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Donald Kendall, Pepsi’s Chief During the Cola Wars, Dies at 99



Donald M. Kendall, a former soda salesman who as the head of Pepsi challenged Coke in a worldwide cola war and personally promoted his brand as the first American consumer product made and marketed in the Soviet Union, died on Saturday at his home in Greenwich, Conn. He was 99.

His family announced his death in a statement.

Raised on a Washington State dairy farm and never completing a college degree, Mr. Kendall spent 44 years with Pepsi, beginning as a bottling plant worker in New Rochelle, N.Y., and then a fountain syrup salesman in Atlantic City. Prematurely gray since high school, he never found youth to be a handicap in rising swiftly through the company’s ranks.

He was named vice president of national sales at 31, then, beginning in 1957, headed the company’s international division, doubling the number of countries in which the brand was sold by the time he left that post in 1963 to become Pepsi-Cola’s president and chief executive at 42. He served as chairman for two decades, until 1991, five years after he had retired as chief executive at 65.

During his tenure he launched an audacious advertising campaign called “the Pepsi challenge” — blind taste tests suggesting that Coca-Cola aficionados actually favored the flavor of Pepsi. When Coca-Cola’s reformulated “New Coke” was tepidly received by consumers in 1985, he capitalized on his rival’s disappointment by promoting Pepsi even more. He gambled that consumers would take to Diet Pepsi while Coke was more tentatively marketing its sugar-free formula as Tab. He sought to woo “the Pepsi Generation” by spending a fortune on a Michael Jackson advertising blitz. And he bought 7Up, in 1986.

Mr. Kendall expanded Pepsi into food production by merging it with Frito-Lay in 1965 under the name PepsiCo and acquiring fast food chains like Kentucky Fried Chicken, Pizza Hut and Taco Bell. (PepsiCo later shed those properties.) Under his watch, the company’s annual revenue grew to $7.6 billion from $200 million.

In a statement, Ramon Laguarta, the current chairman and chief executive, called Mr. Kendall “the architect of the PepsiCo family.”

ImageMr. Kendall poured cups of Pepsi for visiting dignitaries at an exhibition of American products in Moscow in 1959. The Soviet leader Nikita S. Khrushchev took a sip while Vice President Richard M. Nixon looked on. Khrushchev declared the beverage “very refreshing.” 
Credit…PRNewsFoto, via PepsiCo

As a politically-astute chief executive of a global corporation, Mr. Kendall cultivated a close personal and professional relationship with Richard M. Nixon, who early on represented Pepsi as a lawyer and in 1965 played the piano at Mr. Kendall’s second wedding, at the Pierre hotel in Manhattan.

The Nixon connection produced two foreign-policy coups.

In 1959, Mr. Kendall was seeking to open a Pepsi plant in the Soviet Union and saw an opportunity at an exhibition of American products being held in Moscow that year (the same exhibition where Vice President Richard M. Nixon conducted his celebrated “kitchen debate” with the Soviet leader Nikita S. Khrushchev).

At Mr. Kendall’s request, Nixon steered Khrushchev to the Pepsi display.

“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,” Mr. Kendall told The New York Times in 1999. “I told him that somehow, I had to get a Pepsi in Khrushchev’s hand.”

He succeeded. Mr. Kendall poured Pepsi into a paper cup for the premier, who promptly declared the beverage “very refreshing.”

“Cola Captivates Soviet Leaders,” The New York Times headline proclaimed.

A manufacturing agreement was finally signed in 1973 after both parties overcame currency exchange complications: PepsiCo accepted Soviet-made Stolichnaya vodka as payment instead of rubles.

As the Soviet Union was collapsing in the late 1980s, PepsiCo struck another deal: It would get to open two-dozen plants behind the corroding Iron Curtain by agreeing to buy 17 Russian submarines and three surplus warships for scrap.

“We’re disarming the Soviet Union faster than you are,” Mr. Kendall remarked to Brent Scowcroft, President George H.W. Bush’s national security adviser, according to The Times.

According to government documents and the 2007 book “Legacy of Ashes: The History of the C.I.A.,” by Tim Weiner, a former Times reporter, in 1970 Mr. Kendall introduced Nixon to a Chilean media magnate and Pepsi bottling-plant owner who was seeking Washington’s help in overthowing President Salvador Allende, who had been democratically elected in Chile on a Marxist platform. Mr. Allende was deposed in 1973 by the military and replaced by the dictator Gen. Augusto Pinochet.

Credit…Associated Press

Donald McIntosh Kendall was born on March 16, 1921, on a dairy farm in Sequim (pronounced squim), Wash., to Carroll and Charlotte Kendall.

He enrolled in Western Kentucky State Teachers College (now Western Kentucky University) in Bowling Green on a football scholarship but left to enlist in the Navy as a bomber pilot during World War II. He was shot down near the Philippines, awarded the Distinguished Flying Cross and joined Pepsi-Cola after returning home in 1947.

His first marriage, to Anne McDonell, ended in divorce. In 1965 he married Sigrid Rüdt von Collenberg, who is known as Bim, a German baroness. In addition to her, he is survived by their two children, Kent and Donald Kendall Jr.; two children from his first marriage, Edward and Donna Kendall; and 10 grandchildren.

During his eventful tenure with PepsiCo, Mr. Kendall opened China to the company’s products and in 1970 moved its headquarters from New York City to a sprawling campus in suburban Purchase, N.Y., designed by Edward Durell Stone. Its hallmark is a public garden dotted with works by renowned 20th-century sculptors.

Outside the company, Mr. Kendall promoted international trade as chairman of the United States Chamber of Commerce and other business groups and, as chairman of the American Ballet Theater Foundation, recruited Mikhail Baryshnikov in 1980 to be its artistic director.

Mr. Kendall was an early champion of diversity. In 1962, Pepsi appointed Harvey C. Russell Jr. as the first Black vice president of a major United States corporation, prompting a boycott of Pepsi products by the Ku Klux Klan. Mr. Kendall countered by naming another Black corporate executive.

Above all he was a company patriot. He painted his home mailbox in Pepsi colors, downed a Pepsi for breakfast and, while choking on the word C-o-k-e, thrived on the corporate rivalry.

“They brought out the best in us,” he once said. “If there wasn’t a Coca-Cola, we would have had to invent one, and they would have had to invent Pepsi.”


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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