* Sweet Leaf Tead president to replace founder as CEO
* Says founder was 'generously compensated'
NEW YORK, March 22 (Reuters) - Sweet Leaf Tea Co, which is 35 percent-owned by Nestle Waters North America, promoted its president, Dan Costello, to the role of chief executive, replacing the small organic tea maker's founder, Clayton Christopher.
Costello, a former general manager with Nestle Waters North America, began managing Sweet Leaf's day-to-day operations last year when the unit of Nestle SA NESN.VX invested $15.6 million in the Austin, Texas-based start-up with an option to buy it outright.
Sweet Leaf, whose iced tea drinks are sold by Whole Foods Market Inc WFMI.O and other stores, said Christopher would remain on its board of directors.
A company spokeswoman would not disclose the details of Christopher's pay package, only to say he was "generously compensated."
Nestle Waters is behind water brands including Poland Spring, Deer Park and Ice Mountain. Sweet Leaf was its first foray into other types of drinks besides water.
Nestle and private equity firm Catterton Partners are Sweet Leaf's biggest shareholders. Catterton invested $18 million in Sweet Leaf in 2008.
The U.S. market for bottled soft drinks has been hurt by the economic downturn, but a growing health consciousness has led some consumers away from full-calorie sodas to non-carbonated beverages such as teas and juices.
Teas made from natural or organic ingredients have been seen as a bright spot in the industry with Coca-Cola (KO.N) having purchased a stake in Honest Tea. (Reporting by Martinne Geller; Editing by Steve Orlofsky)