Closed the $14 billion acquisition of Quaker Oats Co. despite opposition from some on the Federal Trade Commission
Sales grew an estimated 7% in 2001, earnings increased an estimated 14%
PHOTO BY JOHN S. ABBOTT
The Friday after the September 11 terrorist attacks, Steven S Reinemund gathered employees at PepsiCo Inc. (PEP) headquarters in Purchase, N.Y. President Bush had asked for a moment of silence at noon; at Pepsi, that moment turned into a one-hour multifaith prayer meeting.
Reinemund, 53, himself a devout Presbyterian, is exhibiting more of his softer side since taking over the company's top job on May 2. But there are plenty of hard numbers to back up his spot on the list as a top manager. Based on a strong first three quarters, Morgan Stanley Dean Witter & Co. analyst William Pecoriello expects worldwide profits for the company's Frito-Lay Co. unit to increase 11% this year, and total beverage sales to rise 12.6%. That comes as the company expands operating margins in both businesses. Pecoriello expects Pepsi's total 2001 net income to be $2.98 billion, on sales of $26.99 billion.
A fierce competitor who made his mark at Frito-Lay by increasing its U.S. market share to 57% in 1999, from 39% in 1991, Reinemund is certainly not focusing on employees' well-being solely for humanitarian reasons. Keeping his people happy is the key to Pepsi's future success, Reinemund says. "To have growth in products, you have to have growth in your people," he says. That means giving employees opportunities to move from one business to another, and also diversifying his workforce. Reinemund now insists that 50% of all new employees be female or minority; promotions and departures are monitored as well.
Reinemund, a marathon runner, has put a three-year growth plan in place. In August, he paid $14 billion for Quaker Oats Co., which owns the $3 billion sports-drink brand Gatorade. Reinemund contends that he'll see $400 million in annual cost savings from the deal by 2005. Now, he has to make sure a combined Quaker and Pepsi can grow faster than each would have alone. Wall Street likes his numbers: Since Reinemund's promotion was announced in October, 2000, Pepsi's stock is up 10%, compared with a 14% fall for Coca-Cola Co. (KO)