Donald M. Kendall

Born: 1921
Sequim, Washington
Cofounder and CEO, PepsiCo, Inc.

Donald Kendall has been credited with transforming a failing company, whose competitor Coca-Cola did not even acknowledge it as a challenger, to one of the most successful beverage and snack food companies in existence today. Kendall quickly learned the skills necessary to be a great salesman, and was able to sell Pepsi in a place where American soda had never been introduced: the former Soviet Union.

"You have to know and have confidence in your product, and you have to know the person you're selling to and what he wants and what his problems are. And then, once you get in the door, you have to work at keeping that relationship, do the follow-up work. I think that's where a lot of people lose out."

From Dairy to Soft Drinks

Donald McIntosh Kendall was born in Sequim, Washington, in 1921. He helped his father on their dairy farm by milking cows and driving bulldozers. In high school, Kendall joined the football team and became a star tackle. This achievement earned him a football scholarship to Western Kentucky State College. After three semesters, Kendall left college to join the U.S. Navy during World War II (1939-45). He became a bomber pilot and earned two Distinguished Flying Crosses and three Air Medals.

When the war ended, Kendall found a job in Long Island, New York, where he sold fountain syrup for Pepsi. Within ten years, he went from selling syrup to earning the position of vice president in charge of national sales. By 1959, Kendall was managing Pepsi's international division where he was responsible for all sales outside the United States and Canada. "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," Kendall said in a 1991 interview with Directors & Boards.

Kendall instead set his sights on one of the most unlikely places: the Soviet Union. This was no easy feat for several reasons. First, the Soviet Union was a communist country. Communism promotes state-owned production of goods while capitalism, the political system upheld in the United States, promotes individual production. This means that the Soviet Union had total control of what their citizens could make and purchase. In addition, the Soviet Union and the United States were entangled in a "cold war" at the time, where they were openly hostile to one another but remained just short of violence.

Kendall saw an opening during an American National Exhibition in Moscow in 1959. This first American trade exhibition in the Soviet Union was planned by Soviet leader Nikita Khrushchev (1894-1971) and United States Vice President Richard M. Nixon (1913-1994). The night before the exhibit, Kendall recalled in a 1999 New York Times article, he approached Vice President Nixon and told him "that somehow, I had to get a Pepsi in Khrushchev's hand." The next day, Nixon guided Khrushchev to the Pepsi booth, and cameras flashed as the Soviet leader drank from a Pepsi bottle. This advertising triumph made Kendall famous and an extremely valued Pepsi employee.

Donald Kendall has been described as burly, plainspoken, abrasive, ruthlessly ambitious, and forceful. Some overworked executives gave him the nickname "White Fang."

Ruling the Pepsi Empire

By 1963, Kendall had become Pepsi's chief executive. He had enough vision to know that the company needed to make a change if they wanted to stay competitive with their ever-growing opponent Coca-Cola. As fate would have it, a few years earlier Kendall had met another successful businessman, Herman W. Lay, at a grocer's convention. Lay was chairman of the Frito-Lay Company, a manufacturer of potato chips and other snack foods. The two men engineered a plan to merge their companies in 1965. Together they formed PepsiCo, Inc., with Kendall as chief executive officer (CEO) of the company, and Lay as chairman of the board.

Herman Lay: Dedicated Salesman and Businessman

In 1960 Herman Lay told young, future business owners, "Go into business and be as successful as you can. Learn how the engine runs and drive it yourself." He spoke with experience after transforming an ailing Atlanta snack-food maker into the first national brand of potato chips.

Lay was born in 1909 in Charlotte, North Carolina. He credits his father Jessey Lay, who sold farm machinery, for providing the example of a good salesman. "It was a pleasure to watch him because he did it so well," the younger Lay said. When Herman Lay was ten, he made his own way in sales at the family's new home in Greenville, South Carolina. He set up a soft drink stand on his front lawn. Because the town's ballpark was across the street, Lay made enough money to open a bank account, buy a bike, and hire assistants to work at his stand.

He later earned an athletic scholarship to Furman University in Greenville, but spent only two years there. Lay then worked at several jobs before settling as an independent snack food distributor in Nashville, Tennessee, in 1932. Seven years later he purchased an Atlanta-based potato chip manufacturer, and named his new company H. W. Lay & Company.

