Why Innocent’s ethos survived Coke acquisition

It’s easy to be cynical when an ethical brand is acquired by a multinational. But such deals can – if structured correctly – do more than preserve the founders’ principles


Bottles of innocent smoothies on a supermarket shelf

In 2009, the news that the Coca-Cola Company had taken a significant stake in Innocent Drinks went down like sour milk among loyal customers of the smoothie brand. “You just killed your business!” and “I can’t believe how angry I am!” were just some of the heated comments posted on social networks and the company’s blog at the time.

At that point, Innocent was an ethical outlier. The company used sustainable supply chains and recyclable packaging, while giving a share of profits to its foundation – a charity tackling hunger in the developing world. To consumers, these progressive practices made Innocent the antithesis of corporate giants such as Coca-Cola. For many observers, the deal was an existential threat to the sustainability credentials the brand had been building since its establishment in 1998. 

Coca-Cola increased its holding to more than 90% in 2013, although Innocent’s founders each retained some equity. But, more than a decade on from the initial investment, those at Innocent would argue that not one of the negative prophecies has come to pass. On the contrary, they believe that the brand’s record on environmental, social and corporate governance (ESG) has improved as a result of the multinational’s investment. The business would have been at risk if its founders had refused the deal, which came during a recession in which they had already been forced to made redundancies. 

Keeping at arm’s length

Emilie Stephenson, who heads Innocent’s ‘force for good’ department in the UK, believes that having a “connected, not integrated” relationship with Coca-Cola has helped the brand to sustain its ESG standards. 

“It means that we do things independently,” she says. “We’re part of the system, but we have very much kept our identity.”

When Coca-Cola first took a stake, it offered Innocent its own floor at the company’s London HQ, but Innocent’s founders refused. “That would have saved us a lot of money on rent. But I remember them explaining clearly to us that keeping our own space, which we could brand as we wanted, was so important in retaining our identity and culture,” says Stephenson, who recalls that no one from Coca-Cola transferred over. 

She stresses that safeguarding the brand’s values was a prerequisite of the deal. Ethical red lines included the business’s commitment to funding the Innocent Foundation. 

I’m sure these big businesses look at the kind of culture that their acquisitions have and think: ‘Wow, let’s have a piece of that’

“It’s an integral part of who we are as a business,” Stephenson says. “Coke wanted us to continue with that. It was in their interests to do so and leave us to it.” 

Innocent’s management team worked hard to ensure that employees could see the benefits of the deal, she adds. These included the fact that they could promote their ethical values to a much wider audience. 

Stephenson is one of many long-serving employees who are still with the company since its independent days, which she believes is a further sign that Innocent hasn’t lost its original values. 

“I’ve been here 15 years. On the board we still have at least seven people who were here before the takeover,” she says, acknowledging that “things might be different now if there had been a mass exodus when Coca-Cola arrived”.

Independent audits and inspiration

In 2018, Innocent earned B Corporation status for the first time, even though its parent company is not a B Corp. This is no mean feat, given the extreme scrutiny that the certifying body, B Lab, exercises over the ESG credentials of subsidiaries of large corporations. For instance, Method, a maker of non-toxic cleaning products, had to relinquish its B Corp status after it was acquired by SC Johnson in 2017.

Chris Turner, executive director of B Lab UK, says: “We recognise these big changes in ownership are huge for smaller businesses and can affect their environmental and social performance.” 

All B Corps must apply for recertification every three years, but when one undergoes a significant change in ownership, it’s required to do so annually. B Lab also operates a public complaints procedure, enabling anyone to report any recently acquired B Corp that they believe may be misrepresenting its ESG performance.

The case of Method notwithstanding, Turner says it’s unusual for a B Corp to lose its status after a takeover. If anything, the acquirer is likely to become more ethical itself, which helps to explain why B Corps are such attractive acquisition targets. Research published in the journal Business Strategy in the Environment in 2020 showed that, if the seller had a higher ESG performance than the buyer, the latter’s ESG performance tended to improve.

“More and more B Corps are being acquired by multinationals that aren’t B Corps,” says Turner, citing Unilever, which bought Ben and Jerry’s in 2001 and has been on a streak of acquiring B Corps ever since.

“The idea we’ve been proving by certifying B Corps for over a decade now is that businesses that are ethical thrive in the long term,” he observes. “Big firms are waking up to this. A great example is Danone, which is on the way to becoming the world’s largest B Corp.”

Turner says that Danone’s initial inspiration was a US baby-food brand called Happy Family Organics, a B Corp that it bought in 2013. Within five years of that acquisition, the whole of Danone North America was certified as a B Corp.

Shaping culture

“Smaller businesses can be inspired by the scale they can achieve by being part of a bigger group,” he says. “But I’m sure these big businesses look at the kind of culture that their acquisitions have and think: ‘Wow, let’s have a piece of that.’”

Stephenson believes that both parties can benefit greatly from each other’s strengths, especially through collaboration. For instance, “Coke is doing a lot of great stuff on sustainability on which we work together. One example is our development of a sustainable bottle that doesn’t use fossil fuels. We’re working with them on various plant-based prototypes. It’s useful, as they put lots of money into R&D. We’ve taught them a lot and, arguably, they’ve taught us more.”

A healthy commercial environment requires small trailblazers, strong independents and multinational corporations, according to Turner, who says: “The startups stretch our vision and innovation in the community, while the big businesses and their acquisitions stretch our scale and reach. You need all of that.”

Stephenson agrees. “If you’re anti-capitalist, that’s one thing. But big companies are where they are and they’re useful, so you might as well be encouraging them to do the right thing,” she says.

What does Coca-Cola think of Innocent’s sustainability record? “It’s something they’re proud of,” Stephenson says. “There’s no way they’re ever going to change that. We’re doing really well, so why would they want to?”