Juicy profit: Innocent Drinks has become a huge brand

Company: Innocent Drinks
Founders: Richard Reed, Adam Balon, Jon Wright
Age at start: All 26
Background: The three founders met at university and were engaged in various ventures together there. After working for a number of blue chip firms they decided to embark on their own business together.
Start year: 1999
Business: Fruit juice drinks

Innocent Drinks, which almost single handedly introduced the smoothie to Britain, is now one of the fastest growing drinks brands in Europe - with revenues of £78million in 2006.

The company, started by three friends, has amazed the business world by successfully launching a preservative-free healthy fruit drink and maintaining its ethical principles, despite its founders having no real experience in the sector.

Innocent now employs more than 180 staff and has five offices across Europe. The company's offices are among the most friendly and relaxed in the world and its staff are extremely well treated, with perks ranging from free snowboarding trips to bonuses for having children.

Quitting the rat race
Three friends; Richard Reed, Adam Balon and Jon Wright, met at university and often worked on mini-business ventures together.

Club nights were a speciality; Richard and Adam organised the nights while Jon designed posters and flyers to attract the crowds.

Without realising it, the students were honing promotional skills which would be useful later. Also, they were learning that a sense of fun and enjoyment were important aspects of how they wanted to work.

They often talked about running their own company together, although the idea of fruit drinks wasn't to surface until much later.

After university, all three entered the world of big business; Richard worked for ad agency BMP, Adam went to consultants Bain Associates and Jon worked for management consultants McKinsey and then Virgin.

Like so many involved in the "work hard, play hard" culture of the UK's capital they felt that their diets were far from healthy.

At that time "juice bars" were opening up in London, offering different blends of fruit, sometimes also involving yoghurt and ice - and and it struck the three friends that they couldn't be the only ones who wanted something healthy.

They came up with the idea of a healthy drink that could be bought off-the-shelf, meaning no long wait at the juice bar counter. They began creating their own fruit smoothies at home.

They needed to do some market research and so in the summer of 1998, the lads decided to open up a smoothie stall at the "Jazz on the Green" festival in West London that Adam and Richard had been running for a few years.

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Next to their stall they placed two large empty bins, one marked "Yes" and the other "No". They asked customers to tell them whether or not they should give up their day jobs to start a smoothie business by putting their empty bottles in the appropriate bin.

The crowds voted overwhelmingly for them to start a new business, so Jon, Adam and Richard left their jobs.

At this point, they hadn't thought of the name Innocent. While the jazz festival crowds had backed their drinks, they also overwhelmingly rejected the first trading name of "Fast Tractor".

Other efforts: Naked, Fresh Inc, Fresh and Thirsty were also discounted before the trio decided upon their name.

"We went through thousands of different names, all the different variations, it was a case of getting the thesaurus out until we came up with Innocent," Reed says.

The now famous logo was produced by a startup design agency called Deepend in return for a stake in the business. However, the company went out of business before Innocent went into production, so they never had to give up any of their shares.

Budding innocence
Almost immediately problems beset the plan; there was a massive amount of work to do and the three founders were soon shocked at how tough it could be to set up a new business.

"We were hopelessly naïve," Richard recalls. "We stopped working with just a month's pay to keep us going, but it was nine months before we were up and running."

As with many startups, raising money was one of their major early key obstacles. They needed to raise money to buy fruit and bottles and get the smoothies made.

Bankers and investors were not as easily impressed as the crowds at the festival and shied away from the proposition. There were three overriding factors that the potential investors just couldn't ignore.

Firstly, Innocent had no experience in the sector and appeared to have underestimated the complexity of food manufacturing.

They had only ever made small quantities of their juices but were looking to expand across the nation. Also, their additive-free healthy offering had a very short shelf life, which meant that unless the product was sold quickly it would go off, which left investors fearing that they might end up owning a lot of rotten fruit.

