Professional Documents
Culture Documents
Marketing Management
Marketing Analysis and Strategies for Innocent
Juices, Academic Session 2015-2016
Group Members:
Aseem Chhabra- MBM
Madhan Vignesh Chandrasekaran- MBM
Qiaozhi Chen- MBM
Rehan Abidi- MBM
XI Wang- MIM
Mirabel Akpaka- MIM
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Market Analysis of Innocent Juices
Table of Contents
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Market Analysis of Innocent Juices
Executive Summary
The report draws attention to the fact that Innocent is a premium brand and has a significant
market share in the UK juice and smoothies market with major competitors as Tropicana,
Naked Juice and Ribena. A slight decline has been noticed in the Sales of Innocent drinks,
and further findings show that it is mainly because of an increase in health awareness
amongst consumers towards the sugar component in juices and smoothies and the effects of
recession might push sales down. It is found that consumers would be willing to consume
more juice products if the prices are reduced. The drop in sales has also been witnessed by
Innocent’s competition however the overall revenues are not affected considerably due to
price adjustments. It is also noticed Innocent products have a shorter shelf life when
compared to their competitors therefore improving supply chain processes or introducing
products with longer shelf life may help Innocent to prosper.
It is also seen that there is strong rivalry amongst Innocent and its competitor therefore shall
lay emphasis on maintaining its brand image .However it shall introduce new products which
can be a substitute for smoothies especially during the summer season.
It is also recommended that Innocent may enter an international market such as China since
there is a rise in the health awareness levels amongst the Chinese population .Moreover
China has ‘foreign investor friendly policies’, these policies help foreign businesses to
flourish within China. Due to an ever increasing middle-class in China, Innocent shall be
marketed as a premium band. Innocent may target elderly customers by promoting its
products within the Health Organisations.
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Market Analysis of Innocent Juices
1. Introduction
Three college graduates from Cambridge thought of setting up their own juice company. For
this they bought fruit worth £500, from which they prepared smoothies. They sold these
smoothies at a music festival. However they also put up two bins, a ‘Yes’ bin and a ‘No’ bin
and a banner asking people whether the trio should setup their own juice company. If the
answer was yes then the consumer had to place empty in the bin showing ‘yes’ sign or else
they had to throw the juice in the other bin. By the end of the weekend the ‘Yes’ bin was
filled and the other one was empty. Henceforth the trio set up ‘Innocent Juices’.(Innocent -
little tasty drinks n.d. )
The company’s basic principle is to produce smoothie juices made of fresh fruit and without
any concentrates. Alongside the smoothies and juices its products also include, fruit tubes,
thickness, veg pots (Innocent stopped producing thickies and veg pots in 2009 and early 2015
respectively). Innocent products can be found in almost all retail food outlets and European
coffee shops. (Mintel 2015)
Within the product range of smoothies Innocent has acquired a significant portion of the
market share. Due to a number of reasons Innocent has acquired such a large portion of
market share. Features like quality, trust and reputation make up Innocent’s brand image. The
main competitors of Innocent are Ribena and Tropicana. Tropicana is perceived to be more
revitalising and delicious compared to its competitors however it cannot equal Innocent’s
market share. (Mintel 2015)
By 6 April 2009, Innocent sold 10%-20% of its shares to the Coca-Cola Company for £30
million on. However the three founders of the company were still involved with the
operational activities. Coca-Cola bought more shares for £65million in April 2010, by this
time Coca-Cola owned 58% of Innocent’s shares. Finally by February 2013 Coca Cola
owned 90% of Innocent’s shares. (Wikipedia, 2016)
According to Lynn (2008), Innocent juices is ranked 22 out of 500 for creating jobs in the
Food and Beverage Manufacturing Industry.
As shown in the Fig1.1 which was created using data from Mintel Report , it can be inferred
that Innocent has witnessed a decline in its sales from £107 million pounds in 2013-14 to
£100 million pound in 2014-15 which is around a 6.5% drop, however its market share in the
fruit juices category remains to vary between 9% and 10%.It is seen that there is a significant
drop in the sales than market share of Innocent in the Juice and Drinks category this implies
that the entire juice industry has been affected by a decline in sales. It is seen that Del Monte
and Naked(PepsiCo) are the only two brands which have experienced an increase in Sales.
