PepsiCo Shakes Up Management

Al Carey to Replace Eric Foss, Take on Some Duties Held by Massimo d'Amore

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PepsiCo is making management changes in its beverage and snack business.

The company announced that Eric Foss, CEO of Pepsi Beverages Co., the North American bottling operation, would be resigning, effective in December. Al Carey, who has been running Frito-Lay North America since 2006, will replace him. Tom Greco, currently PepsiCo's chief customer officer, will succeed Mr. Carey at Frito-Lay.

Mr. Carey, a 30-year company veteran, will have a bigger role than Mr. Foss had, however. He will also take on responsibility for PepsiCo Americas Beverages from Massimo d'Amore. The move distances Mr. d'Amore from the North America soda business, though he will still be involved with the soft-drink portfolio globally, an area that the company has increased its focus on. Mr. d'Amore continues to oversee global beverage marketing, as well as Gatorade, Tropicana and Latin America beverages, and he will report to both Mr. Carey and CEO Indra Nooyi.

In a statement Ms. Nooyi praised Messrs. Foss and d'Amore, but lauded Mr. Carey as the "right choice" to lead the beverage business in the Americas.

"Al's highly collaborative leadership style, deep knowledge of our beverage businesses in North America and his past leadership of our 'Power of One' strategy make him the right choice to lead this flagship business," said Ms. Nooyi. "I am looking forward to working with Al in his new role, and taking our beverage business in the Americas to new levels of success."

Carlos Laboy, an analyst with Credit Suisse, pointed out that Mr. Foss' chief role was to integrate Pepsi Americas and Pepsi Bottling Group with PepsiCo, a "difficult task" that is largely complete. Mr. Laboy said he views the changes favorably. "Mr. Carey will bring a collaborative culture, which should also facilitate how innovation moves from marketing to execution."

However, Mr. Laboy said raised the question of whether the beverage side of the business has a deep enough bench, noting that the company has traditionally favored "legacy snack people" in the beverage business. Mr. Carey began his career with Frito-Lay, before moving into a role with Pepsi-Cola North America. Prior to taking on the top job at Frito-Lay he was chief operating officer for PepsiCo Beverages & Foods.

"Mr. Carey returns to the beverage business from Frito-Lay North America, where he was CEO," Mr. Laboy said. "We believe this is not inconsequential given the competencies necessary to run a North American beverage business have traditionally involved intensive marketing, innovation and great franchise relationship skills, whereas the snack business has been more of a push-driven model."

Still, Frito-Lay has been a bright spot for the company, while the beverage business has struggled. Some on Wall Street have even suggested that the company should split up. But PepsiCo has gone out of its way to explain why its scale makes sense, deflecting speculation during a presentation at Barclays Capital's Back-to-School Consumer Conference.

"Rest assured, Power of One remains a competitive advantage for us," said John Compton, CEO of PepsiCo Americas Foods, referring to the company's strategy of jointly promoting both businesses in stores. He cited recent moves, for example, to jointly promote Frito-Lay's natural lineup along with Sierra Mist Natural, as well as bundling Doritos with Pepsi Max promotions.

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