'Go there and get the business.' (interview with PepsiCo's Chairman of the Executive Committee Donald M. Kendall on business opportunities in Eastern Europe) (Chairman's Agenda: Acquiring in Eastern Europe) (interview).

Don't play the waiting game in Eastern Europe and the Soviet Union.

An interview with PepsiCo's Donald Kendall

One of the exhibits at the 1959 American National Exhibition in Moscow was a display of Pepsi-Cola. Soviet Premier Nikita Kruschev and U.S. Vice President Richard M. Nixon visited the exhibit, and photographs of the Soviet leader drinking a Pepsi appeared in newspapers throughout the world.

The exhibit was arranged by Donald M. Kendall, then President of Pepsi-Cola International. Over the next 13 years, Kendall patiently worked to develop a relationship with Soviet officials. Finally, in 1972, PepsiCo signed a historic trade agreement providing for the bottling and sale of Pepsi in the U.S.S.R. Pepsi-Cola became the first foreign consumer product to be sold in that nation. Today, it is the leading foreign soft drink in the Soviet Union, and is widely available in restaurants, grocery stores, and from street kiosks in over 23 major cities. Pepsi-Cola is also the most widely distributed soft drink in Eastern Europe, and is the market leader in Poland, Czechoslovakia, Hungary, Bulgaria, and Romania.

Kendall, the engineer of PepsiCo's breakthroughs in Eastern Europe and the Soviet Union (and in China, where PepsiCo is the largest multinational soft drink producer), joined the company as a fountain syrup sales representative, following service as a naval aviator in World War II. He was elected as Chairman and CEO in 1971, a position he held until his retirement in May 1986. Under his leadership, PepsiCo has become one of the 50 largest corporations in the United States. He is now Chairman of the Executive Committee and is still very active in promoting both PepsiCo's and the U.S.'s East-West relations. Excerpts from a recent conversation with this business visionary and pioneer follow.

Directors & Boards: What impressions of Moscow in 1959 have stuck with you?

Donald Kendall: A lot of people go to the Soviet Union today and talk about how terrible it is. Compared with 1959, it's not terrible. They've made a tremendous amount of progress -- not in our terms, but you can't compare the U.S. or Western Europe with the Soviet Union. You have to go back and look at what they had during the 1950s and what they have today. A lot of changes have been made. The hotel where I stayed had a statue of Stalin out in front. The hotel is still there, but now Stalin is gone. Lenin is even disappearing in some places. Up until a few years ago, there were communist signs and slogans all over the place, and those are disappearing. And, of course, the people are more open. Before, people were very guarded in their conversation. You couldn't get people to really talk, and you had to be very careful when negotiating. That is not true today.

D&B: What were you attempting to achieve when you first set out to do business in the Soviet Union and Eastern Europe?

Kendall: The initial reason why I wanted too get into Eastern Europe was that I was running an international company and it was almost impossible to get into Western Europe. Coca-Cola got into Western Europe with the troops during World War II. Coca-Cola people actually were in uniform, and they set up bottling plants. There was nothing wrong with that. But by the time we got around to going to Europe, Coca-Cola was so strong that if we opened a market, they could put a truck in front of our truck and another one behind it. It was very difficult, and it is difficult still. I made up my mind that that wasn't going to happen in Eastern Europe. I always felt that at some point Eastern Europe was going to change -- that it couldn't continue to function the way it was.

D&B: What is remarkable is the success you've had with the foreign exchange in entering this market and growing your business.

Kendall: We always invested on the basis of whether we had good opportunities to get our money out. We got a barter agreement on vodka and have...