Profile: Innocent’s Adam Balon

Adam Balon, the Innocent co-founder set to shake up private equity

19 December 2011 | By David Benady

Adam Balon, co-founder of Innocent


One of the three kings behind the smoothie empire is moving into private equity. So what can ambitious companies do to win investment?



Adam Balon, co-founder of Innocent Drinks, bounces down the stairs at Fruit Towers, the Ladbroke Grove HQ of Innocent Drinks, sporting a banana-coloured sweater. Innocent’s “chief squeezer” wanders into the staff café and grabs a coffee as he enthuses about the smoothie brand’s international expansion. “We’ve just got to number one in Germany on smoothies, which is an astonishing achievement,” he boasts.

Balon co-founded Innocent in 1999 with fellow Cambridge graduates Richard Reed and Jon Wright. It now turns over £100m, and is a role model for budding entrepreneurs. It shows how far you can get with a good idea, a powerful strategy and your finger on the pulse of the latest trends.

Since hawking their smoothies at a jazz festival over a decade ago, the trio have created one of the UK’s coolest brands and recently sold a 58 per cent stake to Coca-Cola. (Balon insists that selling out to Coke has done nothing to dim the company’s entrepreneurial zeal, nor diverted Innocent from its mission to be an ethical business.)

Yet far from the hard-bitten businessman, the 39-year old Balon appears somewhat intellectual, peering at you intensely through his glasses. He has the steady assurance you’d expect of an Oxbridge graduate.

Now Balon is dipping a toe into the world of private equity, having become an adviser to London-based private equity firm Piper. He is helping Piper spot nascent businesses in retail, leisure and consumer products and services. Piper has backed London start-ups such as Boden, the Pitcher & Piano bar chain, Pied a Terre and cocktail bar chain B@One.

Balon is using his experience of starting up a business to boost the brands of the future. His business nous is also attributable to stints as a McKinsey management consultant and working with Richard Branson on Virgin Cola before setting up Innocent.

“Team is critical” when it comes to investment

Piper has tapped investors such as Carphone Warehouse boss Charles Dunstone, fund of funds Adam Street Partners and Whittington Investments, majority stakeowner in Associated British Foods, to raise £107m for its largest fund to date, Piper V.

Emerging businesses with a turnover of between £5m and £50m will come under Balon’s scrutiny as he seeks out entrepreneurs with the spark of a strong idea which need cash and commercial advice to take them on to a higher level.

Piper focuses on consumer brands, Balon explains, though “actually you often get ideas from entrepreneurs in sectors that you don’t really understand, but you just think, that girl or guy is so smart, they are so good and so driven that they’ll make it work even though I don’t really understand it.”

When it comes to the investment potential of ambitious companies, Balon looks closely at the people running the business. “A lot of the time, that’s the most important thing: does this great team have the get up and go, the drive and the initiative to create something of value? Team is critical.”

“It’s always been creating something from nothing that gives me the greatest pleasure”

Balon lists some of his favourite emerging brands, and they have a distinctly Innocent flavour. There’s Little Dish, healthy convenience food for kids; Peppersmith, launched by ex-Innocent executives offering natural gum and mints; US healthy crisp brand Popchips which is launching in the UK; and Higgidy handmade pies and quiches.

“I love that kind of stuff,” he says. “We are actively out looking for investments, so if you are in the consumer goods space, have the nub of a great business but need money or help, Piper are great to talk to.”

He raves about Piper. “They think things through in a logical way, and that can help an entrepreneur who is juggling with 20 million things at once and doesn’t have time to think through what their brand stands for, who they are targeting and what the proposition is.

“The other part is the systems. Often you get to £10m turnover and the systems you have in place were suitable for a £200k operation. A lot of businesses find it quite daunting – how do I change the way my payroll, accounting systems and website work? There’s no reason why an entrepreneur should have experience in all of those things and that’s where Piper can help.”

Balon is not giving up his day job as Innocent’s international boss just yet, but says private equity could well be the path he follows in future.

“I like the field Piper operates in, taking small nascent businesses that have the nub of an exciting brand and turning it into something that is a success at a greater scale: growing stuff, rather than operating a big business better. It’s always been creating something from nothing that gives me the greatest pleasure.”

His chaotic, swept-back hair shakes as he gets excited about ethical food brands which must be “always delicious with no trade-off between taste, quality and the things you care about.”

The precarious ethics of private equity

But do ethics and business really mix? Especially when the business in question is private equity, which was sharply criticised after the Southern Cross debacle by Labour leader Ed Miliband, among others.

Balon says: “If private equity engages in financial engineering through loading a business with debt and using the cash flows to pay off that debt and take out huge dividends, then, yeah, I don’t see that as adding value one iota. That sort of thing rightly gets a bad press.

“If [however] venture capital is being used to grow businesses, create value and jobs, then that’s what it’s all about.”

He accuses the banks of fuelling private equity’s debt spree, but is glad that party’s over. “The banks were nuts lending what they did but the merry-go-round has stopped so people need to focus on creating proper value. One of the positive things of this whole sorry mess is that it has stopped some of the craziness going on.”

Piper will not use leverage for its investments (as bank lending has dried up), but has pulled in sufficient funds from investors. In these tough economic times, raising over £100m to invest in up-and-coming businesses is quite an achievement, though the question remains whether many businesses have a bright future given the prospects of a decade of downturn.

Balon is optimistic. “Great entrepreneurs will find stuff to do in the toughest of times. A lot of the best businesses in the world have started in really shocking economic situations. The opportunities continue to be there, the trick is finding the right ones.”

Innocent’s future

Balon denies his move into private equity indicates his imminent departure from Innocent or that the founders are squeezing the last drops from the juice brand in preparation to sell 100 per cent to Coca-Cola. “Not true,” says Balon, insisting the company still needs its founders around to help with European expansion and taking on PepsiCo’s Tropicana with Innocent Orange Juice.

Expect more noise from Innocent this summer, as it will be the official smoothie brand of the London 2012 Olympics and will relaunch its Fruitstock festival with an Olympic theme. “We are making some strong headway and it is great fun,” says Balon.

Meanwhile, he’ll be out talent-spotting to find the next Innocent Drinks, if such a brand can thrive in the current climate.

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