Can innocent extend their way out of trouble?
Poor old innocent. For several years they have enjoyed consistent double digit growth, and the adoration of the press and many of us in marketing. In workshop after workshop, teams dreamt aloud of "doing an innocent" in their category. And with good reason. Many a post here has celebrated the many good things the innocent brand have done. And my trip to Fruit Towers was a highlight of 2008.
How different things look today, after a horrid 2008 that saw UK sales plummet by 20%, from £134millon to £107million according to Nielsen.
…. to not
I first commented on clouds on the horizon way back in June 2007, when the sales graph was still shooting upwards. Here's what I said:
"There are a couple of early warning signs on the Innocent brand that
make me worry they are about to loose their way. I posted a couple of
weeks ago on the problem of brands being "hot, then not". I do hope
this is not the case with innocent."
The risk of brand extension
Back in 2007 I worried about the launch of This Water distracting attention from the core smoothie business. I even got a chance to talk about the risks of extending out of smoothies in Jan 08 when I met founder Richard Reed. My recommendations to him for 2008 were:
1. Focus on the core smoothie business
2. Be ready to fight back against Tropicana Smoothies
3. Work on driving the price down, to bring in new consumers, and increase economies of scale
innocent chose of course to take a different path in 2008. They launched Veg Pots, which 80% of our readers thought would be a "miss". They also launched an orange juice, with little added value apart from orange selection, that takes them head-to-head with market leader Tropicana, and own label. And while all this was happening, the core smoothie business lost £27million in sales. And now comes news that they plan to extend even more with a food snack called Innocent Squeezies.
All these extensions have 2 problems:
1. They steal valuable resources and attention away from the core smoothie business that is in sharp decline.
2. It is not obvious that innocent can create a profitable business model for these new launches, given the investment needed to get them off the ground, and keep them flying
Time for a refresh?
The other challenge for 2009 is how well innocent's quirky, quaint brand tone, style and values fit with a recession-battered UK population. Michael Sudgen of VCCP recently commented that "The innocent world seems to have closed up and become formulaic. It should grow up and refresh its communication". I must admit to becoming a bit tired of the wacky email newsletter, and the wooly hats promotion is starting to feel a bit tired.
Time then for a refresh of the core business, rather than trying to extend their way out of trouble.