for the ‘right’ employees and compromise on growth. There is a third way: flog the existing bunch for all they’re worth. Much as many would love to squeeze a little tighter, push and prod, ethics prevent it, particularly at Innocent Drinks. Balon, Wright and Reed know they have a hard-working team that goes the extra mile if necessary. They’re not keen to meddle.

So, stem growth it is. “Yeah, something’s got to give, but what it’s always been is keeping the situation vacant,” agrees Reed. “Don’t get me wrong, of course we’ve made the wrong decision in the past, you go for the short-term benefit. But it creates 10 times more work.”

First and foremost, the values have to resonate. Beyond that initiative, intelligence and experience influence recruitment. The website has proved the most successful hunting ground, but Reed will try everything and anything. Headhunters, recruitment consultants, job ads and internal recommendations – for a £1,500 reward – go so far. Dinner parties, conference speaking gigs, trade shows and its free summer music festival Fruitstock, which features JobStock, are all opportunities.

“It’s about exposing what we’re offering to the people out there and hopefully the right people will be interested. As the brand has become a bit more established and understood externally it’s helped with the strike-rate of the people we get to meet.”

Reed, Wright and Balon still interview candidates personally. How long that will continue is anyone’s guess, but right now it’s non-negotiable. “No one will come in without seeing one of us. Typically they won’t see all of us. We have a third of the business that we act as lead coach for. I take care of the people team, Jon interviews on the supply team and Adam will speak to the international guys. And no one gets through week one without me ranting on about company values.”

Challenge discipline

It’s refreshing, in a way, to know Innocent Drinks takes a hard line; the iron fist in its velvet glove. “Or maybe the velvet fist in the iron glove,” Reed responds. “The heart of it is very altruistic and positive, but to achieve that you have to be tough.” Fearing he’s sounding “weirdly prescriptive” he adds that providing you’re warm, friendly, generous, human and do to others as you’d have done to you, it’ll be OK.

Fall below set standards and the response will be immediate – fair, but brutally honest. “This idea that you don’t let people know they’re under-delivering is the most crazy thing. It totally disempowers the individual and is a very selfish thing on behalf of the person that’s not saying. The reason they’re not saying is because they feel uncomfortable. It’s not because they’re trying to protect that person.”

Given the touchy-feely-ness of the organisation and the nice-guy image of the founders, do they ever pull the trigger? “I’ve done it, man. I will always continue to do it. To look after the good people you have to get rid of those that sit on the bus for the ride. I know people may think that’s the antithesis of being innocent.”

Admittedly, ‘letting staff go’ is a rarity. Since inception, 201 permanent members of staff have been on the payroll, a remarkable retention rate. And most of the 48 who penned the company ethos remain. And the number of good leavers – “regretted losses”, says Reed – easily outweighs the simple ‘losses’. Another quirky feature illustrating the approach to recruitment and retention is the ‘lest we forget’ button on the online employee gallery, with eulogies of their efforts.

Reed claims to know every employee, bar the five who joined while he was trekking with his yoga teacher wife in Argentina last month. He promises the brand new Innocents will be known to him before the week is out “because with 180 you can definitely know them, it’s easy”.

Challenge: time management

Having time for employees is important. But at some point, whether it means cutting back to group inductions or giving trusted managers the autonomy to hire, something has to give.

Management consultants break time into that spent ‘on’ the business and that spent ‘in’ the business. By far the majority of entrepreneurs spend time on the minutiae ‘in’ the business. Are Reed and Co falling into this trap at the expense of driving growth? “I’m trying to get more in front of that because last year it was taking too much of a chunk and you’re here till nine at night,” he admits, adding he only managed 16 days leave last year. “I’m spending as much time on the business as I ever have done, though. On the value stuff, I don’t see it as doing my job and then doing the value stuff.”

Along with everyone else in the business, Reed has set five key objectives for this year. Protection and enhancement of the cultural values of the company is number one. Second is leading the Sustainable Squad; third, getting closer to the fruit (the standards, growers and pickers); fourth is giving staff opportunities to develop themselves through the Innocent Academy; and fifth is the creative side.

Reed originally penned the pithy label messages, but has largely delegated responsibility. Time permitting, though, he still works with the head of creative on writing ads, recipe books, labels, booklets. “Branson put in his autobiography that you’ve got to do whatever you’ve got to do. There’s so much rubbish out there, but there are hopefully some things I’m a bit better than average at. You want everyone focused on the things they’re above average at.”

Challenge: expansion

For Balon, European expansion is the key. Every week he spends a couple of days abroad, splitting time between Innocent’s offices in Ireland (Dub Towers), France (Eiffel Towers), Holland (Grass Towers), Denmark (Viking Towers) and Germany. Wright, on the other hand, focuses on the supply chain.

Looking beyond 2007, Reed would love to pursue global expansion. All three have pledged to remain with Innocent until at least 2010. Then it’s the big one – what to do next. A partial flotation, a sale or continuing are possible scenarios, Reed says. You sense he favours going to market. For now, however, they have enough bridges to cross first.

Challenge: growing the brand

Last January, Innocent advertised on television for the first time. The timing was right, with consumers still flush with good intentions, the ads were simple and on-brand and the company carried out in-store activity in parallel. It was a success all round.

Buoyed, Reed, Wright and Balon sanctioned another spend for the summer. The response was muted. “The first one was, ‘Oh my God’, the second, ‘Mmmm’. It still did stuff, it just didn’t do half as much,” says Reed. The advert paid for itself and wasn’t a total flop, but the lack of in-store activity against heightened competitor activity, a more obtuse ad that assumed knowledge of the brand and no New Year resolutions, led to a disappointing outcome. “In January sales went up 50%, but only 10% in summer. We were hoping for more.”

Innocent: In brief

Name: Innocent Drinks

Founders: Richard Reed, Adam Balon, Jon Wright

Proposition: Fruit smoothie brand

Founded: 1998

Staff: 187

Turnover 2006: £78m