(Reuters) – PepsiCo Inc said on Monday Ramon Laguarta would succeed Indra Nooyi as chief executive officer, tapping a company veteran with vast experience in international markets that have been driving the beverage giant’s growth in recent years.
Laguarta starts on Oct. 3 and will be PepsiCo’s sixth CEO in its 53-year history. He takes over as the beverage maker navigates a shrinking global soda market and growing snacks business, while spending more to stay competitive against rival Coca-Cola Co and nascent players eating into market share.
“Ramon Laguarta is exactly the right person to help build on @PepsiCo’s strong position and success. He has been a critical partner and friend and I am positive that he will take PepsiCo to new and greater heights in the years to come,” Nooyi tweeted on Monday.
A 22-year veteran of PepsiCo, Laguarta oversaw global operations, corporate strategy, public policy and government affairs in his role as president.
He previously headed Europe Sub-Saharan Africa division – a unit PepsiCo characterized as “one of the most complex business divisions in the company.”
Laguarta, 54, was named president of the company in September last year and was tipped to succeed Nooyi. He also formerly led PepsiCo’s Eastern European operations.
“With a deep understanding of PepsiCo’s international operations, and a broader understanding of the total company portfolio in his role as president, we believe that Laguarta is well-placed to continue executing on PepsiCo’s current strategy,” Cowen & Co analysts said.
PepsiCo’s shares were up 1.3 percent in morning trading on Monday.
Nooyi is the third female CEO to leave a Fortune 500 company in the last one year after Denise Morrison quit Campbell Soup in May and Irene Rosenfeld stepped down as the head of Oreo-cookie maker Mondelez International Inc in August 2017.
That leaves only 23 female CEOs at Fortune 500 companies, representing less than 5 percent of the total, according to the Fortune magazine.
Her departure also leaves only one woman of color among the 23 – Geisha Williams of utility company PG&E Corp – with the rest being white, according to the magazine.
NOOYI RESHAPES PEPSI
PepsiCo’s international operations rely less on beverages and more on snacks, an area Nooyi is largely credited with re-shaping and expanding as consumers shifted away from sodas and focused on healthy foods.
The Frito Lay snacks business now contributes 46 percent in total operating profits, nearly double its beverage business.
In her climb to the top, she had a major hand in re-shaping PepsiCo – helping it to spin off its interest in Pizza Hut, KFC and Taco Bell while a top executive at the company. Since 2009, Nooyi has been on an acquisition spree – inking 80 tactical deals, including buying its bottling operations and the recent dehydrated fruit chips maker Bare Foods.
More recently, Nooyi focused on reinvigorating sales of its marquee sodas by stepping up marketing efforts to win market share from Coca-Cola.
As CEO for 12 years, she has boosted sales of the Mountain Dew and Gatorade maker to $63.5 billion, up 80 percent from when she started. The company’s share price has risen 78 percent in the same period.
She also saw off billionaire activist investor Nelson Peltz’s efforts to spin off the company’s beverage business from its more successful snacks division by offering his fund, Trian, a board seat in 2015 to make peace. The hedge fund exited its stake in 2016.
Wells Fargo analyst Bonnie Herzog, however, said the change at the top could see PepsiCo considering more strategic options.
“This transition could open a wider door to PEP considering a variety of potential alternatives, including stepped up refranchising or even potentially splitting up the company.”
Nooyi will remain chairman of the board until early 2019.
PepsiCo said it has not yet entered into any compensation arrangements with Nooyi or Laguarta with respect to changes in their job roles
Reporting by Siddharth Cavale and Uday Sampath Kumar in Bengaluru; Editing by Anil D’Silva, Bernard Orr