Pepsi is one of the most iconic American brands in the world, and you're bound to start an argument about whether it or Coca-Cola is the superior soft drink. The company has a somewhat unique history, which includes a Cold War-era deal with Russia and temporary ownership of the world's sixth-largest navy.
Richard Nixon vs. Nikita Khrushchev
After the launch of the Russian Sputnik 1 satellite, the United States hoped to regain its place on the world stage and show that its economic model was better than the communist model presented by the Soviet Union. In 1959, then-President Dwight D. Eisenhower felt the best way to do this was to bring American culture to the Russians, showing them the benefits of a capitalist society.
To achieve this, the American government organized the American National Exhibition in Moscow's Sokolniki Park. A host of American brands including Pepsi, Disney, IBM and Dixie Cup Inc. sponsored booths and exhibits, and then-Vice President Richard Nixon attended the opening.
Pictured --Nikita Khrushchev and Richard Nixon drinking Pepsi at the American National Fair
Khrushchev and Nixon at the American National Exposition, 1959.
While there, Nixon and Russian President Nikita Khrushchev engaged in a heated debate over the topic of communism versus capitalism and the efficacy of their economic models. In an attempt to ease the tension, the head of Pepsi International, Donald Kendall, offered the Soviet leader a Pepsi, which he drank and enjoyed immensely.
Years after the show, the Soviet Union wanted to make a deal with Pepsi to ensure its products remained permanently in the country. However, since their currency was not accepted around the world, there was an issue of whether the Russian government would pay for the exchange. That's when the idea came: vodka.
Under the new agreement, the Soviet Union would replace Pepsi with vodka from its state brand Stolichnaya for resale in the United States. As a result, the Pepsi Soda Company was the first to obtain such an agreement between the United States and the Soviet Union during the Cold War.
Stolichnaya Vodka became popular immediately after entering the US market. In 1973, it sold about 30,000 units annually in the country, and by 1978 annual sales reached 200,000 units. By 1980, its sales had risen to 1 million a year, making it the second most popular vodka in America.
By the late 1980s, the Soviet Union's contract with Pepsi was about to expire. However, unlike in previous years, their vodka is not enough to satisfy the American company. This caused the American people to boycott Russian products, including vodka, due to the Soviet invasion of Afghanistan. Swedish vodka brand Absolut quickly overtook Stolichnaya in popularity.
The Soviets didn't want to lose Pepsi, so they chose a rather unusual trade with the Pepsi Soda Company. In exchange for its product, they would give Pepsi a fleet of ships, including 17 submarines, a frigate, a cruiser and a destroyer.
Three Soviet soldiers in uniform
Soviet troops in Afghanistan, 1979. (photo)
The country's Cold War budget had left its armed forces in excess of equipment, and the ships and submarines supplied to Pepsi were seriously in disrepair. All the submarines had serious rust problems, and only one was actually seaworthy. The majority also listed to one side.
The US government was not happy with Pepsi's deal with the Soviet Union and made its feelings known. In response to the upheaval, Kendall reminded the Pentagon that he had succeeded in reducing the number of Russians' fleets, memorably saying, "I'll dismantle the Soviet Union faster than you."
Donald Kendall laughs
Donald Kendall, 2006.
Eventually, Pepsi sold the ships for scrap to a Swedish recycling company, as the company wanted to recoup the cost of shipping its product to the USSR. For a time, however, it owned one of the world's largest navies, showing what can happen when a country's citizens truly love a consumer product.
