mr seth
The Smooth Start-Up
The start-up of Innocent Drinks is one of the best-known in the business world. In 1998, after leaving Uni, Richard Reed, Adam Balon and Jon Wright decided to try their own business, selling fresh fruit smoothies.
They tried out recipes on friends, then spent £500 on strawberries and bananas, turned the fruit into smoothies, and sold them at a small music festival in London. At their stall they put up a big sign saying ‘Should we give up our jobs to make these smoothies?’ One bin at the front of the stall said ‘Yes’; another bin said ‘No’. By the end of the weekend the ‘Yes’ bin was full of smoothie bottles.
At the start, everything went smoothly. The Innocent 3 found it surprisingly easy to break into major outlets even though their retail prices were as high as £2 for a small, 200 ml bottle. By 2002/2003 sales had risen to £10 million a year and the future looked very bright. Then things became a bit tougher. The smoothie market had been originated in Britain in 1994 by a company called ‘PJ’. Stung by Innocent’s success, in 2003 PJ Smoothies were promoted more heavily, stabilising their market leading position. Then the major supermarkets started offering own-label smoothies. With a Tesco’s own-label bottle at £1.39, it would be much harder to charge £1.99. Also in summer 2003 Innocent launched a new brand, ‘Juicy Water’. It struggled to achieve a good distribution level, and then repeat purchase levels were disappointing.
Yet look at the bar chart below, to see how brilliantly Innocent recovered in 2004. Better still, the market size has expanded steadily, from £20 million in 2001 to £60 million in 2003 and an estimated £80 million in 2004.
Source: AC Nielsen Scantrack, quoted in The Grocer magazine Nov 13th 2004
So how was Innocent Drinks able to restore its growth position? The complete answer is not yet clear, as Innocent would not want PJ to know exactly how it has boosted market share so dramatically. One aspect
The start-up of Innocent Drinks is one of the best-known in the business world. In 1998, after leaving Uni, Richard Reed, Adam Balon and Jon Wright decided to try their own business, selling fresh fruit smoothies.
They tried out recipes on friends, then spent £500 on strawberries and bananas, turned the fruit into smoothies, and sold them at a small music festival in London. At their stall they put up a big sign saying ‘Should we give up our jobs to make these smoothies?’ One bin at the front of the stall said ‘Yes’; another bin said ‘No’. By the end of the weekend the ‘Yes’ bin was full of smoothie bottles.
At the start, everything went smoothly. The Innocent 3 found it surprisingly easy to break into major outlets even though their retail prices were as high as £2 for a small, 200 ml bottle. By 2002/2003 sales had risen to £10 million a year and the future looked very bright. Then things became a bit tougher. The smoothie market had been originated in Britain in 1994 by a company called ‘PJ’. Stung by Innocent’s success, in 2003 PJ Smoothies were promoted more heavily, stabilising their market leading position. Then the major supermarkets started offering own-label smoothies. With a Tesco’s own-label bottle at £1.39, it would be much harder to charge £1.99. Also in summer 2003 Innocent launched a new brand, ‘Juicy Water’. It struggled to achieve a good distribution level, and then repeat purchase levels were disappointing.
Yet look at the bar chart below, to see how brilliantly Innocent recovered in 2004. Better still, the market size has expanded steadily, from £20 million in 2001 to £60 million in 2003 and an estimated £80 million in 2004.
Source: AC Nielsen Scantrack, quoted in The Grocer magazine Nov 13th 2004
So how was Innocent Drinks able to restore its growth position? The complete answer is not yet clear, as Innocent would not want PJ to know exactly how it has boosted market share so dramatically. One aspect