Comment - Coca-Cola Co's Innocent Drinks deal
Green campaigners will be upset at the deal
Innocent today (9 April) announced it has accepted a further investment by soft drink giant The Coca-Cola Co in a further sign that the firm is facing an uphill struggle.
Innocent, which controls more than two thirds of the UK smoothie market, agreed to sell a stake of between 15% and 20% in its business to The Coca-Cola Co in April 2009 for GBP30m (US$49m).
But, Coca-Cola has today upped its stake to 58%. A fee for the new shares has not been disclosed.
The move suggests Innocent has continued to struggle, although it claims to investment will be used for overseas expansion.
In November, Innocent reported pre-tax losses of GBP11.2m (US$18.8m) for the year ending 31 December 2008, compared to profits of GBP12m the year before, according to accounts filed by the firm with Companies House.
Smoothie sales continued to slide in the UK in 2009, falling by 27% in value and volume during the year, to GBP127m (US$190m) and 47m litres, according to the annual Britvic Soft Drinks Report.
The figures show that consumers rejected smoothies in greater numbers as the UK recession reached its peak. Sales were already down 20% in 2008, to GBP172m, according to the previous year's Britvic report.
The deal announced today involves Coca-Cola buying the shares of Innocent’s two original start-up investors, who want to retire, Innocent has said. In addition, each of the founders of Innocent will relinquish a minority of their own shares, but retain the majority of them.
While Richard Reed, co-founder of Innocent says the deal is “good news for all parties”, there is sure to be a number of outside parties that won’t be happy with the deal.
Now that the soft drinks behemoth has sunk its claws even deeper into the group, the question is whether this is a step too far for the ethical consciences of Innocent's core drinkers?
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