Innocent Drinks: seven strategy lessons from the setbacks of

Innocent Drinks: seven
strategy lessons from
the setbacks of Europe’s
biggest smoothie maker
Innocent
Innocent
to £114.1
an impressive 5% sales increase
despite a
million ($180 million/€131 million),
about
background of intensely negative media
Innocent
the collapse of
its sales.
Innocent is payin
g for its failur
e to innovate
and differentiat
e – and as a
result its retail
is down as much
price
as 30%-40%
in many retail
outlets. When
the recession ends
there is a dange
it won’t be able
r
to get its prices
back up again.
sacrificing marg
It is
in to maintain
volume – and
the expensive ingre
with
dients found in
smoothies that’s
a route that can
only result in a
serious erosion
profitability.
of
Lesson 1: Talking to the wrong
consumers
that is the
It’s not premium pricing in itself
is that its
problem. Innocent smoothies’ challenge
its competitors,
core consumers – who, according to
Innocent
are 20-somethings and early-30s, although
– have been
million ($62 million/€45 million).
maintains they have broad age appeal
older, more
more affected by the recession than
in the
affluent consumers.
There’s an even closer parallel for Innocent
with health
super-premium
The core consumers of brands
example of blueberries, the trendy,
continued to benefits are people aged over 40. Professor David
priced fruit. Sales of blueberries
premium to Hughes, Emeritus Professor of food marketing
increase, despite selling at a 600%
of the
at Imperial College, London, explains
apples, even while Innocent sales fell.
has six
pricing
“Tesco
premium
Tesco:
chain,
UK’s largest grocery
The argument that Innocent’s
up to scrutiny. segments of shoppers. The finer foods group – who
is the main problem doesn’t stand
of them to have an effect
– they’re just there as a
income
it’s a
higher
price,
are
of
–
matter
a
shoppers
just
Tesco’s
not
is
of
16%
are
The decline
marketing tool, they’re not doing anyone any good
in the minds and include many older, richer people and they are
symptom of failing to justify the price
and if they put enough of some of them in to have
of a number 2.5 times more likely to be buying blueberries than
of consumers – and that is a result
a real effect they wouldn’t taste good.
which we
any other group.”
of serious strategic problems, problems
“Our
Super
Smoothies
only
have the benefits that
from
matches that of many – if
This consumer profile
believe could prevent Innocent smoothies
you can get naturally from fruit and we make sure
ed brands.
not most – health-orient
regaining their former level of sales.
there’s enough of the ingredients to have a positive
natural effect – and that they taste excellent.”
The Detox product, for example, contains
SMOOTHIES
CHART 1: THE RISE AND FALL OF INNOCENT
lemon, honey and ginger. The Vitamin C Super
s consumers
newly-cautiou
juicesSmoothie
provides
500% of your RDA of vitamin
point of difference compared to other
it is not.
As Innocent has gradually lost its
price is justifiable and found that
C, “but all from natural sources,” emphasised
have questioned whether the super-premium
Reed. “All the vitamin C comes from rosehips and
acerola cherries. A competing product to ours has
£131.4
probiotics.
– the most
• Benecol cholesterol-lowering drink
expensive dairy product in the UK supermarket
to £39.2
– actually increased its sales by 18.8%
s: seven
Innocent Drink
ns from
strategy lesso
f Europe’s
the setbacks o
ie maker
biggest smooth
140
Brand adds fibre-digestive health
message
Those benefits include fibre content, said Shilpee
Aggarwal, Innocent’s nutritionist. “A smoothie gives
you on average 15% of your GDA for fibre. Fibre
is one of the biggest problem nutrients in the UK
– eight out of 10 people aren’t reaching their fibre
requirements.
“Chowing down on a bowl of sprouts or prunes
($206/€151)
120
£107
($168/€123)
£94.3
($148/€109)
100
Sales
(£ million)
3.6 Innovation
Mixed performan
ce on innovatio
n
Innocent has
continued to invest
in new product
development throu
ghout
300% of the RDA of vitamin
C, butthe
it’s down
all added
turn.
back from synthetic sources. We don’t do that – we
only want to offer natural health benefits.”
