Exchange of 17 USSR submarines for Pepsi syrup. Deal of the century or curiosity?

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

In 1989, in exchange for a concentrate for the production of the Pepsi-Cola carbonated drink, the Soviet Union handed over a whole fleet of 17 decommissioned submarines and several ships to the owner of the famous brand. This gave rise to PepsiCo CEO Donald McIntosh Kendall jokingly saying that he is disarming the USSR faster than the government of George W. Bush.

Barter trade

Economic ties between the United States and the Soviet Union began to strengthen in 1959, when Khrushchev and Eisenhower agreed to hold exhibitions of the two countries' achievements. The first of these was the Soviet exhibition in New York in June of the same year. Then the American companies were given the opportunity to present their products at a return exhibition in Moscow. This opportunity was seized by Donald M. Kendall - at the time he was in charge of the international trade of Pepsi. The stand in Moscow's Sokolniki Park became the place where Soviet citizens first tasted Pepsi-Cola soda. The American foreign policy department played a significant role in this - the deputy secretary of state personally asked Kendall to bring his goods to the USSR. In this way, the US leadership, obviously, hoped to "add" the Russians to the Western way of life.

After Kendall treated Nikita Khrushchev, who had been heated up during the debate, with a sweet drink, success awaited him. Pepsi-Cola was the first American consumer product in history to be launched on the Soviet market. A soda bottling plant was opened in 1974 in Novorossiysk. A year earlier, Ogonyok magazine published an interview with Donald M. Kendall, in which the American businessman praised the Russians as “reliable and interesting business partners,” and also said that in exchange for the concentrate, PepsiCo receives cognac, vodka and champagne.

Barter was a necessity, since the Soviet ruble was not among the convertible currencies. Pepsi was able to popularize Stolichnaya vodka among Americans, making the Soviet strong drink brand the second on the US market after the Swedish Absolut vodka. Stolichnaya's sales in America reached $ 150-200 million a year.

Deal of the century or curiosity?

In 1989, when the Pepsi company already had 21 factories in the Soviet Union, Moscow donated 17 old submarines, a frigate, a cruiser and a torpedo bomber for the next batch of syrup.

In a May 10, 1989 Soviets Buy American article, New York Times journalist Flora Lewis detailed the deal, which she called "a good way to help rebuild." As it turned out, each of the submarines cost the Americans only 150 thousand dollars. It is noteworthy that during World War II, Donald M. Kendall served not just anywhere, but in the US Navy, and was well versed in ships. Perhaps that is why he agreed to the Soviet proposal. At the same time, Kendall purchased Soviet oil tankers for a joint venture with partners from Norway.

The submarines were subsequently resold by PepsiCo as scrap metal. As the Russian historian Gleb Baraev told the Slovak publication Hospodárske noviny, they were talking about outdated Project 613 submarines, built back in 1951-57. Of course, all weapons were previously removed from them, so there was no talk of any "disarmament". Pepsi continued the practice of barter exchange until the collapse of the USSR. In the spring of 1990, for example, the company received several cargo ships and another batch of vodka. However, Pepsi did not manage to open 26 more factories as planned under the previous monopoly conditions. Since 1992, the Russian economy has become a market economy, and barter trade has become a thing of the past. The era of PepsiCo's dominance in the domestic market has also passed - former Soviet citizens have tasted imported Coca-Cola. However, personally to Donald M. Kendall, who at one time met with Brezhnev and Kosygin, Moscow remained friendly. In 2004, President Vladimir Putin awarded the former PepsiCo executive with the Order of Friendship.