By Bernice Hurst, Contributing Editor
To some, Coca-Cola's move in early April to acquire a minority stake in British smoothie maker Innocent Drinks is a way for the beverage giant to expand beyond soft drinks by taking a small stake in an innovative company. But others railed about how Coke's involvement might corrupt one of the U.K.'s beloved niche brands.
Innocent, which gives 10 percent of its profits to charity and uses recycled bottles, has quickly become one of Britain's top brands by emphasizing its healthy ingredients and social commitment. Some of Innocent's trucks are covered in fake grass and daisies, and hydraulics make the trucks appear to dance.
Innocent's owners plan to use the £30m investment to fund expansion. Co-founder Richard Reed told the Telegraph, "They have been in business for 120 years, so there will be things we can learn from them. And in some small ways, we may be able to influence their thinking too."
But much of the British media was fixated on how Innocent Drink's do-good principles would likely be compromised under Coke's partnership. A 2007 article in The Independent tabulated how ethical standards at smaller independents were significantly or at least somewhat diminished after merging or partnering with a larger corporation. The list included Ben & Jerry's/Unilever, PJ Smoothies/PepsiCo, Pret A Manger/McDonald's, Green & Black's/Cadbury, The Body Shop/L'Oréal, and Tom's of Maine/Colgate-Palmolive.
For instance, Ben & Jerry's received a pre-takeover ethical-score of 13; and a post-takeover score of 1.5. The article noted that since the 2000 merger, Vermont factories had closed, its co-founders, Ben Cohen and Jerry Greenfield, had distanced themselves from the brand, and a 2004 company audit found less than half of the company's staff "expressed confidence that Ben & Jerry's will continue to uphold its commitment to values." The article noted that new management had made efforts to bring the co-founders back into the fold and that has continued.
On the positive side, Craig Sams, founder of Green & Black's chocolates, has said the sale of his company to Cadbury provided the funding and expertise to expand to the next level.
Assessing the Innocent/Coke partnership, Ruth Mortimer, the associate editor of Marketing Week magazine, told the Independent that many of these niche brands continued to sell well after partnering with larger players. She added, "I don't think most shoppers will be especially concerned as long as they see no obvious differences in the way that Innocent behaves or communicates."
Management also vowed not to lose its scruples.
"Every promise that Innocent has made, about making only natural healthy products, pioneering the use of better, socially and environmentally aware ingredients, packaging and production techniques, donating money to charity and having a point of view on the world will remain," Mr. Reed told the Guardian. "We'll just get to do them even more."
Discussion Questions: What's the likelihood that ethical standards slide after a smaller, socially-conscious brand merges with a larger corporation? If likely, how harmful is that to a brand's development? What's the key to preserving those niche attributes while capitalizing on synergies coming from a larger parent?