🥤 How Pepsi Accidentally Became a Naval Superpower

 

It started with a sip.

1959, Moscow. The Cold War is ice-cold. The US and USSR are holding cultural exhibitions in each other's cities — essentially a "look how great our lifestyle is" competition. At the American exhibition, Vice President Nixon led Soviet Premier Khrushchev toward a display booth dispensing none other than Pepsi-Cola. The night before, a sharp Pepsi exec named Donald Kendall had whispered to Nixon: get Khrushchev to drink it on camera. Nixon did. Khrushchev liked it so much he asked for a second one, and reportedly said "This is very refreshing."

That one sip cracked open the entire Soviet market.

The vodka years. Since Soviet rubles were worthless internationally, the USSR and Pepsi resorted to barter — cola syrup in exchange for Stolichnaya vodka, which Pepsi then sold in the US. By the late '80s, Russians were drinking approximately a billion servings of Pepsi a year, and in 1988 Pepsi even broadcast the first paid commercials on Soviet TV — starring Michael Jackson.

Life was good. Until it wasn't.

The vodka problem. The US imposed sanctions on Soviet products, including vodka, after the USSR invaded Afghanistan. Suddenly Pepsi had a billion-serving market but nothing to take home in return. Kendall flew to Moscow to renegotiate. The Soviets had no hard currency. So they made an offer only the Cold War could produce:

"How about some warships?"

The deal. PepsiCo secured 17 submarines at $150,000 each, plus three warships: a cruiser, a frigate, and a destroyer. On paper, a country operating 17 submarines would have tied with India for the seventh-largest fleet of attack submarines in the world.

Kendall called the White House and deadpanned to the National Security Adviser: "We're disarming the Soviet Union faster than you are."

The anticlimax. Here's the twist — the ships were small, old, obsolete, and unseaworthy. PepsiCo was more a middleman than a maritime power. The 17 submarines and warships were sold almost immediately for scrap to a Norwegian shipping firm.

Two years later, the Soviet Union itself collapsed. Pepsi's billion-serving market vanished. The navy was already gone.

A soft drink company briefly owned more submarines than most countries — and sold them for parts. Just another Tuesday in the Cold War. 🫧