David Johnston has boosted PepsiCo's fortunes in tough economic times with bold NPD, as he tells Alex Beckett


When David Johnston took the reins of the UK's leading juice and hot cereal brands on April Fools Day last year, he must have hoped the reported dip in smoothie sales was some kind of practical joke. But it soon became clear to the new general manager of PepsiCo's Tropicana and Quaker businesses that with consumers deserting the category in droves and raw material prices rocketing, the world was entering economic meltdown.

Juices and smoothies was arguably the category worst affected by the recession. By the year-end, falling sales led Johnston to ditch PJ Smoothies and concentrate on Tropicana Smoothies, a brand launched just two months before Johnston arrived. The only comfort he had was that his rivals were in the same boat, with Innocent bombing 22.6% [Nielsen] and Nestlé pulling the plug on Boosted Juice.

Now, 18 months in the job and the quietly spoken Irishman has put his decades of experience in soft drinks, first at Britvic, and latterly as a PepsiCo exec, to good effect. While juice sales overall have fallen 9% on last year, Tropicana has recorded a small but significant year-on-year sales improvement of 1.2% to £260m [Nielsen 52w/e 19 September 2009].

Johnston can gain further confidence from a British Soft Drinks Association (BSDA) statement issued this week that talked of "opportunities for growth within the smoothie sector" and a return in consumer confidence reviving the smoothie market. The latest figures from Innocent, support the view that the worst is over. It has reported sales for the past three months up 10% year-on-year [Nielsen ­12w/e 5 September 2009].

However, despite his brand selling well and the sector finally starting to pick up, Johnston still sounds stunned when he casts his mind back to the sudden deterioration of the juices and smoothies market at the beginning of 2008's third sales quarter. "It had been a category in consistent growth, so the speed of change took a lot of us by surprise," he admits.

When asked what prompted the sudden change of fortune, he seems genuinely at a loss. "I don't know why things happened so quickly. People have tried to explain what makes this recession different, but there isn't a consistent message."

Johnston's reticence betrays a caution borne of the turmoil of the past 18 months. The subject of Innocent, and the £30m minority stakeholding Coca-Cola took in the brand in April, provokes a defensive reaction. "You'll get me into trouble," he warns. What he most definitely will talk about is how Tropicana has countered the challenging climate with NPD. Clearly back in his comfort zone (and that of his attendant PR), he explains how reducing the size of Tropicana Smoothies from 1-litre to 750ml in April this year and dropping the price from £1.99 to £1 was the right thing to do in the face of retailers cutting range and space in smoothies. "We had to validate smoothies and 750ml felt like an optimal size. They are not something people drink every day so the smaller size was more suitable. In the long term we think smoothies are here to stay and Tropicana has an important role to play in the category."

Unit sales of the £7.3m range increased 39% in the first 12 weeks following the switch and Johnston says he is "really excited by the results we have had".

His actions chime with the BSDA's recommendations for category rejuvenation. "Demonstrating affordability and innovation will play an essential role in reviving the fortunes of smoothies," it notes.

However, he seems uncomfortable with further probing on financial performance. Questions are met with brief answers and long pauses, so the conversation returns to product launches, particularly the launch of the £2.49p a litre Tropicana Gold super-premium juice range in February, a risky move given the economic conditions.

"I don't believe it was risky to launch such a premium product at the height of the recession," he argues. "A market leader is obliged to take the initiative with innovation."

The other major change Johnston spearheaded was the rebranding of its children's range Tropicana Go! to the new name of Tropicana Kids! in April. "Not enough people were getting what 'Go' was," admits Johnston.

Fortunately the Quaker oats business has provided less angst for Johnston, with oats remaining bang on trend. September saw the fruit of Quaker's biggest piece of NPD for years: breakfast brand Paw Ridge, one of the few cereals that can be advertised to kids on TV because of its low sugar content.

Johnston has a target of £5m for first-year sales and although he doesn't have any figures from the first few weeks he is comfortable to release, reports from the sales force lead him to announce "penetration and sales have been exceptionally strong".

He even insists The Grocer spoons down some of the porridge, his soft Irish burr making both the thick mixture in the steaming bowl and the ambitious sales target surprisingly easy to swallow.

And just because we are in recession doesn't mean future NPD will be limited. It's in PepsiCo's DNA, he says.

"Culturally PepsiCo doesn't do a lot of stopping to smell the roses, although sometimes we should do. PepsiCo is always about what's next. The phrase I use most in the day is 'what's next?'"

The only issue is, he won't give us the answer to that question.

Walkers gets prepared for Christmas (10/10/09)
PepsiCo targets kids with new porridge called... Paw Ridge (15/8/09)
Innocent and Tropicana chill out with the kids (25/4/09)

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