Pepsi appoints Indian-born woman as chief executive

Pepsi yesterday named its Indian-born chief financial officer, Indra Nooyi, chief executive, making the soft drinks giant one of the biggest US companies to be run by a woman.

Ms Nooyi (50) replaces Steve Reinemund, who has led the group through one of the most successful periods in its history.

Mr Reinemund's decision to step down came sooner than investors had expected, but Ms Nooyi had long been viewed as his natural successor.

Mr Reinemund, who will remain chairman until next May, said he was retiring to spend more time with his family.

Caroline Levy, analyst at UBS, said the succession did not signal any problems at Pepsi. "Investors have been speculating for years about when Ms Nooyi may step into the top role," she said.

Mr Reinemund said that "having worked side-by-side with Indra for many years, I am convinced she is more than qualified and clearly ready for her new role".

Ms Nooyi, an electric guitar enthusiast with a reputation for taking bold risks, will be only the fifth chief executive in Pepsi's 41-year history when she takes the job in October.

She described her relationship with Mr Reinemund yesterday as one in which they completed each other's sentences.

During Mr Reinemund's five years at the helm, Pepsi's net profits grew by 70 per cent and its share price increased by more than half - taking the group's market capitalisation above that of its rival Coca-Cola.

But Mr Reinemund's greatest legacy is arguably his strengthening of Pepsi's international business, once the US group's weakest link but now its largest and fastest-growing division.

When Pepsi appointed Ms Nooyi as its new chief executive yesterday, cynics were bound to link the announcement to the group's current troubles in India.Both Pepsi and Coca-Cola drinks have been banned in many states because of a contamination scare.

But while the presence of Ms Nooyi - a native of Madras, known to wear a sari to Pepsi functions - can only help improve sentiment towards the group in India, it would be wrong to portray her appointment as a publicity stunt, say analysts.

Investors know Ms Nooyi best for her role as chief financial officer but the title fails to capture the extent of her influence since joining the group 12 years ago. While Mr Reinemund is credited with leading Pepsi through one of the most successful periods in its history over the past five years, it is Ms Nooyi who provided much of the strategic direction.

She played a central role in the restructuring of the group in the late 1990s, including the disposal of its restaurant business and the acquisition of Quaker Oats - a deal that has helped Pepsi outperform Coke for the past several years.

Ms Nooyi spent the first 23 years of her life in India and credits her demanding grandfather with pushing her up the academic ladder to business school in Calcutta and, eventually, Yale.

Short of cash, she worked overnight shifts as a receptionist while attending class in the daytime.

"Being a woman, being foreign-born, you've got to be smarter than anyone else," she once said. "But you've also got to work harder."