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A business owner with a taste for success

Eric Johnson:
A business owner with a taste for success

When Eric Johnson started working part-time in the family business at the age of 8, he told his father, “We’re going to give people their money’s worth.”
Johnson went to work on the assembly line at Johnson Products Co., a producer of ethnic hair products. The young boy’s task was to fill shampoo bottles.
Eager to give customers real value for their money, Johnson filled the bottles to capacity, causing shampoo to spill when the caps were placed on the bottles. He was dismissed from his first job after two days and reassigned to wiping off jars.
Today, the president and CEO of Baldwin Richardson Foods Co. still believes in giving customers their money’s worth.
Baldwin Richardson’s dessert toppings–sold under the Mrs. Richardson’s brand name–and Nance’s condiments offer consumers top-quality products at supermarket prices, he notes. And the company’s Baldwin Ice Cream line is comparable to premium ice cream brands, without the premium price.
Johnson acquired Richardson Foods Corp. from the Quaker Oats Co. in December 1997. At the time, Johnson owned Baldwin Ice Cream Co. in Matteson, Ill., a regional ice cream producer with roughly $10 million in annual sales.
As a unit of Quaker Oats, Richardson Foods boasted $49 million in annual sales–much of it as a supplier to McDonald’s Corp.–and was significantly larger than Baldwin Ice Cream. Other potential buyers bid for Richardson Foods when it went up for sale, but Johnson prevailed. He did not make the highest offer, but he was the only bidder who wanted keep the business intact.
“We were committed to preserving jobs,” says Johnson, who kept the Richardson Foods plant and all 145 employees.
Beyond his commitment to keep jobs at the Macedon plant, Johnson was intent on growing the business. Since the acquisition, the operation has hired 12 additional staffers.
For Johnson, growing a business is nothing new. He worked at Johnson Products–the nation’s first publicly traded African-American company–during his summer vacations, intrigued with every aspect of running a business.
By the time he was a high school sophomore, he was a member of the company’s sales force. In his senior year, he managed his own territory.
Being in the trenches helped Johnson develop a healthy respect for salespeople that stayed with him when he went into management.
“I realized essentially the only people that drive the revenues are salespeople,” he says. “I find sales challenging. It’s a mental game of organization. I like the competitive nature of it.”
Growing up, Johnson hoped one day to become the president of Johnson Products. After graduating from Babson College with a degree in finance and management, however, he decided to take a break from the family business and took a sales position at Procter & Gamble Co.
Johnson intended to return to the family business, but thought working for a large corporation would give him valuable insight into the business world. He also sought discipline not available at the family firm. As the eldest son of Johnson Products’ owner, he had free rein within the company.
“Basically, everything I did was OK,” Johnson explains. “If I didn’t fill out expense reports, if I didn’t do this, if I didn’t do that, no one complained.”
At Procter & Gamble, Johnson sold a variety of personal-care products and toiletries, such as Prell shampoo, Scope mouthwash and Sure deodorant.
After a two-year stint, he returned to Johnson Products in 1977, armed with business acumen obtained at Procter & Gamble and an MBA degree from the University of Chicago’s Graduate School of Business.
When Johnson resumed work at the family business, he committed himself and the company to growing its branded products. The market for ethnic hair products had become more diversified, with many more competitors fighting for the same shelf space.
Marketing ethnic products became more of a challenge. In the 1950s and 1960s, Johnson Products had a virtual monopoly on the ethnic hair care market. In the 1970s, the company purchased the rights to the syndicated television show “Soul Train” from producer Don Cornelius in order to use the program as an advertising vehicle for its Afro Sheen products.
“Soul Train was a very effective medium,” Johnson recalls. “To reach the black consumer back then was very easy. The market was very targeted.”
The Johnson family eventually sold the show’s rights back to Cornelius, but continued to advertise on the show and in ethnic publications.
During the next few years, Johnson held various positions within the company. He was named senior vice president in 1987 and became president and CEO a year later.
