Nooyi will step down October 3 after serving 24 years with the company and will remain chairman until early 2019, the company said.
Indra Nooyi, PepsiCo's first female chief executive, is stepping down after 12 years at the helm of the food and beverage behemoth. She spearheaded Pepsi's transition to a greener, more environmentally aware company.
Nooyi has been with PepsiCo for 24 years, with the last 12 as CEO. "PepsiCo today is in a strong position for continued growth with its brightest days still ahead", she added.
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Often choosing to wear the traditional sari at corporate events, Ms Nooyi is proud of her Indian background, once saying: "Although I'm a daughter of India, I'm an American businesswoman".
Ramon Laguarta, the future CEO, has spent 22 years at the company, and served as the President of PepsiCo.
"Ramon Laguarta's unanimous appointment follows a systematic and thorough succession process by the Board of Directors". He previously served as CEO of the Europe Sub-Saharan Africa region. "Ramon has been a critical partner in running the company, and I'm confident he will take PepsiCo to new and greater heights in the years to come", Nooyi said about her successor.
With Nooyi's departure, the rest of PepsiCo's senior leadership team will remain unchanged, the company said.
PepsiCo's premarket stock price declined slightly after the announcement, CNBC reported.