Cola Commodore: The Unbelievable Tale of Pepsi’s Fleet and the Soviet Naval Exchange

Are You More Pepsi or Coca-Cola?

This question is meant to anger your attention while also delving into Cold War history.

And yeah, we are going to discuss Pepsi, so please allow me to ask you a serious question:

Did you know that roughly 35 years ago, Pepsi possessed the world’s sixth largest naval fleet? Pepsi had enough weapons at that point in history to wage war on anyone who dared to oppose it.

But first, let us go in order.

How it all started

In 1959, then-US President Dwight Eisenhower decided to send a group of American cultural icons to the Soviet Union as part of a charity tour, i.e. the US and the USSR agreed to stage cultural exhibitions in their respective countries to highlight their respective lifestyles and achievements.

Among them was Donald Kendall, vice president of Pepsi, who had a bright idea: why not introduce the Soviets to the sweet taste of capitalism by offering them free Pepsi samples?

The American exhibition in Moscow included a model American house in which Vice President Richard Nixon and Soviet leader Nikita Khrushchev engaged in a heated dispute over capitalism and communism known as the “kitchen debate.”

They were comparing the advantages of communism and capitalism while analysing the latest technologies and consumer products for the American people. A Pepsi vending machine was one of the exhibition’s highlights.

It was a hot July day, and the talk was tight because everyone was thirsty.

The Pepsi vending machine was one of the show’s highlights, and Donald M. Kendall, the company’s vice president of marketing at the time, provided refreshments in the form of a glass of Pepsi.

The photo that Kendall took of Khrushchev sipping Pepsi went viral in the US media and became the most successful Pepsi campaign ever.

The Soviet premier reportedly said, “This is very refreshing,” and loved it so much that he asked for another.

Since this was the first time a Soviet leader had ever sampled an American product in public, it was a historic occasion.

How Pepsi was introduced to the Soviet Union

The Soviet market was mostly blocked to Western products; therefore, Pepsi took advantage of this chance to penetrate it.

In 1972, Pepsi made history as the first foreign consumer product to be sold in the USSR, following years of negotiations.

But there was a catch: Pepsi was unable to accept Soviet rubbles as payment since they were worthless outside of the USSR and could not be exchanged for other currencies.

Pepsi struck a deal with the Soviet Union to resolve this matter: in exchange for rubbles, Pepsi would obtain Stolichnayaya vodka, which it would thereafter market in the US and other nations.

Both sides benefited from this agreement, which allowed Pepsi to increase sales in the Soviet Union and gave Stolichnayaya access to new markets.

Significant 1989 events

But by 1989, circumstances had altered. Once the USSR invaded Afghanistan, the US placed sanctions on Soviet goods, including vodka.

As a result, Pepsi was unable to continue selling Stolichnaya in its primary market.

Pepsi needed to renegotiate the terms of its deal with the USSR since it was about to expire.

Donald Kendall, the CEO of Pepsi at the time, came to Moscow to meet with Soviet officials. Kendall had personally mediated the agreement with Khrushchev thirty years before.

The Soviets were unwilling to give him the hard currency he demanded—$3 billion for his syrup.

Rather, they put out a novel suggestion: they would provide Pepsi with a fleet of navy ships that they could not afford to maintain or needed.

Pepsi ruled by waves

After accepting this offer, Kendall went on to acquire 17 destroyers, cruisers, frigates, and submarines.

This surpassed the fleets of nations like Australia and Spain to make Pepsi’s the sixth largest in the world at the time, according to some estimates.

Naturally, Pepsi has no plans to maintain or use these vessels. With a rapid $3 million profit, he sold them to a Swedish scrap metal company.

After that, Kendall made a joke about having “Disarmed the USSR faster than Reagan.”

Brutal truth

Although the tale of Pepsi’s military takeover is intriguing, it is untrue to state that the soft drink giant became a naval powerhouse because of the agreement.

When Pepsi purchased the decommissioned Soviet warships, they were not equipped for combat. They were in different states and had retired from active duty.

Pepsi had more expertise selling snacks and soft drinks than planning military operations, therefore it was obvious that the business could not deploy the ships for military purposes.

Even though this historical occurrence is funny, it’s vital to remember that selling surplus military hardware is not unusual.

These devices have been bought by numerous nations for a variety of uses, such as film projects or museum exhibits.

What the end of the Cold War signifies for us

Although Pepsi’s seafaring journey was brief, it had a significant historical impact.

It demonstrated how a soft drink manufacturer can participate in global politics and diplomacy as well as how trade can unite people despite ideological divides and foster mutual gain.

He also demonstrated how unusual problems can be solved creatively to overcome obstacles that appear insurmountable.

One of the odder incidents of the Cold War was Pepsi’s acquisition of the Navy, but it also represented the realities and events of the time.

According to Kendall, “We disarm them financially.”

They were disarming—of metals that were not needed.

This post was written by Mario Bekes