Johnson inherited a struggling business; in 1988, it lost $3.4 million. Within a year, he managed to turn the company around, posting a $2.2 million profit in 1989.
His turnaround strategy required downsizing Johnson Products’ work force by 18 percent. Johnson describes the move as a difficult but necessary decision.
“I decided to save the company for people who would be long-term employees,” he says.
Three hundred employees were let go in the restructuring. Efficiency improved and sales began to rise.
In late 1989, Johnson made a strategic acquisition with the purchase of M&M Products, a competitor in the ethnic hair products market.
The $5 million acquisition boosted annual sales by $9 million, and Johnson says the money spent on the acquisition was recouped in 18 months.
Within a few years of becoming Johnson Products president, his long-time dream, Johnson grew restless with running the family business and longed for more. He realized that he yearned to run a private company and wanted to explore another industry.
“It was frightening for me–the feeling I am headed for something that is not the president of Johnson Products,” he recalls.
After trying unsuccessfully to buy Johnson Products in order to take the company private, Johnson in 1992 resigned as president and CEO, handing over a company with more than $41 million in sales and a $3.7 million profit.
Johnson took stock of his own skills before making his next move. He knew he was not an inventor, and working for someone else did not appeal to him. In September 1992, the opportunity arose to purchase Baldwin Ice Cream, a small player in the Midwest ice cream industry.
Johnson did the math and immediately realized the growth potential in the ice cream business. While only 3 percent to 4 percent of U.S. households use ethnic hair products, 97 percent have freezers.
Johnson also felt comfortable with the food-products business because it was similar to hair-care products. Often the same machines are used for liquid products, whether it is chocolate topping or shampoo.
When Johnson purchased Baldwin Ice Cream in late 1992, the company had 1.8 percent of Chicago’s ice cream market. Johnson grew sales of the brand by offering value. Today, its market share in the Windy City has climbed to 7.1 percent.
Johnson sought to expand his company, and was approached by NationsBank when Richardson Foods Corp. went up for sale. Quaker Oats had sought a buyer for Richardson Foods after deciding the Macedon operation did not fit into its core strategy.
Johnson consulted with his brother, John, on the purchase of Richardson Foods. Both thought it would be a good strategic fit for Baldwin Ice Cream.
John Johnson quit his job as a stockbroker to help his brother work on the acquisition of Richardson Foods. He moved to Rochester and joined the company as vice president of sales when the acquisition was completed.
“Eric has always been extremely savvy and smart,” John Johnson says. “I continue to learn from Eric. He has always been a very good mentor.”
John Johnson says his brother earned the respect of employees at the Macedon plant by sticking to his commitment to keep the company as a single unit without any layoffs.
Eric Johnson splits his time between Chicago and Rochester, having purchased a home in Victor. He decided to keep the headquarters of the renamed Baldwin Richardson Foods in Chicago because of its close proximity to the McDonald’s Corp. headquarters in Oak Brook, Ill.
Richardson Foods is a large supplier for McDonald’s, providing sundae toppings, ketchup, breakfast syrups and other condiments for the fast-food chain. Sales to McDonald’s account for more than half of Baldwin Richardson’s total revenues.
Johnson spent the better part of last year doing what he does best: marketing brands. After acquiring Richardson Foods, he went to work on creating bolder designs for the Mrs. Richardson’s and Nance’s labels, aiming to win a larger share of the retail market.
Baldwin Richardson enjoyed a 3 percent rise in sales in its first year.
Johnson plans to employ the same strategy he used for Baldwin Ice Cream to position the Mrs. Richardson’s and Nance’s brands: offer a premium product at fair prices. He also is increasing in-store promotions of the two brands and plans to implement coupon advertising.
Johnson also has jumped on the e-commerce bandwagon and is marketing his firm’s dessert toppings and condiments via the Web.
“We’re moving on all fronts,” Johnson says. “We want to make (Mrs. Richardson’s and Nance’s) household names.”

3/12/99

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