Innocent until proven guilty over Coke deal?

The Innocent boys are on the defensive after agreeing to sell a further 40% stake to Coca-Cola.

Last Updated: 25 Feb 2013

Innocent has always made great play of its almost anti-corporate, eco-friendly, health-conscious credentials. So it’s no surprise that it’s taken a lot of stick after agreeing to let global sugary drinks purveyor Coca-Cola increase its stake to 58%. Innocent says the deal will help them scale further and faster, and insists that Coke has been a model minority investor since taking an initial 18% stake last year. Now it remains to be seen whether Coke will be equally hands-off as a majority owner. But it’s hard to see why it would change a winning formula. And since Innocent has so far fulfilled its promise to stick to its principles, shouldn’t we give this great (ex-)British business the benefit of the doubt?

Innocent has undoubtedly been one of the UK entrepreneurial success stories of the last decade: founders Richard Reed, Adam Balon and Jon Wright have turned a small UK start-up into a global drinks company, valued at around £300m when Coke bought its stake last year. But on the face of it, the clever positioning that has made it so successful – the healthy drinks, the philanthropy, the folksy marketing messages – appear to be almost the antithesis of Coke’s corporate image. Hence the accusations from the blogosphere that Reed and co are ‘selling out’ – just as the likes of the Body Shop, Ben & Jerry’s, and Green & Blacks were before them.

Frankly, we don’t begrudge entrepreneurs selling up if they decide that they’ve had enough and want to cash in on their years of toil; surely they’ve earned that prerogative. And inevitably, when they come to do so, it will probably be the big players in their market (in opposition to whom they may have positioned themselves) who will want to buy. As Reed points out, this isn’t necessarily any worse than a fast-buck merchant from the private equity world.

Besides, the situation is slightly different here. Coke is getting most of its extra stake by buying out one of Innocent’s angels (what an investment that turned out to be, incidentally); the three founders are selling some shares, but they’ll apparently keep enough to retain operational control over the company. Reed says Coke will remain a ‘passive investor’, just as it has been so far – but it will help Innocent ramp up its distribution in new markets (initially in Europe, though there’s some talk of a tilt at North America too).

Maybe Coke will prove to be rather more overbearing now it has majority ownership. And in an ideal world, it would be nice if this great British company stayed in great British hands. But Coke hasn’t corrupted Innocent yet. So for the time being, there’s no reason not to take Reed at his word.

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