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Market Analysis of Innocent Juices
Figure1.1 Sales in Juice and Drinks category (Mintel,2015)
Innocent continues to be the market leader in Smoothies category however it has experienced
a decrease in the volume and value sales largely because of customer concerns over the sugar
contents. Being a market leader Innocent has also invested heavily in its promotion and brand
marketing activities which are based on the ‘taste good, does good’ campaign.
Some of the main reasons for analysing Innocent’s market strategy were because Innocent
has a strong reputation in the market for being unadulterated and being pure. It is also known
to promote healthy living. Its brand image has often come into question by the media thereby
making it a more interesting brand to research upon. It is mainly present in the European
market hence students would be required to think deeper for promoting it internationally
thereby stimulating intellectual thinking amongst the group members.
This Report evaluates the marketing strategy for Innocent Juices. This report will examine
Innocent’s competitive power using Porter’s Five Forces, it will also describe the Marketing
Mix of Innocent Juices whereby the pricing and promotion strategy of Innocent shall be
described. Furthermore the macro environmental factors affecting Innocent are studied using
PESTEL analysis. The findings from the PESTEL analysis are used in SWOT Analysis to
give clearer picture of Innocent’s marketing strategy. Finally, some deductions will be made
as to how Innocent as a brand could be promoted internationally.
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Market Analysis of Innocent Juices
Evaluation of the Marketing Strategy and Marketing Mix
2.1Product Info
Smoothies are Innocent’s main range of products. Smoothies were first introduced to the UK
market in the year 1999. Over the years, the company has constantly introduced different
flavours and formats. A variety of two super smoothies and three flavours of Juicy Waters
was introduced in the year 2003 by the company. Innocent started selling vegetable pots and
noodles in the year 2008 until recently they decided to stop its production and have their full
focus towards fruit juices. In the current market, their range of products include smoothies
and super smoothies, fresh juices, coconut water, bubbles (a blend of fruit juice and spring
water) and products for kids.
Choices in size: Innocent juice makes a variety of products that comes in various ranges such
as 250ml, 330 ml, 360 ml, 750 ml and 1.35 litre bottles.
Packaging: Innocent also markets its production and packaging with an idea called
‘sustainable’ strategy which makes the raw materials more sustainable and the eco-friendly
packaging of the products makes less impact on the environment and is low in carbon
footprint. In 2007, the company was the first to achieve 100% recyclable and renewable
packaging. (Innocent, 2015)
Ingredients used: The products of the company are 100% natural with no added colours,
preservatives and sugars. Although, followed up by the controversies of lots of added sugar in
the products, there are a lot of questions raised as the company mentions simply ‘some sugar’
in the list of ingredients (Telegraph, 2007).
2.3 Place
Innocent drinks have their headquarters based in London which sets a good starting point for
the company regarding the further economic development and expansion of the overseas
market. Innocent sources its raw material from all over the world from thousands of different
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Market Analysis of Innocent Juices
farms of all types and sizes - large plantations, co-operative groups and tiny family farms and
even from the Amazon rainforest who are bound with International Labour Organizational
standards (Innocentdrinks.co.uk). Innocent has equally given importance to the distribution
strategies equally as the promotion strategies as some companies concentrate only on the
promotional aspects for development. Planners will sometimes skip over the product, place,
and price elements and head straight for the promotional strategy perhaps ‘marketing’’ leads
straight to advertising in the minds of many planners (Andreasen, 2002).Innocent fruit juices
were also sold in McDonalds for a trial period of six months as part of the happy meal which
received a lot of negative feedbacks from the customers in the company’s online blogs.
