HERE come the Innocent boys, shambling into the posh London restaurant —
jeans, stubble, tousled hair, each in a different flowery shirt. They look
like they’re heading for a hard night in Ibiza with Calum Best.
But right now these three — Adam Balon, Richard Reed and Jon Wright — have
more pressing things on their minds. As the founders of Innocent smoothies
(pulped fruit drinks with no additives), they run one of the best-loved and
fastest-growing businesses in Britain. This month Innocent’s expansion drive
reaches Scandinavia. This year its turnover is expected to double to £70m.
To some, the way they do things — no chief executive, 10% of profits given
away, constant customer dialogue — makes them the most interesting
start-up to happen in Britain in the past decade.
To others, they are just a very hot property, heading a company that could
already be worth £175m — two-and-a-half times sales in a premium, healthy
drink sector that is expected to grow rapidly in years to come.
That makes Balon, Reed and Wright, who hold 70% of the company, three very
rich thirty-somethings indeed — on paper. But don’t expect them to sell up
just yet.
“Yeah, there have been plenty of people wanting to buy us,” grins Balon, after
the handshakes. “All the big guys.”
Pepsico marched in two years ago, buying the rival PJ operation. Coca-Cola is
pushing Minute Maid into Britain. Have they all come knocking? “We can’t
tell you,” says Reed, suddenly serious, “people talk to us in confidence.”
Wright furrows his brow and adds: “But there have been discussions where
people say ‘unless we buy you, we will crush you’.”
Reed, the conciliator, smiles. “We’re flattered to be asked, however,” he
says, “and we rule nothing out.”
The Innocent founders are a sharp act, intertwining comments but rarely
speaking over each other, each allowing the others their say. It’s how they
run the company. Old university chums, they left good jobs in advertising
and consultancy to set up Innocent in 1999, and clearly still enjoy playing
to each other’s strengths: Wright does systems, Balon does deals and Reed
does ideas.
Other than that, they’ve ensured that Innocent is infused with liberal values,
operating with 100 staff from a funky warehouse base in west London, touting
products that are free of concentrates and preservatives, sold in
eco-friendly bottles (150,000 a day) and supermarket tetrapaks, with money
ploughed back into causes such as the Rainforest Alliance.
They want to prove that business really can be a force for good, and others
want to believe them. About 40,000 consumers sign up for Innocent’s weekly
e-mail. Last week Reed even won a “most admired businessman” award from the
National Union of Students, the latest in a pile of Innocent’s accolades.
The company’s rise has surprised many — Innocent doesn’t even own any juicing
facilities but contracts out to five secret sites in Britain. Once sales
build in Europe, it plans to sign similar deals on the Continent.
The key has been timing. When Innocent launched seven years ago, few took the
smoothie market seriously — independently owned PJ, which uses concentrates,
was the only sizeable brand. Since then demand has boomed. It was a hunch
about that which persuaded Balon, Reed and Wright to chuck in their careers
and establish Innocent.
And no stress running with three bosses? “Nah, three is such a great number to
have,” says Reed. One can always balance the other two.
Balon: “Or five would be good, too.”
Wright: “Can’t imagine that.”
They laugh, but beneath the banter you can feel the drive. Reed’s knee bounces
anxiously under the table. Aged 33, a bundle of nervous energy, he is the
youngest and chattiest of the three, all beatnik chic with his bracelets and
necklace under gaping Joseph shirt.
Balon, 34, bigger, beefier with a deep voice and winning smile, is the
corporate reassurer — trained at McKinsey, wearing Paul Smith, he read
economics at university and now handles Innocent’s expansion in Europe.
Wright, also 34, ex-Bain, Liberty shirt, is quieter, more cautious, but even
he beats out a tattoo with his heel as he talks. He has a business card that
reads “complete bottler” and can be famously grumpy — but he’s the financial
brains.
“That’s why I’m grumpy.”
Cue more laughs. The humour that bonds the three runs through everything the
company does, and is an infectious draw for consumers. Check out the jobs
available page on Innocent’s website and click “Maldives”. Then remember the
“stop looking at my bottom” tag printed under its smoothie bottles.
“They have a really astute understanding of what makes a young metropolitan
audience tick,” says Jason Cobbold of the advertising agency United London,
which as HHCL advised Innocent last year. “It’s almost anti-marketing.”
Better still, it means rivals often underestimate the Innocent trio as
hippy-dippy, do-gooders. Anything but. They are seriously educated, middle
class, high achievers — Balon’s father works for JP Morgan, Reed’s is a
former bus company executive, and Wright’s an ear, nose and throat surgeon —
and they are not frightened to fire employees who don’t pull their weight.
Nor do they work for nothing. They pay themselves £120,000 a year, and guard
some of their numbers closely.
“The profit figure is the one number I can’t give you,” says Reed, “but the
margins are healthy, though not obscene.”
More pertinently, 11 competitors have launched and withdrawn in the smoothie
market since 1999, leaving monster rivals such as Pepsico to slug it out
with Innocent.
