PepsiCo names next CEO
Thursday, October 5th 2000, 12:00 am
By: News On 6
Former Frito-Lay chief will take over next year
By Katie Fairbank / The Dallas Morning News
A former Frito-Lay Inc. chief executive will be taking over the top job at PepsiCo Inc. at the end of next year, once again signaling the importance of the Plano-based snack-food company to its parent corporation.
Steve Reinemund, 52, who led Frito-Lay for seven years before moving to PepsiCo in June, will move up when current chief executive Roger Enrico steps down, company officials confirmed Wednesday.
Mr. Reinemund will also become chairman of PepsiCo, based in Purchase, N.Y., when Mr. Enrico retires at the end of 2002.
Mr. Reinemund said he probably won't hire someone to replace him as president and chief operating officer.
Analysts say Mr. Reinemund's promotion is a smart move for PepsiCo.
"Reinemund has been a pivotal player in the company," said Peter Schofield, a money manager at John Hancock Sovereign Investors Inc., which owns about 1.2 million PepsiCo shares.
"His top priority will be to continue to deliver consistent earnings growth," Mr. Schofield continued.
During his seven years at Frito-Lay, Mr. Reinemund, a former Marine, reorganized the snack-food maker's North American operations and boosted sales with new products such as Fritos Scoops kits, a combination of large corn chips with dips.
When Mr. Reinemund left Frito-Lay last year, it was responsible for 64 percent of PepsiCo's sales.
"I think that Steve has demonstrated himself as a very strong executive," said Skip Carpenter, an analyst with Donaldson Lufkin & Jenrette.
"With Frito-Lay bringing in two-thirds of the business, long term the company will continue to expand the snack operations worldwide."
Mr. Reinemund is not the first top executive at PepsiCo to come from Frito-Lay.
Both Mr. Enrico and the late Wayne Calloway, PepsiCo chairman from 1986 to 1996, led Frito-Lay before taking the top job at the parent company.
Frito-Lay has almost half the $27 billion worldwide salty snack market, and third-quarter profits increased 11 percent over 1999 to $574 million.
Those increases helped boost PepsiCo 16 percent during the same period.
Frito-Lay is likely to increase its market share even further with the announcement Wednesday that it is buying Uncle Chipps Co., the snack maker's main rival in the Indian potato chip market, for an undisclosed price.
"With its main rival out of the picture, Frito-Lay will be the most popular packaged potato chip in India, offering seven flavors that appeal to the Indian palate," said Catherine Sleep, managing editor of just-food.com.
In North America, Frito-Lay's sales rose 7.6 percent to $2.06 billion in the third quarter.
The increase was paced by sales of Lay's potato chips and Tostitos tortilla chips and snack kits, the company said.
Third-quarter net income for PepsiCo rose to $587 million, or 40 cents a share, from profit from operations of $507 million, or 34 cents, a year earlier.
Analysts' average estimate was 39 cents, according to First Call/Thomson Financial.
PepsiCo sales rose 7.2 percent to $4.91 billion from $4.58 billion.
Its shares fell 88 cents Wednesday to $45.13 in New York Stock Exchange trading.