Although, it was argued that the products of Innocent were introduced in McDonalds to make
the company enter the big league in the market (Telegraph.co.uk). Innocent products are sold
in super markets all-over the U.K. and even in some European market like Spain, Italy,
France and Germany. Innocent supplies its products to over 10,000 retailers to cover the
widespread market. The place element in a social marketing initiative may be the key element
of the marketing strategy because easy availability of the goods and services gives a strong
advantage over the competition. (Strand et. al, 2004)
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Market Analysis of Innocent Juices
3.Analysis of Innocent’s Competition using Porter’s Five Forces
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Market Analysis of Innocent Juices
3.5 Threat of Substitute Products
The threat of substitute for juice drinks is medium. The Innocent faces its major competition
from supermarkets ‘own label’ product. (Mintel, 2015) Since these supermarkets have the
large customer database and are cheaper than the Innocent. Another threat would be people
making their own juice drinks at home. This is due to the recession and lack of disposable
income. Due to Innocent’s brand image and large fan base, it continues to have a strong
presence in the market.
4. PESTEL Analysis
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Market Analysis of Innocent Juices
Table 1.1 Source: UK National Minimum Wage rates (2015)
According to Table 1.1 it is seen that the rate of income has risen from £5.93 in 2010 to £6.70
in 2015. Cadman (2015) states that the wages have increased faster than inflation over these
years, which in turn has increase an average households’ purchasing power. Due to an
increase in the purchasing power consumers would find it easier to buy fruit juice, juice water
and smoothies.
5. SWOT Analysis
Strengths
1. Innocent is the number 1 selling brand in UK. Following the trend of endorsing
‘healthy living’ in the UK, Innocent promotes healthy lifestyle. As reported by “The
Grocer” consumers have a much better understanding of the health benefits of
smoothies, which was reinforced by the Department of Health's ruling.
2. It responds to the ever changing needs of its consumers by frequent flavor
introductions help maintain high interest (in 2003 it altered the recipe of the
strawberries & banana smoothie to incorporate strawberry seeds following feedback
from evangelists who wrote to or phoned Innocent.
3. Innocent has a very large fan base which have turn into customers
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Market Analysis of Innocent Juices
4. There have excellent promotion strategies (events marketing {Fruitstock, its
annual music festival held in London}, its packaging etc.)
5. Excellent CSR.
Weaknesses
1. The company has to diversify into other drink products so as to be able to compete
effectively. (In 2008, for example, the company reported pre-tax losses of £11.2m for
the 12 months to December 2008, compared to profits of £12m the year before
(according to accounts filed by the firm with Companies House). These losses were
believed to also be due to the poor weather experienced in the summer months—a
core time for soft drinks sales—with consumers cutting back on their smoothies
consumption.)
2. Short shelf Life as compared to other fruit juices and smoothies
3. It is quite pricey. According to a 2015 Mintel report, 24% of consumers cut back on
buying fruit juices and smoothie due to its cost.
Opportunities
1. With the new healthy living trend, expanding to other healthy products.
2. Creation of a new product for the elderly as that market has not being exploited yet.
Threats
1. Due to the recession, it is likely that consumers would opt to buy cheaper products.
2. With the entry of other fruit juice and smoothie company into the market, the
competition would be stiffer.
“Doing business in a foreign market is no different; but then again, it is often more
challenging and more difficult” (Brown, 1990). Innocent being a subsidiary of Coca-Cola,
venturing into international market would not be a problem. Additionally, Innocent has
successfully operated their business across Europe in 15 countries with a turnover of more
than £200 million each year (Innocent, 2016). The selection of entering into a new market is
critical and complex task, where many different factors have to be taken in consideration
(Driscoll, 1997). There are cultural challenges faced by brands which marketed
internationally.
Based on Hofstede’s cultural dimensions theory Innocent can be viably marketed to China.
According to the World bank, United States Census Bureau of 2013, China had a population
of 1.357 billion and also from the Hofstede’s cultural dimension, China scores 30 in the
uncertainty avoidance dimension.Based on reports from the World Bank, CIA World
Factbook China is amongst the thirteen fastest-growing economies in the world. The Chinese
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Market Analysis of Innocent Juices
government launched a new tax law in 2008 to unify the income tax rate between
domestic corporations and foreign investment to 25%, this was done to attract more foreign
investors (Ferrantino, Shi and Liu, 2015). If Innocent starts marketing in China, the Chinese
government shall treat them as same as a ‘domestic enterprise’. Therefore foreign investors
shall benefit from such policies.
