How Pepsi-Cola got Soviet warships

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

In the summer of 1959, US Vice President Richard Nixon brought the Pepsi to the USSR for the first time. And he even persuaded Nikita Khrushchev to try the drink. Then the Americans managed to establish the production of soda in the Union. In response, the USSR sent Stolichnaya vodka to America. But 30 years later, for the Pepsi recipe, the Americans managed to get something much more valuable from the Union. It was about dozens of real warships and submarines.

In the summer of 1959, an exhibition of the USSR and a reciprocal exhibition "Industrial Products of the USA" in Moscow took place in New York. Sokolniki Park displayed American-made goods: cars, art objects, fashion news and a whole model of a typical American house. Many well-known brands participated in this exhibition: among them Disney, IBM and Pepsi.

That summer, many Soviet people tried Pepsi for the first time in their lives. One of them was the head of the Communist Party of the Soviet Union Nikita Khrushchev. On July 24, then-US Vice President Richard Nixon gave Khrushchev a tour of the exhibition. It was there that the infamous kitchen debate took place. The conversation got its name because most of it took place on the territory of a model kitchen in a house that, according to the organizers, every American could afford.

The heads of the two powers discussed the merits and demerits of communism and capitalism. Nixon also took Khrushchev to the Pepsi stand, which was symbolically divided into two parts: on one the drink was mixed with American water, on the other with Soviet water.

The previous evening, one of the leaders of Pepsi Donald Kendall spoke with Nixon at the American embassy. As the head of the company's international department, he ignored the position of the rest of the management, which was against sponsoring a booth at this exhibition. To prove that the trip was not in vain, he told Nixon that he "must get Khrushchev to take the drink in his hands."

Nixon succeeded. The photographer captured both leaders in a photo at a time when Khrushchev cautiously tried from a glass of Pepsi. To the side of them, Kendall pours another glass of drink. Khrushchev's son later recalled that many Soviet people who first tried Pepsi said that the drink smelled like wax.

For Kendall, this photo was a real victory. Six years after the American exhibition in Moscow, he took over the company. The USSR became a land of hope for Kendall, and his goal was to turn it into a new market for Pepsi. In 1972, he managed to assert the monopoly of his company and keep Coca-Cola competitors out of the Soviet market until 1985.

In the USSR, the syrup of the drink was supplied, which was prepared and bottled already at local factories. The New York Times then called Pepsi the "first capitalist product" in the Soviet Union. There was only one drawback - money.

Soviet rubles had no value in the international market, since their value was set by the Kremlin. Soviet law also prohibited the export of currency outside the country. Therefore, all agreements between Pepsi and the USSR were based on the principle of barter. In exchange for the raw materials for the drink, Pepsi received Stolichnaya vodka from the Soviet government. By the late 1980s, Soviet people drank about a billion servings of Pepsi a year.

In 1988, the company paid for the first time for a television commercial starring Michael Jackson. The exchange worked great, "Stolichnaya" sold well in the states. However, everything changed with the embargo that America imposed due to the Soviet-Afghan war. This meant that something else had to be changed.

So, in the spring of 1989, Pepsi and the USSR signed an unprecedented deal. The American company became the owner of 17 old submarines and three warships: a frigate, a cruiser and a destroyer, which the company sold for scrap. Pepsi also received new Soviet bulk tankers, some of which were leased and some were sold to a friendly Norwegian company.

In response, Pepsi won the right to double the number of beverage factories across the council's country. "We are disarming the Soviet Union faster than you are," once faked Kendall Brent Scowcroft, security adviser to President George W. Bush.

But it was all incomparable to the $ 3 billion contract signed in 1990 (the figure is based on the monetary equivalent of Pepsi soda turnover in the USSR and Soviet vodka in the United States). It was the largest transaction in history between the Soviet Union and an American private company. Pepsi even launched another brand in the communist state - Pizza Hut. The future seemed bright.

However, in 1991 the Soviet Union collapsed, and with it the "deal of the century" collapsed. While Russia continues to be Pepsi's second largest market outside the US, their pioneering glory has faded. The company failed to cope with the competition - in just a few years, Coca-Cola bypassed its predecessors. And in 2013, the company's billboards left Pushkinskaya Square. Perhaps Pepsi should have kept that destroyer …