Innocent turns to Coca-Cola to finance international expansion

Plenty of coverage in the press today about the announcement that the darling of Business Studies textbooks, Innocent Drinks, has sold a minority stake to Coca-Cola for £30million…

The sale of Innocent shares to Coca-Cola is reminiscent of a minority stake taken some years ago by McDonalds in Pret A Manger. Lets hope that this latest investment goes more smoothly than the Pret one!

The Times takes a pretty balanced view in its reporting, explaining the strategic rationale for the deal and also pointing out the potential conflicts between Innocent’s ethical stance and that of its new US partner.

The Guardian takes a look at other niche/premium food brands that ended up selling themselves to much larger competitors. Green & Blacks is now part of Cadbury’s. Ben & Jerry’s is part of the Unilever brand portfolio.

Innocent management have also written an open letter to employees, suppliers, customers and other stakeholders.Well worth a read.

The shareholdings in Innocent post-deal are interesting. The three original founders retain about 60% (20% each) with staff holding a combined 10% (valued at about £30m. Coca-Cola have what is described as a small stake - probably around 10-20%, though the precise shareholding will be linked to business performance over the next year or two.

It is not just the finance that the share sale brings to the business. Coca-Cola will bring substantial strategic benefits to Innocent, particularly as it seeks to exploit Coca-Cola’s distribution network overseas.

This is perhaps an invitable and undoubtedly interesting next stage in the development of Innocent. It should be fascinating to see how the Coca-Cola investment enables the smoothie-maker to accelerate its growth after a couple of years when sales have matured in the face of market saturation and intense competition in the UK.