Veg Pots: In Nove
mber 2008, it launc
Veg Pots, a range
hed Tasty
of microwavea
ble vegetablebased lunchtime
meals marketed
on the basis that
each one offers
three portions
of veg. These
up on the trend
pick
for foods with
an intrinsic health
benefit to be used
as ingredients in
more convenient
product forma
ts, their presence
intended either
provide a health
to
benefit or –if
they’re not prese
at sufficient levels
nt
to have any measu
– simply to create
rable effect
a “health halo”
.
While it’s true
that sales of some
foods with purpo
whole fresh
rted health benef
spinach and brocc
its – such as
oli – increased
sharply in the
period 2005-2007
as the “superfood
s” frenzy took
hold in the media
, it’s also the case
that the growth
in many categories
has come to an
end. The reaso
is clear – whole
n
fresh foods are
not convenient
£80.5
($126/€92.7)
80
60
40
£30
($47/€35)
20
0
2005
Source: Nielsen supermarket scanning data
Published by
Report
2007
2006
for UK
4
Innocent Tasty Veg Pots have recorded £15 million ($24 million/317 million) in retail sales in their first full year on the market
With
and created a 2009
new category in the UK supermarket – healthy vegetables
thatits
arestrateg
ready-to-eat, require no preparation, come in a
2008
y having failed
to justifywith
prices
delicious sauce and deliver three of your recommended 5-a-day in a single
serve.
one of its smoothies
your Veg Pot,
its super-p
– byDrink
30%-40
remium pricing
% in some cases.
and sales plungin
never be able
says Innocent, and you will get your full 5-a-day in one meal.
It’s a step that
to recover the
g as
might protect
lost value.
the brand’s volume a result, Innocent has drastic
ally cut
, but once taken
Innocent will most its
likely
www.new-nutrition.com
13
www.new-nutrition.com
Published March 2010
19
www.new-nutrition
.com
Contents
1. Executive Summary
2. Seven strategy lessons: economic downturn exposes flaws and strengths
Lesson 1: Talking to the wrong consumers
Lesson 2: No point of difference
Lesson 3: No benefit you can feel
Lesson 4: Aiming a niche product at the mass market
Lesson 5: No packaging innovation
Lesson 6: Failed to open new categories and segments
Lesson 7: Flawed international strategy
3. The Innocent story
3.1 Rapid sales growth
Success with smoothies
Factors contributing to early success
3.2 Brand positioning: naturally functional, fruit, fun, tasty and convenient
Brand adds fibre-digestive health message
Core brand messages focus on 5-a-day benefit
3.3 Communications strategy
Educating health professionals
3.4 Packaging and distribution strategy
3.5 Pricing strategy
Premium pricing
Price-slashing to protect brand
3.6 Innovation
Mixed performance on innovation
A me-too product under-performs
Orange juice another me-too
4. International expansion
4.1 Hope from Coca-Cola partnership?
4.2 Challenges of expansion
4.3 Does premium-pricing translate to other countries?
5. Moving forward with kids
5.1 Kids market focus in bid to revive flagging fortunes
5.2 Successful kids brand sees sales slump
5.3 Price-slashing to stop collapse
Companies and brands
COMPANIES AND BRANDS IN THIS
REPORT
Benecol
Coca-Cola
Compal Essencial
Danone Actimel
Danone Activia
FruitShoot
Innocent
Innocent Juicy Water
Innocent Smoothies for Kids
Innocent Squeezies
Innocent This Water
Innocent Veg Pots
PepsiCo
Tropicana
Yakult
Yoplait Frubes
CONTINENTS/COUNTRIES/REGIONS
EUROPE
Austria
Denmark
Finland
France
Germany
Ireland
Norway
Portugal
Sweden
Switzerland
The Netherlands
UK
FoRMAtS & PRICING
About this report
Available
formats:
Pricing:
Innocent
Drinks
rocketed from start-up
to over $200 million in retail sales within eight years, creating a brand new
category in Europe – fruit smoothies – and enjoying premium prices.
PPT – 160 slides
PDF & PPT each priced at:
But between 2007 and 2009 its sales plunged by 29% (Neilsen), and prices were slashed.
€200/$295/£160/C$295/A$345/NZ$395/¥33000
It’s easy to blame the economic downturn for Innocent’s recent sales decline, but during the downturn many other
premium health brands actually grew their sales by 20%-30% even as Innocent’s fell.
PDF – 80 pages
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the seven strategy lessons
that can be learnt from the experience of Innocent.
