On Monday, Pepsi (NASDAQ: PEP) announced that Indira Nooyi will officially step down as Chief Executive Officer in October. Ramon Laguarta, a company veteran of 22 years, will replace her. Laguarta formerly headed PepsiCo's global operations, corporate strategy, public policy, and governmental affairs, and also played an integral role in PepsiCo's expansion in sub-Saharan Africa.
Nooyi's departure leaves the S&P 500 on track to have just 23 female CEOs, less than 5% of the total, according to data from non-profit research group Catalyst. Last year, there were 27 female CEOs in the index.
Pepsi's North American beverage business, which includes Gatorade and its namesake cola, is its largest unit. It has posted declining revenue as sales of carbonated drinks fall and upstart brands eat into the market share of its non-cola drinks. Its Pepsi's Frito-Lay snack business, however, is a $15.8 billion unit that has delivered 3% sales and 6% profit growth in the three years before its last report in February.
A potential restructuring of the business as a whole may also on the cards, with a move to perhaps split the snack and beverage business. "The investment bankers have been knocking on our door forever," outgoing PepsiCo CEO Indra Nooyi told analysts earlier this year when questioned about the possible reorganization.
"This transition could open a wider door to Pepsi considering a variety of potential alternatives, including stepped up refranchising ... even potentially splitting up the company," wrote Bonnie Herzog, an analyst at Wells Fargo.
The company is one of many consumer goods groups struggling to generate growth from their traditional products as younger shoppers look for healthier, local, and niche goods. The problem is particularly pressing for soft drink makers. Overall soda consumption has dropped to its lowest level in more than 30 years. The pressure is on to find alternatives to sugary drinks. Nooyi chose to avoid large transactions that could have explored alternative markets, including WhiteWave Foods, a maker of dairy alternatives that sold to Danone SA for $10 billion two years ago.
Last year, analyst speculation resurfaced that Kraft Heinz (NASDAQ: KHC) shareholder 3G Capital would engineer a complex three-way transaction under which Pepsi's snack arm would go to Kraft Heinz and the soda brands to Anheuser-Busch InBev SA.
The 64-year-old Nooyi has been with PepsiCo for 24 years. Under Nooyi's watch, PepsiCo's revenue grew to $63.5bn, from $35bn in 2006.
"Growing up in India, I never imagined I'd have the opportunity to lead such an extraordinary company," Nooyi said in a statement. "PepsiCo today is in a strong position for continued growth with its brightest days still ahead."
Snack sales in US grew 2.5% from 2016 to 2017, while soft drinks grew 1.6%, according to Euoromonitor. Carbonated drinks declined 0.8% in the same time period.