Indra Nooyi is set to leave PepsiCo after 12 years as CEO.
The company’s board of directors made the announcement today, praising Nooyi’s contribution to the business which includes 80% growth in group turnover.
She will be replaced by Ramon Laguarta. The change will come into effect from 3 October, with Nooyi remaining as chairman of PepsiCo until early 2019 to help ease the transition.
The announcement comes little more than a year after Laguarta, a former head of PepsiCo’s Iberian business and one-time Chupa Chups executive,was appointed PepsiCo president. Many commentators at the time speculated that the company was lining up Laguarta for the top job.
The move leaves just two female chief executives at any of the world’s top 100 food and beverage manufacturers.
Indra Nooyi said: “Leading PepsiCo has truly been the honour of my lifetime, and I’m incredibly proud of all we have done over the past 12 years to advance the interests not only of shareholders, but all our stakeholders in the communities we serve. Growing up in India, I never imagined I’d have the opportunity to lead such an extraordinary company. Guided by our philosophy of ‘Performance with Purpose’ – delivering sustained performance while making more nutritious products, limiting our environmental footprint and lifting up all the communities we serve – we’ve made a more meaningful impact in people’s lives than I ever dreamed possible. PepsiCo today is in a strong position for continued growth with its brightest days still ahead.”
In recent years, Nooyi had faced pressure to align PepsiCo’s portfolio with consumers’ growing interest in health and nutrition. PepsiCo shifted its focus away from carbonated soft drinks, which account for a smaller proportion of overall sales than ever before.
This transformation is characterised by comments Indra Nooyi made on the release of PepsiCo’s most recent annual report. “While in 2006 our ‘Fun for You’ portfolio was about 70% larger than our ‘Good for You’ and ‘Better for You’ portfolios combined, by the end of 2017, they were nearly equal,” she said.
At the start of the year, she was criticised for discussing a line of potato chips aimed at women. Nooyi said the new Doritos product would crunch less, leave no flavour coating on the consumer’s fingers, and be easier to fit inside a handbag.
The company did not say what Nooyi planned to do after she leaves PepsiCo, or whether she would retire.
Laguarta will become PepsiCo’s new CEO on 3 October.
“Ramon Laguarta is exactly the right person to build on our success,” Indra Nooyi continued. “He is a terrific executive with a long and proven track record of growing businesses. He has a deep understanding of the changing preferences of consumers and other critical trends unfolding around the world, and he has demonstrated that he knows how to navigate them successfully. Ramon has been a critical partner in running the company, and I’m confident he will take PepsiCo to new and greater heights in the years to come.”
Speaking about his appointment, Laguarta said: “I’m incredibly humbled and privileged to be appointed the next CEO of PepsiCo, and I want to thank the board of directors for the confidence they have placed in me with their decision. I also want to thank Indra for her overwhelming support. She has transformed the company with her bold vision and outstanding leadership, and I feel fortunate to have her as a mentor and a friend. And of course, I want to thank all of my colleagues, as well as the customers, bottlers, partners and investors who are part of the PepsiCo family. I look forward to working more closely with all of you in the months and years ahead, and to continue growing this special company long into the future.”
Characteristic of PepsiCo’s robust performance under Nooyi’s stewardship, the company reported strong second-quarter results thanks to its Frito-Lay North America unit last month. Sales increased 2% to $16.09 billion.
By Alex Clere
There’s an unfortunate irony to this morning’s announcement, which has obviously taken the food industry by surprise. Many people expected that Ramon Laguarta would become CEO eventually, ever since he was named president last year. But for many years, Big Food has struggled with the issue of gender representation at boardroom level. Indra Nooyi, a woman in charge of one of the world’s largest food businesses, was an anomaly. Just as the food industry was welcoming its third female chief executive at any of the 100 largest food companies – Beth Ford, coincidentally a former PepsiCo executive, who became CEO of Land O’Lakes – Indra Nooyi is gone. Hershey’s Michele Buck is now the only other female CEO in the top 100, FoodBev research shows.
Speaking on behalf of PepsiCo’s board of directors, presiding director Ian Cook said: “As chairman and CEO, Indra has provided outstanding leadership over the past 12 years, serving as a model both within our industry and beyond for responsible corporate stewardship in the 21st century.
“She has delivered strong and consistent financial performance, managing with an eye toward not only the short-run, but the long-run as well. As CEO, she grew revenue more than 80%, outperforming our peers and adding a new billion-dollar brand almost every other year. And shareholders have benefited: $1,000 invested in PepsiCo in 2006 is worth more than 2.5 times that amount today.
“At the same time, Indra has invested for the future, leading the way on corporate sustainability and responsibility, and embedding a sense of purpose in everything the company does. As one of the first Fortune 100 CEOs to embed sustainability targets into business operations, Indra was a pioneer, paving the way for a new generation of business leaders who seek to ‘do well by doing good.’ Under her leadership, PepsiCo grew its portfolio of Good for You and Better for You options from about 38% of revenue in 2006 to roughly 50% in 2017, almost tripled its investments in research and development to expand its more nutritious offerings and minimize its environmental impact, and achieved global recognition for the company’s work in communities around the world.
“Indra has also, selflessly, served as a mentor for associates up and down the organisation, building close relationships with leaders in every one of PepsiCo’s key markets, championing diversity and adhering to the highest standards of corporate ethics, earning PepsiCo a place on Ethisphere’s list of the World’s Most Ethical Companies every year since the list was established 12 years ago.
“Thanks to her leadership, PepsiCo is well positioned for ongoing success as Ramon assumes this new role. He is a seasoned leader with deep experience in international markets, and the board is confident that he is the right person to usher in this next chapter of growth for PepsiCo.”
© FoodBev Media Ltd 2019