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These cover:
• Pricing
• Establishing and maintaining a point of difference
HowPositioning
to order:
•
and branding
• Communicating health benefits
Complete
andinnovation
return the attached order form
•
Packaging
E-mail:
[email protected]
•
Consumer
targeting
Or visit: http://www.new-nutrition.com/10kt09.asp
Thanks to in-depth interviews with the company’s founders since 2002, New Nutrition Business has been in the
unique position of tracking the rise of Innocent Drinks to its status as Europe’s biggest smoothie brand and the
fourth-largest in the world. This report reveals how the company went from start-up to a celebrity brand and the
reasons why its strategy meant that it hit trouble in the downturn, even as other health brands prospered.
Insights don’t have to cost a fortune
Innocent’s packaging and distribution, marketing communications, brand positioning, pricing strategies and
European brand expansion are all examined in detail.
Expertise in the business of food, nutrition and health since 1995
ABout uS
This report draws on material published in our journal New Nutrition Business, which provides case studies
and analysis of success and failure in the global nutrition business. It is used by more than 1,700 corporate
subscribers in 42 countries.
Since 1995 we have been researching, analysing and forecasting the global nutrition business, and we provide
expert consultancy to companies and government organisations around the world.
Many companies make New Nutrition Business available online to all of their research, product development
and marketing staff. Our website – www.new-nutrition.com – contains the largest searchable internet database of
information about the business of food and health.
We have a small staff – all with experience in nutrition or in food and beverage marketing – but a global
perspective, with offices in London and New Zealand and affiliates in Japan and Finland.
FORMATS & PRICING
Available formats:
Innocent
Innocent
to £114.1
an impressive 5% sales increase
despite a
million ($180 million/€131 million),
about
background of intensely negative media
Innocent
the collapse of
its sales.
Innocent is paying
Veg Pots: In Novem
for its failure
and differentiate
to innovate
ber 2008, it launch
Veg Pots, a range
– and as a result
ed Tasty
its retail price
is down as much
of microwaveable
based lunchtime
as 30%-40%
vegetablemeals marketed
in many retail
outlets. When
the recession ends
on the basis that
each one offers
there is a danger
three portions
it won’t be able
of veg. These
to get its prices
up on the trend
pick
back up again.
for foods with
sacrificing margin
It
is
an intrinsic health
benefit to be used
to maintain volume
as ingredients in
the expensive ingredi
– and with
more convenient
product format
ents found in smooth
s, their presenc
a route that can
ies that’s provide
e intended either
only result in a
a health benefit
to
serious erosion
profitability.
or –if they’re
of
at sufficient levels
not
to have any measur present
– simply to create
able effect
a “health halo”.
3.6 Innovation
While it’s true
that sales of some
foods with purpor
whole fresh
Mixed performanc
ted health benefit
spinach
s
–
e on innovation
such as
and broccoli –
increased sharply
period 2005-2
in the
007 as the “superf
Innocent has
oods” frenzy took
continued to invest
hold in the media,
in new produc
development throug
t in many categor it’s also the case that the growth
hout
300% of the RDA of vitamin
C,
butthe
it’s downtu
all added
ies has come to
rn.
an end. The reason
is clear – whole
back from synthetic sources. We don’t do that – we
fresh foods are
not convenient
only want to offer natural health benefits.”
Lesson 1: Talking to the wrong
consumers
that is the
It’s not premium pricing in itself
is that its
problem. Innocent smoothies’ challenge
its competitors,
core consumers – who, according to
Innocent
are 20-somethings and early-30s, although
– have been
maintains they have broad age appeal
more
older,
than
recession
more affected by the
in the
affluent consumers.
There’s an even closer parallel for Innocent
with health
super-premium
The core consumers of brands
example of blueberries, the trendy,
David
to
Professor
continued
benefits are people aged over 40.
priced fruit. Sales of blueberries
premium to Hughes, Emeritus Professor of food marketing
increase, despite selling at a 600%
of the
at Imperial College, London, explains
apples, even while Innocent sales fell.
