Pepsi’s Nooyi Leaves Us Feeling a Bit Flat

Indra Nooyi will step down as Chief Executive Officer of PepsiCo Inc., Bloomberg News reported Monday. Two big problems trail in her wake.

Her departure, scheduled for October, leaves the S&P 500 on track to have just 23 female CEOs, less than 5 percent of the total, according to data from Catalyst, a non-profit research and advisory group.

It’s not just that progress has stalled in getting more women into the top spot, it’s going backward. Last year, there were 27 female CEOs in the index. Though corporate America says it wants to have more women as leaders, efforts to make real change are proving to be distressingly inadequate.

But the transition at Pepsi to 22-year company veteran Ramon Laguarta also has far-reaching implications for the drinks maker.

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 more-niche goods.

For soft drink makers, the problem is acute. 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 avoided large transactions that could have done just this. She passed on WhiteWave Foods, a maker of dairy alternatives that was sold to Danone SA for $10 billion two years ago. 

During her tenure Nooyi also saw off activist Nelson Peltz, who called for the company to be split into its beverage division and its successful snack arm, which includes Doritos and Lay's chips. 

Calls for a separation could emerge once more. Though the company’s recent financial reports have been encouraging, changes in consumer tastes are here to stay.  

Certainly the competition isn’t standing still: with acquisition powerhouse Kraft Heinz Co. in need of a fresh deal to plug into its cost-stripping machine, Pepsi could come onto its radar screen. Last year, analyst speculation resurfaced that Kraft 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.

With Kraft Heinz's share price having slumped after its failed tilt at Unilever NV last year, and AB InBev struggling to generate growth from its U.S. beer business, that idea has faded.

But with Nooyi preparing to depart, a galvanizing force against big corporate change will also disappear. That leaves Laguarta on deck to tackle an existential problem at Pepsi. 

— With assistance by Elaine He

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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