Coca-Cola Gets Innocent

The Coca-Cola Company (KO) is investing £30 million ($44 million) for a minority stake of between 10% and 20% in Innocent Drinks, a U.K.-based maker of fruit smoothies. Innocent sells about 2 million smoothies a week and will use the proceeds to fund European expansion.

The company currently operates in 13 European countries and has revenues of £100 million ($148 million). In addition, Coca-Cola may be able to help Innocent Drinks distribute its products.

Innocent makes only natural healthy products using socially and environmentally packaging and production methods. The company distributes its drinks in vans made to look like cows. The three original founders will continue to run the company.

The management of Coca-Cola has five strategic priorities for sustainable growth, one of which is to improve the company’s growth in the still (non-carbonated) beverage portfolio, especially through strategic acquisitions. The minority stake in Innocent Drinks fits into this mandate.

The group business unit president for Coca-Cola Europe, James Quincey, stated that Coca-Cola has long admired the Innocent Drinks brand, their products and their unique approach to business. Coke’s investment will support Innocent and accelerate its expansion across Europe.

Coca-Cola’s investment in Innocent came shortly after China’s Ministry of Commerce rejected Coke’s attempt to buy China Huiyuan Juice Group Limited, China’s largest juice maker, for $2.3 billion. Obviously, Coca-Cola’s management is looking for acquisitions to augment its juice segment globally.

In North American operations, the company has benefited from the growth of non-carbonated beverages, not only juices, but also bottled water and sports drinks. The category of non-carbonated beverages should generate higher margins for Coca-Cola as economies of scale improve.

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