Innocent Drinks

Topics: Nutrition, Pricing, Price Pages: 14 (3527 words) Published: October 28, 2012
Innocent Drinks: seven strategy lessons from the setbacks of Europe’s biggest smoothie maker Innocent

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

s: seven Innocent Drink ns from strategy lesso f Europe’s the setbacks o ie maker biggest smooth 140 120

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. premium pricing UK’s largest grocery chain, Tesco: “Tesco has six 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 a income is not just a matter of price, it’s 16% of Tesco’s shoppers – are higher not doing anyone any good are The decline marketing tool, they’re 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 of many – if This consumer profile matches that believe could prevent Innocent smoothies you can get naturally from fruit and we make sure not most – health-oriented brands. of the ingredients to have a positive regaining their former level of sales. there’s enough 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 juices newly-cautious consumers your RDA of vitamin Smoothie provides 500% of point of difference compared to other is not. As Innocent has gradually lost its price is justifiable and found that it “but all from natural sources,” emphasised C, 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% ($206/€151)

to £114.1 an impressive 5% sales increase despite a million ($180 million/€131 million), about background of intensely negative media

Lesson 1: Talking to the wrong consumers

3.6 Innovation
Mixed performan ce on innovatio n
Innocent has continued to invest in new product development throu 300% of the RDA of vitamin ghout the downturn. C, but it’s all added 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...
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