pricing
“Tesco has six
UK’s largest grocery chain, Tesco:
The argument that Innocent’s premium
up to scrutiny. segments of shoppers. The finer foods group – who
is the main problem doesn’t stand
of them to have an effect – they’re just there as a
of price, it’s a are 16% of Tesco’s shoppers – are higher income
The decline is not just a matter
marketing tool, they’re not doing anyone any good
in the minds and include many older, richer people and they are
symptom of failing to justify the price
and if they put enough ofthan
some of them in to have
number
a
blueberries
of
buying
result
a
be
is
2.5 times more likely to
of consumers – and that
a real effect they wouldn’t taste good.
which we
any other group.”
of serious strategic problems, problems
“Our Super Smoothies
only have the benefits that
from
matches that of many – if
This consumer profile
believe could prevent Innocent smoothies
you can get naturally from fruit and we make sure
brands.
not most – health-oriented
regaining their former level of sales.
there’s enough of the ingredients to have a positive
natural effect – and that they taste excellent.”
The Detox product, for example, contains
SMOOTHIES
CHART 1: THE RISE AND FALL OF INNOCENT
lemon, honey and ginger. The Vitamin C Super
consumers
newly-cautious
juicesSmoothie
provides
500% of your RDA of vitamin
point of difference compared to other
it is not.
As Innocent has gradually lost its
price is justifiable and found that
C, “but all from natural sources,” emphasised
have questioned whether the super-premium
Reed. “All the vitamin C comes from rosehips and
acerola cherries. A competing product to ours has
£131.4
probiotics.
– the most
• Benecol cholesterol-lowering drink
expensive dairy product in the UK supermarket
to £39.2
– actually increased its sales by 18.8%
: seven
Innocent Drinks
s from
strategy lesson
Europe’s
the setbacks of
maker
ie
th
biggest smoo
million ($62 million/€45 million).
PDF
27 pages
140
Those benefits include fibre content, said Shilpee
Aggarwal, Innocent’s nutritionist. “A smoothie gives
you on average 15% of your GDA for fibre. Fibre
is one of the biggest problem nutrients in the UK
– eight out of 10 people aren’t reaching their fibre
requirements.
“Chowing down on a bowl of sprouts or prunes
($206/€151)
120
£107
($168/€123)
£94.3
($148/€109)
100
Sales
(£ million)
Brand adds fibre-digestive health
message
£80.5
($126/€92.7)
80
60
40
£30
($47/€35)
20
0
2005
Source: Nielsen supermarket scanning data
2007
2006
for UK
4
Report
Published by
Innocent Tasty Veg Pots have recorded £15 million ($24 million/317 million) in retail sales in their first full year on the market
With
and created a 2009
new category in the UK supermarket – healthy vegetables
thatits
arestrategy
ready-to-eat, require no preparation, come in a
2008
having failed to
justifywith
prices
delicious sauce and deliver three of your recommended 5-a-day in a single
serve.
one of its
smoothies
your Veg Pot,
its super-pr
– byDrink
30%-40%
emium pricing
in some cases.
and sales plunging
never be able
says Innocent, and you will get your full 5-a-day in one meal.
It’s a step that
to recover the
as
might protect
lost value.
the brand’s volume, a result, Innocent has drastical
ly cut
but once taken
Innocent will most its
likely
www.new-nutrition.com
13
www.new-nutrition.com
19
www.new-nutrit
ion.com
Chart 2: Price
comparison
Core brand messages focus on 5-a-day benefit
of chilled jui
Powerpoint
106 slides
nks: seven
Innocent Dri
ons from the
strategy less
Europe’s
setbacks of
othie maker
biggest smo
The Innocent Company Rule Book:
ces in the UK
in 2007
Note that single-s
erve packs ena
ble super-prem
Innocent brand
ium pricing – eve
at its height com
n in 1-litre pac
manded a 100%
80% premium
ks the
premium over
over market-lead
supermarket own
er Tropicana.
-label and an
Innocent Tasty Veg Pots have recorded £15 million ($24 million/€17 million) in retail sales in
their first full year on the market and created a new category in the UK supermarket – healthy
vegetables that are ready-to-eat, require no preparation, come in a delicious sauce and deliver
three of your recommended 5-a-day in a single serve. Drink one of its smoothies with your
Sourcget
e: New
Veg Pot, says Innocent, and you will
your
5-a-day
in one meal.
Nutrifull
tion Busin
ess
An example of the quirky, comical advertisin
g used by Innocent Drinks.
55
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NEW NUTRITION44 BUSINESS
ION BUSINE
SS
BUSINESS
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71
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