Following in the footsteps of a transformative leader, PepsiCo’s new CEO will need a vision to adapt to the evolving global CPG sector.
Ramon Laguarta will take over as CEO of the food and beverage giant in October, replacing Indra Nooyi, who has reigned as CEO for the past 12 years. A 22-year veteran of the company, Laguarta was appointed President of PepsiCo in September 2017, overseeing global operations, corporate strategy, public policy and government affairs. He was previously CEO of the Europe Sub-Saharan Africa division, which PepsiCo described as “one of the most complex business divisions in the company,” due to its combination of developed and emerging markets. Laguarta 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,” said analysts at Cowen & Co.
In replacing Indra Nooyi, Laguarta follows a transformative leader. During her 24-year career with PepsiCo, Nooyi was at the forefront of a number of major deals that effectively reshaped the company. While she was CFO, PepsiCo bought Quaker Oats. Under her leadership as Vice President of Corporate Strategy, it spun off its interests in Pizza Hut, KFC, and Taco Bell. As CEO, Nooyi cemented PepsiCo’s dominance in the snacks and drinks market, Reuters reports, making no fewer than 80 tactical deals. During Nooyi’s tenure, PepsiCo’s revenue has grown to more than $63 billion from $35 billion in 2006. Its share price has nearly doubled.
Nooyi’s broader legacy stems from her success in steering PepsiCo towards healthier food and beverages – despite frequent clashes with investors and other naysayers. Today these products make up nearly half the company’s sales, up from 38% in 2006, better aligning PepsiCo’s portfolio with evolving consumer tastes, according to Morningstar analyst Sonia Vora. Laguarta will need to build on this foundation as the food and beverage industry continues to move in the health-conscious direction.
Laguarta’s leadership of PepsiCo commences at a time when the overall outlook for the CPG sector remains uncertain. Big brands are having difficulties raising prices while competing with private-label store brands. The rise of a plethora of start-up snack companies has led to extraordinary fragmentation in the food industry. Marketing to millennial consumers is proving especially challenging. One of Laguarta’s particular challenges will be to manage PepsiCo’s response as consumers increasingly turn away from sugary drinks. Nooyi laid the groundwork here, but there is still much work to be done.