The going has been anything but smooth in the smoothie market these past few months.
Sales for the sector dipped by 6% in the 24 weeks to August [TNS]. Nestlé ditched Boosted Smoothies that same month. Innocent, the darling of the smoothie set, was also badly hit, with sales down 21%. And last week, as The Grocer exclusively revealed, PespiCo is to pull the plug on PJ’s Smoothies at the end of the year.
PepsiCo puts the decision down to the current economic climate and unprecedented cost pressures. But is it a simple case of another brand falling foul of the credit crunch?
Pete & Johnny, as it was first known, launched in 1994 (three years after Tropicana), and was the UK’s original smoothie brand. Led by the entrepreneurial drive of founders Harry Cragoe and Patrick Folkes, PJ’s claimed it was still the UK’s number one smoothies brand by volume when PepsiCo bought it in 2005. But in the meantime, it had been outmuscled, or perhaps more accurately outmarketed by cuter and younger rival Innocent.
Under PepsiCo ownership, the brand was given a series of makeovers: in the first, the name was changed and a corporate look was introduced; in the second a ‘funkier’ packaging overhaul in 2007 aimed to associate PJ’s with youth and vibrancy in a return to its roots. But market share continued to plummet. Advertising spend figures from Nielsen show that PepsiCo wasn’t exactly throwing money at PJ’s, either. In 2006, it spent £1m. But by 2007, it had fallen to £100,000.
The nail in the coffin came arguably in February when, in a desperate last throw of the dice, PepsiCo cut the price by 30% to 99p, while reducing the number of variants to just four basic flavours, to compete, reportedly, with own-label.
PepsiCo had clearly lost faith in the brand and its ability to out-Innocent Innocent. Instead it backed its Tropicana brand to provide more effective competition, launching a smoothie range (for the second time) supported by a £4.5m multimedia marketing campaign and heavy trade investment. Sales of PJ’s slipped a massive 70%, from £1.3m to £396,000 in the 24 weeks to 7 September [TNS].
It is a strategy Cragoe fails to understand. “I’m quite surprised with what PepsiCo did with it. I didn’t feel they were ever going to win the battle against own-label varieties,” he says. “It’s another example of how large corporate companies sometimes just can’t make it work when they take over young, entrepreneurial brands.
“The brand was devalued in the process,” adds Cragoe.
But the real problem, says Mintel senior drinks analyst Daniela Gehtman, was not the price positioning. It was PepsiCo’s wavering marketing approach. “They didn’t seem to have any confidence. Was it a healthy brand, or a fun one? Was it about lifestyle or value? It kept changing.”
By contrast, says Gehtman, Innocent consistently and directly communicated with its customers. Innocent’s annual Big Knit campaign, where volunteers knit quirky hats that are sold with the 250ml bottles, raised £200,000 for Age Concern last year after 400,000 hats were knitted, and is just kicking off again. “This encourages consumer participation in brand activity and shows the consumer the company cares – it’s innovative marketing that works.”
Innocent’s co-founder Richard Reed believes the problems preceded PepsiCo and relate to the product itself. “It was hard for the customer to know what Pete & Johnny stood for as they didn’t exist, and the product was made from concentrate.”
With PJ’s gone, PepsiCo is now focused on bestselling Tropicana. “We believe this decision is a responsible approach to managing ranges,” says a spokeswomen. “The decision to delist PJ’s is not just about the smoothie sector, it’s part of a broader business decision.”
Sales for the sector dipped by 6% in the 24 weeks to August [TNS]. Nestlé ditched Boosted Smoothies that same month. Innocent, the darling of the smoothie set, was also badly hit, with sales down 21%. And last week, as The Grocer exclusively revealed, PespiCo is to pull the plug on PJ’s Smoothies at the end of the year.
PepsiCo puts the decision down to the current economic climate and unprecedented cost pressures. But is it a simple case of another brand falling foul of the credit crunch?
Pete & Johnny, as it was first known, launched in 1994 (three years after Tropicana), and was the UK’s original smoothie brand. Led by the entrepreneurial drive of founders Harry Cragoe and Patrick Folkes, PJ’s claimed it was still the UK’s number one smoothies brand by volume when PepsiCo bought it in 2005. But in the meantime, it had been outmuscled, or perhaps more accurately outmarketed by cuter and younger rival Innocent.
Under PepsiCo ownership, the brand was given a series of makeovers: in the first, the name was changed and a corporate look was introduced; in the second a ‘funkier’ packaging overhaul in 2007 aimed to associate PJ’s with youth and vibrancy in a return to its roots. But market share continued to plummet. Advertising spend figures from Nielsen show that PepsiCo wasn’t exactly throwing money at PJ’s, either. In 2006, it spent £1m. But by 2007, it had fallen to £100,000.
The nail in the coffin came arguably in February when, in a desperate last throw of the dice, PepsiCo cut the price by 30% to 99p, while reducing the number of variants to just four basic flavours, to compete, reportedly, with own-label.
PepsiCo had clearly lost faith in the brand and its ability to out-Innocent Innocent. Instead it backed its Tropicana brand to provide more effective competition, launching a smoothie range (for the second time) supported by a £4.5m multimedia marketing campaign and heavy trade investment. Sales of PJ’s slipped a massive 70%, from £1.3m to £396,000 in the 24 weeks to 7 September [TNS].
It is a strategy Cragoe fails to understand. “I’m quite surprised with what PepsiCo did with it. I didn’t feel they were ever going to win the battle against own-label varieties,” he says. “It’s another example of how large corporate companies sometimes just can’t make it work when they take over young, entrepreneurial brands.
“The brand was devalued in the process,” adds Cragoe.
But the real problem, says Mintel senior drinks analyst Daniela Gehtman, was not the price positioning. It was PepsiCo’s wavering marketing approach. “They didn’t seem to have any confidence. Was it a healthy brand, or a fun one? Was it about lifestyle or value? It kept changing.”
By contrast, says Gehtman, Innocent consistently and directly communicated with its customers. Innocent’s annual Big Knit campaign, where volunteers knit quirky hats that are sold with the 250ml bottles, raised £200,000 for Age Concern last year after 400,000 hats were knitted, and is just kicking off again. “This encourages consumer participation in brand activity and shows the consumer the company cares – it’s innovative marketing that works.”
Innocent’s co-founder Richard Reed believes the problems preceded PepsiCo and relate to the product itself. “It was hard for the customer to know what Pete & Johnny stood for as they didn’t exist, and the product was made from concentrate.”
With PJ’s gone, PepsiCo is now focused on bestselling Tropicana. “We believe this decision is a responsible approach to managing ranges,” says a spokeswomen. “The decision to delist PJ’s is not just about the smoothie sector, it’s part of a broader business decision.”
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