Dr Bruce Linter, the firm’s long-term research manager, said it was increasingly vital that firms continued to innovate when times were tough.
Addressing an Innovation Day at Leatherhead Food Research this week (September 19), Linter said: “It is very short-sighted to close R&D departments. We have to keep innovating, otherwise you’ll make money in the short-term, but in the long-term someone else will come along and make your product cheaper and you won’t have a business anymore.”
He said PepsiCo was continuing to innovate and was instead focussing on increasing productivity to improve financial performance.
“If you say in a time of recession that you should start firing people in R&D, you are left with a big hole later on. Productivity is a key part of our agenda, instead,” he added.
He said R&D had helped PepsiCo have success in recent years by enabling the business to broaden its appeal. 10 years ago most of its brands were “full fat, full sugar and popular”, Linter said.
But the firm had extended its range by diversifying its traditional platforms – such as Walkers – into low fat and baked varieties, as well as buying companies such as Quaker.
While this helped meet changes in consumer attitudes, Linter insisted companies must do more than simply listen to customers when looking for future growth.
Customer insights are very important, but “they don’t have the foresight” to know what they will need in five to 10 years’ time, he suggested.
World in 2020
“Consumer tests don’t tell you what the world will be like in 2020, when raw materials are likely to be in shorter supply, when the world will be more interconnected, where obesity will grow if we carry on as we are, where people will live longer and there will be a change in where power lies from the US to the Far East. We need to understand all of this to design products.”
He added PepsiCo had a three-pronged approach to tackle this: the company was committed to develop products that were more healthy, had less environmental impact and were produced by “a talented and diverse” workforce.
“Our commitment to develop people is genuinely see as being as important as business results,” he added. “It is this, alongside insights, strategy and business development that has allowed PepsiCo to deliver over the past 10 years.”