PepsiCo. Once Had One of the World’s Largest Military Forces…No Really

A creative deal between Soviet Russia and PepsiCo. that resulted in the temporary creation of a new military force

The age-old question of whether you prefer Coke or Pepsi is one many have likely been asked. In fact, the Cola Wars became a cultural phenomenon in the 1970s and 1980s when the Coca-Cola Company and PepsiCo. Amplified their rivalry to new levels.

Ask most anyone today and there’s likely a preference for Coke or Pepsi. For Russia, thanks to a strategic move by a Pepsi executive in 1959, their journey to Team Pepsi was about to begin. Over the next three decades, Russia’s answer to which beverage do you prefer was undoubtedly Pepsi. In fact, Russia wanted Pepsi so much, they would enter a unique business deal to obtain in.

Capitalism v. Communism

By 1959, the Soviet Union and the United States were heavily embroiled in the Space Race. The epic battle between capitalism and communism was on full global display. And as is often the case, Americans believed strongly in its democratic and capitalist values and sought to highlight its benefits to those who operated with a different set of values.

President Dwight D. Eisenhower was no exception. He longed to bring Western civilization, more specifically American civilization, and its capitalistic values to the people of the Soviet Union. His hope: that visibility to the benefits of capitalism would spark internal pressure and momentum to drive change within the Soviet Union.

To help showcase “Americanism,” the U.S. government set up a convention in Moscow. The convention, titled the “American National Exhibition,” was created to flex and highlight American ideologies.

A Bold and Brilliant Business Move

Then Vice President Richard Nixon was in attendance representing the United States. While there, as the story goes, he got into a heated dispute with the Soviet Union’s Nikita Khrushchev. Had it not been for the quick thinking of a PepsiCo. Vice President, Donald M. Kendall, in attendance - whose offering the Soviet Union leader a drink of their cold carbonated beverage helped deescalate the argument - who knows how things would have escalated.

Kendall had hoped for an opportunity to introduce Pepsi to Russians in attendance of the exhibition. He viewed Russia as a vast, untapped market for his company. He capitalized on an opportunistic moment, a moment that is captured in a timeless photo showing Nixon and Khrushchev with Kendall in the background pouring a Pepsi refill. Not only would this win Russia’s love for Pepsi, it would also cement Kendall’s career at Pepsi. He would become CEO of PepsiCo. six years later.

Some years later, Russian hankering for Pepsi continued to grow. So much so that they set out to make a deal with PepsiCo. to ensure the drink was available in their country, regardless of their political system differences. Unfortunately, at that time, the Soviet Union’s currency was not accepted throughout the world. Simply put, there money was no good here.

Let’s Make a Deal

The Soviets were not deterred. They put forward a creative proposition to PepsiCo.  Turning to their other national currency, vodka, the Russians created a path to ensure Pepsi was available within their country. In a fundamental beverage barter, Pepsi received Russian vodka in return for their famous soda pop.

The agreement proved successful. But as the 1980s wound down, so too was the stability and influence of the Soviet Union. As the sun began to set on the 80s and the USSR, time on the initial agreement between Russia and PepsiCo. was running low as well.

Facing the crumbling of its government, currency challenges remained, and having used vodka in their initial agreement with Pepsi Co., they began looking for alternative forms of payment. Once again, where there was a will there was a way, and Russia put forward an even more creative offer to secure its Pepsi.

To renew their agreement and continue the influx of Pepsi to their country, Russia would give PepsiCo. seventeen submarines, a cruiser, a destroyer, and a frigate from their naval fleet. In return, Russia received three billion dollars worth of Pepsi.

PepsiCo. - One of the World’s Most Powerful Military Forces is Born

And so, having received a Russian naval fleet in exchange for their product, PepsiCo. proudly boasted the world’s sixth most powerful military force. The title would be short lived however. It is likely not surprising to learn that PepsiCo., with no need for such a force, sought a way to monetize their new toys. They would take their newly acquired fleet and sell it for scrap recycling to a company in Sweden.

The deal, which happened over 30 years ago this April was just another chapter in the unique relationship that existed between Soviet Russia, the United States, and of all companies,  PepsiCo. It also serves as one of the more creative and unique ways to barter for product. Finally, it is worth nothing that with their creative bargaining, PepsiCo. was considered the first capitalistic product in Soviet Russia.

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