Having left their high-powered jobs behind, the world in which the Innocent founders lived was now a harsh one.

"It was a case of our friends buying us the occasional pint and eating cereals three times a day. We come from great families but they aren't so rich that they could support us to that extent. The business very nearly never happened."

Straining to succeed
In one final, desperate move Richard sent out an email entitled "does anybody know someone rich?" to everyone they had ever known.

The email was passed around and via a former work colleague of Jon it eventually landed in the inbox of a certain Maurice Pinto.

Pinto was a wealthy American with a lot of experience in investing in new companies.

People like this are often referred to as business angels, as they are often the saviours of businesses' ideas, investing money and time to help grow young companies.

Adam, Jon and Richard went to see Maurice and, despite being close to 40 years younger than him, they got along very well. Maurice liked their business plan, and thought that Innocent addressed an important need.

He knew that in the US there was a huge demand for smoothies, but the UK still had no real smoothie companies at that stage. The maverick in Maurice also found Innocent's unconventional approach to business refreshing.

The trio had high ideals about how the company should behave towards its staff, suppliers and the environment. Maurice was also impressed that they didn't rush into decisions and would always debate very heavily before coming to a conclusion, which they had to do because the business has no single leader.

Their answer to Maurice's first question "who's in charge?" was "we all are".

In the end Maurice decided to invest £250,000 in return for a 20% stake in the business. Now, the company could really get going.

While they had been looking for funding, Innocent had also been attempting to find a manufacturer and this had been no easy process either.

"We went around virtually every drinks manufacturer and they were all saying that we needed to make our smoothies with concentrate. However, we responded by saying that we have tested this and consumers don't want drinks made from concentrate, they want something natural," Richard says.

Prior to gaining the funding, they had given small batches of their drinks to shopkeepers for free for them to sell on, as a market test, and the response was overwhelmingly positive.

"The shops wanted to place orders but we had to say 'sorry, we're not really ready yet'," Richard recalls.

The quest for a manufacturer eventually brought them to a small family business which agreed to make the drinks the way they wanted, if Innocent provided them with the machinery to do the production.

Getting the manufacturing of the smoothies just right is far from easy, and today Innocent smoothies continue to win taste tests over other brands - so Innocent keep their manufacturer's identity secret.

But that small family business is still making smoothies for them to this day.

The funding from Maurice came through in early 1999 and Innocent launched later that year with three recipes: Strawberries and bananas, cranberries and raspberries and oranges, bananas and pineapples.

To start with Innocent sold its drinks to high end food retailers such as Harvey Nichols and Harrods - and to what was then a small coffee chain.

These were Innocent's "beacon outlets" though the big retailers were soon to follow.

Waitrose was its first supermarket buyer: "Supermarkets don't even return your calls at first, then they say no and then if you are persistent you get a chance. When we managed to get in front of Waitrose they could appreciate the drink was just right for their audience."

After Waitrose came Sainsbury's - and shortly after that all the big retailers began stocking their drinks.

From April 1999 until the end of the year, Innocent had sales of £400,000. In its second year of trading turnover hit £1.6million, then £4.2million, £6million, £10.6million, £17million, £37million and in 2006, a whopping £78million.

Where are they now?
All three founders are all still fully involved in the business, which has expanded across Europe. "Fruit Towers" in London is still the company's HQ - although it now has offices in Ireland, Denmark, France, the Netherlands and Germany. The trio have stuck to their ideals and have built a closely-knit, friendly and ethical company. The drinks are still preservative-free, the plastic bottles are 50% recycled and renewable fuels are used when possible.

Staff retention is one of the highest in the world; of more than 200 people taken on, just 13 have left in eight years of trading. Maurice Pinto is still the only outside investor, although the company has turned down numerous offers of investment and to sell since becoming successful.

David Lester is a successful entrepreneur, the founder of the small business website startups.co.uk and the co-author of How They Started (Crimson Publishing, £12.95)