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. Last Updated: 07/27/2016

Pepsi Trailblazer Says Fizz Not Gone for Russia




The American who brought consumer capitalism to Russia 40 years ago came back for a visit last week - to reports of bribery and money laundering, to a Mercedesful of impeccably suited thugs, to political wars among the lap-dog newspapers and television networks of too-wealthy tycoons, to throngs of street urchins and trash bin-miners trampled in the stampede to wealth.


All in all, he said, it could have been worse.


"The changes are unbelievable,'' Donald Kendall said.


"People keep talking about crime and corruption and not about the amazing things that have happened here. You can't believe the merchandise in the stores and the shopping centers.


"Go out on the street and look at the traffic jams, at the cars. They're not just Mercedes. The changes here go deeper than that.''


Even to dream about such things a decade ago, he said, "would have been absolutely impossible.''


It is tempting to many to write off Russia's experiment with capitalism thus far as a waste of a decade, or even a net loss.


Kendall is that rarest of Americans, not to mention native Muscovites: someone who still believes the Russian glass is half full.


More specifically, he believes it is half full of Pepsi-Cola. For Kendall will forever be known for making Pepsi the first American consumer product on Soviet restaurant menus and store shelves.


As a rising executive at the Pepsi-Cola Corp. in 1959, Kendall bucked his elders and set up fountain dispensers at Moscow's Sokolniki Park, where the Soviet leader Nikita Khrushchev and U.S. Vice President Richard Nixon were about to christen the first American trade exhibition ever held in the Soviet Union.


"I went to Nixon the night before, at the embassy, and told him I was in a lot of trouble at home because people thought I was wasting Pepsi's money coming to a communist country,'' Kendall said the other night at a Moscow reception sponsored by the company. "I told him that somehow, I had to get a Pepsi in Khrushchev's hand.''


Kendall got far more than he could have imagined.


The next day, Sokolniki was the scene of the famous finger-wagging "kitchen debate'' between Khrushchev and Nixon. Kendall now recalls watching the scene, transfixed, as the two men verbally slugged it out over the merits of capitalism and communism.


In mid-left-hook, Nixon steered Khrushchev to the Pepsi pavilion for sips of cola, some made with American water and some with Russian. Khrushchev declared the Moscow version clearly superior and ordered everyone around him to partake.


Pepsi reaped a publicity windfall the company's elders never expected. Kendall became CEO in 1965. A decade later he negotiated a monopoly for Pepsi on cola sales with Khrushchev's successors that stood until the Soviet Union fell eight years ago.


And Kendall, who was merely seeking a toehold on a market his arch-nemesis, Coca-Cola, had not penetrated, discovered something more: an affinity for Russia that has become a personal cause and a conviction that however bad things seem now, they will get better.


In that sense, his presence in Moscow last week for a slightly belated celebration of the July anniversary of the Sokolniki event may have been a tonic.


Although the occasion was marked by a banquet in the Kremlin Palace and speeches by the United States ambassador, James Collins, and others, it is safe to say that neither side feels like celebrating.


Americans, burned by Russia's 1998 economic crash and intimidated by the scale of corruption, have reined in their business dealings here. Russians feel humiliated by privation and are seething over the United States brouhaha about corruption - a problem they say Americans ignored as long as it benefited them.


One of those Russians, Georgy Arbatov, dined last week with Kendall, Anatoly Dobrynin, the former Russian ambassador to the United States, and other veterans of the Pepsi era of good feeling.


Arbatov, a familiar face to Cold War Americans as director of the U.S.A./Canada Institute, takes a more dyspeptic view of things. Kendall is a friend and a smart businessman, he said in an interview last week, but his analysis of Russia's future is distinctly rose-colored.


"Shock therapy was a complete disaster for Russia,'' Arbatov said, using the shorthand for the effort to convert Russia overnight to a capitalist system. "There is tremendous polarization. On one side people have luxury cars and overseas bank accounts; on the other living standards have dropped tremendously.


"We were tremendously ideological. Ideology was like a religion. And suddenly, we lost the ideology, and the only god that exists is the greenback.''


Kendall allowed that it is important to acknowledge the failures, and just as important to remember that the United States also has had its share of robber-baron tycoons, mafias, economic panics and corruption scandals.


Now retired for 13 years as the head of Pepsico Inc., Kendall is president of the East-West Institute, an organization broadly devoted to better understanding and relationships between Russia and the West. In that capacity, he argues that turning one's back on Russia at its low point would be a huge mistake.


"I was always convinced that we had to open this place up instead of isolating it, and I still am,'' he said. "It's going to come out in the end because they've got a younger generation here that's well-educated and doesn't want to go back to the past.''


Just as he was in 1959, Kendall is in the minority.


Asked what lies in Russia's immediate future, for example, Arbatov said simply, "Nothing good.''


Still, he acknowledged that he has been mistaken before.


"I was at Sokolniki that day, with my wife and my boy, and we tasted Pepsi-Cola,'' he said. "And I must tell you - almost none of the Russians liked it.''