When Pepsi had the world’s 6th-largest military
In the summer of 1959, amidst the Cold War, the residents of Moscow were greeted by The American National Exhibition, featuring American cars, models of entire houses, cereals, it also included well-known brands such as IBM, Disney, and Pepsi. This Exhibition, a rare display of Capitalism in the heart of Communism, was just a reciprocal of a similar display earlier by the Soviets.
This Exhibition was witness to the famous exchanges between the then Vice-President Richard Nixon and Soviet premier Nikita Khrushchev, regarding the differences between Capitalism and Communism, labeled as the Kitchen Debate, called so due to the meetings happening in a mock-up, cut-out model of a kitchen. While debating in one such kitchen, Nixon led Khrushchev to a Pepsi-Cola dispenser, that offered two versions: one mixed with American water, the other mixed with Russian. This in fact was a setup by Donald M. Kendall the then head of Pepsi’s international operations. Kendall had sponsored a booth against the wishes of his higher-ups. He had approached Nixon at the American Embassy and had asked him to ensure that he got a Pepsi in the hands of the Soviet premier. Nixon succeeded and Kendall’s foresight proved prophetic when Pepsi landed an exclusive deal to supply the Soviet Union. All this was closely followed by journalists and photographed, seizing the interests of the Soviets. They had initially likened the smell of Pepsi to that of shoe wax, but nonetheless Pepsi became the most memorable item of the exhibition.
In 1972, Kendall finally managed to land a deal with the Soviet Union, along with gaining an edge over Coca-Cola (as it was barred from entering Soviet union until 1985). But money proved to be a problem. The Rouble was practically worthless outside of the country and was heavily regulated by the Kremlin. So they turned to barter, Pepsi Concentrate in exchange of Stolichnaya Vodka.
The barter proved to be a success, the cola was bottled locally and by the 1980s, the Soviet Union consumed about a billion servings of Pepsi. They also ran ads in the State TV featuring Michel Jackson, the western media were in a riot, they hailed Pepsi as the first “Capitalist Product available in the Soviet Union”.
At the onset of the Soviet-Afgan War, cries of boycott rose and Pepsi became skittish of the barter. So in 1989, it stuck a sensational deal; Pepsi became host to 17 old submarines, a frigate, a destroyer, and a cruiser, in return of doubling its plants in the Soviet Union. These were quickly scrapped and sold to a Norwegian company. But for a very short period of time, Pepsi had become the 6th largest military of the world (somewhere in Hell perhaps, the British and Dutch East India Companies had water in their eyes). Jokes ran amok of Pepsi taking the high way in the Cola Wars and even Kendall remarked to Scowcroft, President George H.W. Bush’s national security adviser that; “We’re disarming the Soviet Union faster than you are”.
In 1990, Pepsi signed a new 3 billion dollar deal and even managed to introduce Pizza Hut to the country, but alas the Soviet Union fell within a year, plunging Pepsi’s assets into chaos. With its various units stuck in different countries, Pepsi was essentially dealing with 15 different countries. From this blow, Pepsi never recovered. It is still very popular in Russia but has lost its edge to its arch-nemesis Coca-Cola. Should have repaired those warships.
Author: Nishant Singh
