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Restructuring: A term that strikes fear into the heart of most workforces. But, for executives, it is not always reason to shudder. 


This week saw PepsiCo shuffle its top pack for the second time in six months, sparking speculation about its long-term strategy as it looks to keep pace with “the other lot”. John Compton, former head of the company's Americas Foods division and a company lifer, has taken the newly-created role of president aiming to bring some fizz back for the firm. Meanwhile, Brian Cornell, former head of Walmart's Sam Club unit, assumes Compton's old role. 

Compton will now be responsible for PepsiCo's beverages, snacks and nutrition categories, as well as global strategy, operations and marketing. 

Much of the press coverage centred on the idea that Compton's appointment makes him “heir apparent” to replace CEO Indra Nooyi, who appears to have hit choppy waters in recent months.

Forbes suggested that Nooyi, who moved up from the CFO role at PepsiCo six years ago, had “borne the brunt of investor criticism” as PepsiCo has fallen behind Coca-Cola in the US market. Shares have dipped and the stock has advanced just 0.5% in the last five years, Forbes highlighted. 

Apparently, Nooyi has been flagged as a possible candidate for the top job at the World Bank, so she wouldn't be putting her feet up for long. 

But, what prompted the PepsiCo pack shuffle? The New York Times said it was “clearly intended to reassure investors” who have become “impatient over PepsiCo’s anaemic stock price and the signature brand’s loss of market share in the US”. 

The NYT also suggested the move was aimed to convince investors “the company was not drifting too far from the products that made it famous”. It also shows a succession strategy is in place, calming nerves in the financial world, the NYT theorised.

Nooyi's attempts to position PepsiCo as a company that sells “nutritional” products and put the focus on health has won her some plaudits, the NYT said. But, the paper quoted longtime PepsiCo investor, Donald Yacktman, as saying: “I've always seen that as more PR than reality. To focus on that would be sort of like the tail wagging the dog.”

So, what did analysts make of the moves? The Wall Street Journal picked up on comments from Stifel, Nicolaus & Co's Mark Swartzberg, who considered the appointments positive for the company's “long-term fundamentals”. Although he admitted he had no inside knowledge of the situation, he said it was a "reasonable outcome" that Nooyi would soon leave her position as CEO. 

The WSJ also reported comments from city analyst Wendy Nicholson, who last month noted it would be a “mistake to underestimate the chaos factor” at PepsiCo. 

She added: "While we believe change is good, especially for an organisation that has underperformed, we also wonder how much more shifting of responsibilities is yet to come."

So who will be king, once the queen has abdicated? Some reports suggested it would be a three-horse race between Compton, Cornell and European operations chief Zein Abdalla. Sounds like a 1970s supergroup that never was.

The UK's Independent offered a useful rundown on Cornell, but it seems the smart money is on loyal company-man Compton. Watch this space.

Sectors: Soft drinks

Companies: PepsiCo

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