“We got wind the PJ acquisition was going to happen,” says Balon, “and we had
to ask ourselves, are we up for it? It took a bit of soul searching. And we
decided yes, we think we know how to win, we actively took a decision not to
get out.”
They also abandoned plans to diversify — they had an ice cream range ready to
go — and decided to concentrate on geographic expansion of their core
smoothie range. They have bases in France and Denmark. Next year Germany and
Austria.
Their problem is people. They are growing so fast that finding the right staff
is slowing them down. Last autumn they took in four senior executives with
big-company experience — three have stuck. “We’re choosy, they have got to
be commercially switched on, but with an altruistic streak, too,” says Reed.
So far, in sales terms, it is working. “At the end of 2004 we were 2.2 times
bigger than PJs, whereas now we are 3.3 times bigger,” continues Reed.
“Basically, the whole market has grown, and so have all the main players,
with us growing the most to get to a 61% market share.”
Those close to the Innocent operation have been impressed by the founders’
strategic nous. Jules Hydleman, who chairs the Innocent board and represents
the interests of Maurice Pinto — the only venture capitalist who would back
the three founders when they launched (£200,000 for a 20% stake) — describes
Balon, Reed and Wright as the best management team he has ever encountered.
“They have incredible attention to detail,” he says.
Richard Hall, who heads the Zenith International consultancy, says that, more
importantly, the way Innocent does things is having an impact far beyond its
market niche.
“Consumers are looking for businesses to trust and they want to reward that
trustworthiness,” says Hall. “In my view Innocent is a model for the values
all businesses should aspire to in the future.”
But further growth will be far tougher. Innocent’s quirky marketing style is
ill-suited for the mass market, and will be incomprehensible on the
Continent. And how much of the boho feel will be lost as new layers of
management come in? It is at this stage that ethical brands such as Ben &
Jerry’s (now Unilever) and Green & Black’s (now Cadbury) have sold
out. But maybe there is another way.
“We’re not on a path to sell in any shape or form,” says Reed,
“but I can imagine a float being more likely than a trade sale. I get quite
excited that we could do it in an Innocent way.”
Or could one of them quit? They all shrug and pull faces. “More likely
something might change in our personal lives, someone gets ill or something.
But we can always get round it.”
Reed is married, Balon and Wright have girlfriends. No kids yet. They all went
on holiday recently during which they each gave a commitment to stick with
the business until at least 2010. And if it all came crashing down, there’s
lots they wouldn’t miss. Their biggest grief has not been competitors, they
say, but people who let you down.
“The bloody alarm company,” says Balon. They all roll their eyes. “The alarm
in our offices used to go off every Saturday at 7.13am. And then we’d get a
phone call from the company insisting it was mice.”
“Right, like, every Saturday at 7.13am?” "And they’d say,
yeah, mice are creatures of habit.”
They crack up again. But they’ve got to dash. They give me their latest book
of smoothie recipes and a promotional pair of Innocent underpants, and then
they’re off, in a flurry of flowery shirts, leaving me to pay the bill.
Jon Wright's vital statistics
Born: July 20, 1972
School: Winchester College
University: St John’s, Cambridge
First job: consultant at Bain
Status: unmarried
Salary: £120,000
Home: Notting Hill
Car: black Audi RS4
Favourite film: Sleeper
Favourite book: How Things Work (volumes 1 and 2)
Favourite listening: Radio 4
Best gadget: PSP (Playstation Portable)
Last holiday: Ibiza ‘with Adam and Rich and their lovely
ladies’
Adam Balon's working day
INNOCENT’s commercial director wakes at his house in Ealing, west London, at
6.30am and often takes a tennis lesson in Holland Park before work. “It’s a
great way to start the morning,” says Adam Balon.
He is at his desk in the open-plan office at Fruit Towers, Innocent’s base in
Shepherds Bush, by 9am.
“I’ll do e-mails, plan my day and head into meetings by 10am. I’ll be talking
to customers, retailers, wholesalers, and building up systems for
international expansion.”
There will also be conference calls and inevitably a potential employee to
interview. “We are expanding so fast, recruitment is a priority.”
He will take co-workers round the corner for a drink at lunchtime, and often
meet contacts after work in the Anglesey Arms. He is usually home by 8pm.
Increasingly, he is also travelling abroad as Innocent pushes its
distribution into Scandinavia, Germany and Austria.
Richard Reed's down time
RICHARD REED relaxes by running and practising yoga. At weekends, he likes to
get into the “Great Outdoors”.
“If it’s hiking, it’s the Lake District, the Yorkshire Dales or Peak District,
if it’s mountain-biking it’s the South Downs or Wales. Camping is definitely
a thing, too, not on a campsite but miles from anywhere, beside a river, poo
in the ferns.”
Inflatable mattress? “Yeah, you’re good. I do have an inflatable mattress.” He
recently came back from a cycling holiday in Provence. “I cycled off the
calories each day.”
He also gets involved in some charity projects — he’s helping Greenpeace
organise a fundraising event at the moment. And when he has the time, he
buys a lot of flowery shirts. “We all have the same ones, even though we
bought them separately. I also seem to spend a lot of time in nightclubs at
the moment.”
