AMDP Final

TO: Clark Hansen, CEO, Anima Mundi Development Partners 

FROM: Gavin Lituchy, Research & Development Associate

DATE: October 15^th, 2019 

SUBJECT: Investment Opportunity: Innocent Drinks

Earlier this month you asked me to recommend a business worthy of our investment here at AMDP. After doing research on several companies, I have come across Innocent Drinks, a smoothie and juice company based in London. Not only is Innocentcommitted to doing business in a socially responsible, environmentally sustainable, and profitable manner, but it’s also at the forefront of innovation. As Innocent Drinks continues to grow, I’d highly recommend that AMDP invests in this company before it’s too late.

Below I’ll describe how Innocent meets our standards, who they are as a sustainable company, and why their approach towards innovation is focused on helping society. 

AMDP Standards

Triple Bottom Line

The Triple Bottom Line is a framework that measures a company’s financial, social, and environmental performance. It consists of the three P’s:

·     Profit: the revenue a firm brings in minus it’s operating expenses  

·     People: measures a company’s social responsibility and how it interacts with its customers, employees, investors, and community 

·     Planet: refers to a company’s focus on sustainable and environmentally conscious practices

Corporate Social Responsibility 

Corporate Social Responsibility (CSR) is a type of self-regulation that helps a company be socially accountable for all of their operations. It allows a company to become conscious of their own impact on the economy, environment, and overall social space (Chen).

Social Enterprise

Social Enterprise is a business that looks to make profits while also contributing to the environment and society. Balancing these areas are key to operating a social enterprise, and is what distinguishes it from a typical business. Often times profits made by the company are used to help fund social programs or environmentally sustainable activities (Barone). 

Carbon Footprint

Carbon Footprint refers to the amount of greenhouse gasses emitted into the atmosphere by a person or company. It is usually measured in tons of Carbon Dioxide (CO2) per unit of time, and can be produced through direct or indirect human activity. Maintaining a low Carbon Footprint is important to any business that is focused on environmental sustainability, as greenhouse gasses have been attributed to global warming (Selin). 

Innocent Drinks

Innocent Drinks was founded in 1999 by three Cambridge University graduates. After selling smoothies at a music festival in the London, they decided to quit their jobs and start Innocent. While the company originally just sold smoothies, it has expanded its products to a range of fresh juices, dairy-free milks, coconut water, and sparkling fruit beverages. Innocent has even produced several smoothie recipe books and has since established itself as the UK’s and Europe’s number one smoothie and bottled juice brand (Innocent). 

After running into problems following the financial crisis, the founders of the company decided to sell the business to Coca-Cola (Smale). Innocent, however, still operates under its original name and original mission -- to sell natural, healthy products that “taste good and do good.” The company revolves around sustainable activity that’s helps people and leaves the planet better than the way we found it. From using green energy in their London headquarters to sourcing fruit from ethical farms, Innocent does everything they can to abide by their mission (Innocent). 

By the Numbers: 

Last year Innocent’s annual sales eclipsed £370 million, rising twenty-two percent from the year before. They sold over two million smoothies per week around the world, which equates to roughly one billion portions of fruits and vegetables across the entire year (Torrance). While its target audience remains in European supermarkets and coffeeshops, it has recently begun selling its bottled smoothies in Japan. Innocent continues to expand into new regions throughout the globe, but has yet to begin selling its products in the United States. Naked Juice, the leading bottled smoothie brand in the U.S., rakes in over $545 million every year and currently owns roughly 65% of the market. If Innocent decided to tap into this lucrative market, it could potentially capture a portion of the market share and see a large increase in sales (Harfmann).

Sustainable Innovation:

Innocent’s innovative bottle for its drinks illustrates how the company is leading the way in terms of sustainability. Starting in 2003, they launched their first eco-friendly bottle made out of 25% recycled plastic. While that might not sound that impressive for today’s standards, it was revolutionary at the time. By 2007 Innocent rolled out the world’s first 100% recycled material bottle. Now the company uses both plant-based and recycled materials in their bottle and aims to have 100% renewable material by 2022. They also initiated what they call a “recycling revolution” which encourages their customers to recycle every bottle, every time. 