The Lay company had become one of the largest manufacturers of snack foods in the southeastern United States at the same time the Fritos company was experiencing similar success in the Southwest. After Fritos's founder Elmer Doolin died in 1959, Lay merged the two companies and formed the Frito-Lay Company. After the merger the company began distributing Lay's Potato Chips nationwide for the first time. By 1963, Frito-Lay produced thirty-two products and enjoyed sales of over $127 million. The company then adopted a new slogan for its Lay's Potato Chips, "Betcha Can't Eat Just One."

Two years later Frito-Lay merged with Pepsi-Cola to form PepsiCo, Inc. Herman Lay remained active in the company until he retired in 1980. After leaving PepsiCo, Lay maintained a dedication to entrepreneurship by speaking about business to eager listeners in public forums. He also started several new businesses including State Fair Foods, a manufacturer of frozen foods. In 1982, Lay died at the age of seventy-three in Dallas, Texas.

After the new company was formed, Kendall began to concentrate on his vision for Pepsi's future. In particular, he wanted to change the image of the company in order to attract topnotch workers. He thought he could accomplish this task by moving the PepsiCo headquarters out of the city of New York to a new building on 144 acres of rolling lawns. He then offered his employees the first on-site physical fitness center, fully equipped and staffed, and an outdoor sculpture garden.

As the company began to draw talented employees, Kendall also began to expand his ideas about advertising. He challenged PepsiCo's advertising agency BBDO to emphasize real people in their commercials, and to use compelling visual details and catchy music. The agency came up with an unforgettable phrase, "Come alive! You're in the Pepsi Generation" and included a jingle written by the composer who had won an Academy Award in 1961 for his arrangements of the musical West Side Story. It was reported that Kendall loved the ad the moment he heard the music.

During Kendall's reign, PepsiCo became one of the twenty-five largest corporations in the United States. By the time he retired in 1986, PepsiCo made revenues of $7.5 million, had more than 137,000 employees, sold Pepsi-Cola products in nearly 150 countries and snack foods in ten international markets.

Because of Donald Kendall's initiatives, the Soviet Union opened a Pepsi plant in 1974, making it the first U.S. company to make its product in that country.

For More Information

Books

Enrico, Roger. The Other Guy Blinked: How Pepsi Won the Cola Wars. New York: Bantam Books, 1986.

Louis, J. C., and Harvey Z. Yazijian. The Cola Wars. New York: Everest House, 1980.

Periodicals

"Beyond Colas and Beyond." Beverage Industry (March 2002): p. 10.

Chura, Hillary. "Sweet Spot; Soda Marketers Answer Demo Shift by Aiming to Woo Hispanic and Black Teens." Advertising Age (November 12, 2001): p. 1.

Fisher, Anne B. "Peering Past PepsiCo's Bad News." Fortune (November 14, 1983): p. 124.

"Go There and Get the Business." Director & Boards (Winter 1991): p. 15.

"A Hot Fight over Cold Drinks." Time (May 16, 1983): p. 52.

"Pepsi Turning Blue with New Flavoring to Lift Cola Sales." New York Times (May 8, 2002): p. 2.

Thomas, Robert Jr. "Herman W. Lay obituary." New York Times (December 7, 1982): p. D30.

"U.S. Business Hall of Fame." Fortune (April 13, 1987): p. 102.

Wines, Michael. "Raise a Glass to the Effervescent View of Russia!" New York Times (October 18, 1999): p. 4.

Web Sites

Frito-Lay, Inc. [On-line] http://www.fritolay.com (accessed on August 16, 2002).

Gatorade. [On-line] http://www.gatorade.com (accessed on August 16, 2002).

PepsiCo, Inc. [On-line] http://www.pepsico.com (accessed on August 16, 2002).

Pepsiworld. [On-line] http://www.pepsiworld.com (accessed on August 16, 2002).

The Quaker Oats Company. [On-line] http://www.quakeroats.com (accessed on August 16, 2002).

Tropicana Products, Inc. [On-line] http://www.tropicana.com (accessed on August 16, 2002).