4Ps shall be used to analyse a strategy that could be employed for internationalizing the
Innocent brand in China
Price
A Survey in 2012 by the Chinese Ministry of Health stated that the issue of ‘food safety’ was
the most pressing issue amongst Chinese population. 174 incidents related to ‘food safety’
were reported in 2012. China has been faced with a serious food supply and product safety
issues. These issues cause Chinese customers to buy foreign products as they appear to be
safer though more expensive. A report by Euromonitor 2012 reported that wealthy Chinese
consumers are willing to pay premium prices for branded products and are interested in being
exposed to new flavours from overseas. Innocent drinks can take advantage of the fact that it
is an international brand from the UK which guarantees 100% natural juices and smoothies at
a premium price
Product
According to Euromonitor (2012), Chinese juice consumers prefer real fruit/vegetable juice
products over fruit-flavoured juice drinks. New flavours are well accepted by Chinese
fruit/vegetable juice consumers (USDA, 2012). This would make it relatively easy for
Innocent drinks to break into the Chinese market as they have a variety of flavours.
A research by Mintel has reported growth in the number of instances where blueberry
flavouring appeared in new juices marketed in China since 2008. It moved up from the ninth-
most popular flavour in 2008 to the eighth-most popular flavour in 2010 (5% of new product
launches) and it became the second-most popular flavour in 2012 (8% of new product
launches). Judging by these reports, Innocent drinks would experience little difficulty in
selling its products in China.
Promotion
Advertising can be the best promotion strategy for building brand awareness. Coca Cola
(2014) states that the Coca Cola brand has spent $3.30 million in Asia, which is 7.0% of their
revenue spent on advertising and marketing campaigns. This would be beneficial to Innocent
brand since it is a subsidiary of Coca cola.
Place
Fan and Xiao (2016) state that the retail model is no longer considered in China, while
business to customer model has been successful in Chinese e-commerce market. Online
shoppers grew by 45% and the sales summed to $250 billion between the years 2008 -2009.
Due to the rapid growth of Chinese e-commerce market, Innocent brand can consider selling
its product online.
Challenges
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Driscoll (1997), claims that globalization of businesses is a tough task as different
countries have different cultures. To be able to overcome cultural challenges they will have to
depend on the people of the country they are expanding to such as suppliers, distributors,
customers and government officials.
For Innocent drinks to break into international market it has to consider the work culture in
different countries. To enter such a market a lot of factors have to be considered, Hofstede’s
cultural dimension theories can be helpful. According to Hofstede (2015), China scores 80 on
the power distance index, whereas UK scores only 35. A manager from the UK branch
experience pressure for not being able to adapt to the power distance while working in China,
which may further impact on interpersonal relationships and future business operations.
Language shall be a barrier for Innocent with regards to conducting business in the Chinese
market. The Chinese trademark law requires that all foreign brand names shall be translated
into Chinese version so that it becomes easier for customers to read and remember (Birden,
1996).
7. Recommendations
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Market Analysis of Innocent Juices
Targeting male population:
According to Mintel reports (2015), it can be seen that Innocent is more popular amongst
women than men. Hence, Innocent should consider targeting toward the male population.
Developing of a new product named ‘Innocent Sport’ coupled with heavy promotions in
various sport events will help in gaining positive views. A good example of this strategy
would be “Coke Zero”.
8. Conclusion
Innocent is the market leader in the smoothie’s category and a strong competitor in juice
segment. It also stands out as an ethical brand hence it should take all the necessary
precautions to maintain its brand image. Innocent will be able to improve its sales and
promotion strategies by targeting new customers from the age of 40-65 .China seems to be
the most promising market. Being a subsidiary of Coca-Cola and securing high revenues
Innocent has a strong cash-flow situation, this shall enable Innocent to market their products
outside Europe. Therefore entering into the Chinese market can be seen as a viable option.
China has taxation policies which attract foreign investors. Due to increasing health
awareness amongst the Chinese public and an ever expanding elite class China appears to be
a good option for investment.
Due to the advent of recession Innocent should consider fine-tuning its pricing strategy by
introducing juice products or initiate promotional activities such that it attracts customers
from different economic backgrounds.
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Appendix:
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