While their innovative bottles are impressive, Innocent has made sure that their production and office space is green as well. In 2017 they began using 100% biogas, a type of biofuel that is naturally produced from organic waste, to power their boilers. Innocent also switched to 100% renewable energy used in their headquarters. By installing energy efficient LED lights throughout the office, Innocent has one of the most environmentally friendly systems in place – helping to reduce both energy use and costs. They have also pledged to be carbon neutral by 2020 (Innocent).

Finally, Innocent’s sustainable innovation in Spain is arguably the most impactful and interesting. Innocent sources most of its strawberries from a region near Huelva, Spain which is also known for its wetland national park. In a world where water scarcity is the number one concern for agriculture, Innocent set out to find a way to considerably reduce the amount of water used to produce strawberries. Through advanced technology and a thoughtfully developed irrigation system, they were able to reduce water by 1.7 million cubic meters in just 2015 alone. Their efforts helped put water back into the nation park and illustrated how sustainability is Innocent’s number one concern (Innocent).

People Inspired Projects

Besides contributing to the environment, Innocent also makes sure that their company is helping people live better lives. Established in 2004, the Innocent Foundation was created so that no one in the world goes hungry. Every year Innocent has donated 10% of their profits to charities around the world. The two main goals of the foundation are to “stop children dying of hungry… and help the poorest families feed themselves” (Innocent). Over the past 15 years, Innocent has donated £5.2 million to 73 projects which have reached 800,000 hungry people. They only plan on stopping when no one in the world is still hungry.

Innocent didn’t just stop there – in 2008 they created a program called the big knit, which aims to help senior citizens get the care and support that they need. Each year Innocent asks people to knit little wooly hats that they can place on top of their bottles. For every bottle sold they donate a portion to charities like Age Action and Age UK. Since launching the program, 490,000 hats have been knitted and over £140,000 have been donated. Thanks to Innocent, thousands of seniors throughout Europe have received health services, jobs, and medical support (Innocent).

Final Recommendation

Ultimately, Innocent would be a great addition to AMDP’s investment portfolio. It is a well-established business that continues to show strong profits, and has the potential to continue to grow. Innocent has also shown its dedication to creating a better planet through its sustainable innovation and social programs. An investment from AMDP would not only help Innocent’s expansion, but would also be an important step in supporting positive practices and a greener future.

Work Cited

Barone, Adam. “The Aims of Social Enterprises.” Investopedia, Investopedia, 23 Sept. 2019, www.investopedia.com/terms/s/social-enterprise.asp.

Chen, James. “Corporate Social Responsibility (CSR).” Investopedia, Investopedia, 12 Mar. 2019, www.investopedia.com/terms/c/corp-social-responsibility.asp.

 Harfmann, Barbara. “2018 State of the Beverage Industry: Juice, Juice Drinks Market Play up Health Benefits.” Beverage Industry RSS, Beverage Industry, 16 July 2018, www.bevindustry.com/articles/91273-2018-state-of-the-beverage-industry-juice-juice-drinks-market-play-up-health-benefits.

Innocent. “Little Tasty Drinks.” Innocent, 2019, www.innocentdrinks.co.uk/.

 Selin, Noelle Eckley. “Carbon Footprint.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 0AD, www.britannica.com/science/carbon-footprint.

Smale, Will. “How Smoothie Brand Innocent Became a Bestseller.” BBC News, BBC, 9 Apr. 2018, www.bbc.com/news/business-43542605

Torrance, Jack. “Big Rise in Sales for Innocent as It Sucks up Market Share.” PressReader.com - Your Favorite Newspapers and Magazines., 2018, www.pressreader.com/uk/the-daily-telegraph-business/20180918/281638191113065.