The Russian economy has already collapsed (and they sold 20 warships to Pepsi)


The Russian economy has already experienced difficult times. And they did crazy things to survive: Just before the fall of the Soviet Union, the communist state was so desperate for Pepsi that it sold the American beverage company about 20 warships for a shipment of their sweet elixir; making the Pepsi Navy the sixth largest in the world at the time.

Ukraine called out Pepsi and fellow soft drink maker Coca Cola on Twitter on Friday, saying Coke had chosen to side with it. wrong choosing to continue distribution in Russia after its invasion of Ukraine which began last week. It is unclear whether or not Ukraine knows that the Soviet Union once equipped Pepsi with its own fleet.

It’s unclear whether Pepsi will heed Ukraine’s wishes and join the growing list of nations and corporations imposing economic and trade sanctions on Russia, its president and other top oligarchs. . But as Pepsi ponders its future with the increasingly isolated Russian state, let’s take a look back at how Pepsi and the Soviet Union handled their affairs the last time the Russian economy was in similar dire straits.

The Pepsi Navy

In 1959, just two years after the first intercontinental ballistic missile (ICBM) test forced the United States and the Soviet Union to reassess their approach to nuclear deterrence, then-Vice President Richard Nixon and Soviet Premier Nikita Khrushchev both attended the American National Exhibition in Moscow. Sokolniki Park. As the two exchanged remarks on the efficiency of each country’s respective business model, Pepsi International head Donald Kendall decided to break the ice with a few small cups of their namesake soda.

Luckily, the Soviet Prime Minister was immediately taken with the sweet carbonated drink and a deal was struck for the Soviets to start receiving shipments of the drink. Pepsi had secured the first such deal between an American capitalist corporation and the communist Soviet Union…but there was a serious problem. Soviet money was effectively useless outside the nation’s borders.

But while the Soviets might be short on hard currency, they had something else to trade: vodka. Pepsi and Khrushchev therefore struck a deal: Pepsi would provide shipments of soft drinks and, in return, the Soviet Union would provide vodka of its public brand Stolichnaya, for resale in the United States.

For just under a decade, the agreement between the Soviet Union and Pepsi stood no problem, but in 1980, geopolitics ruined the situation. The Soviet Union had invaded Afghanistan, and the American people responded by boycotting Soviet-made products, including the Stolichnaya vodka that Pepsi got in exchange for their soda. Within a few years, Stolichnaya’s sales had dropped enough that Pepsi no longer considered the deal worthwhile.

But the of the Soviet Union the love for second-tier American cola was too strong to let the deal expire, and Soviet officials began looking for other ways to reimburse Pepsi for the soda shipments. In 1989, they had a solution. In exchange for soft drinks from Pepsi, the Soviets offered them a real Navy. Pepsi agreed to the deal, taking possession of a Soviet cruiser, a frigate, a destroyer, 17 submarines and a handful of tankers – instantly making the drinks machine the owner of the sixth-plus. world’s largest navy.

But despite this significant bragging point, the new Pepsi Navy was far from combat-ready. The submarine fleet was in a terrible state of disrepair, with many listings on one side and nearly all showing signs of severe rust. The surface ships of Pepsi’s new navy weren’t in much better condition, with perhaps only one truly seaworthy and at least one more needing constant pumping to keep it afloat.

Nevertheless, the United States government was not particularly happy seeing a corporation suddenly command enough naval firepower to take on entire nations. Pepsi CEO Donald Kendall, who first introduced Khrushchev to the drink, responded to America’s complaints with all the aplomb one would expect from Pepsi’s Navy admiral, reminding the Pentagon that he had just succeeded in drastically reducing the number of ships available to the Soviets.

“I dismantle the Soviet Union faster than you.”

-Donald Kendall (CEO of PepsiCo)

Of course, his comment may also have something to do with the love of the Soviet people for their capitalist product. A number of things ultimately led to the downfall of the Soviet Unionincluding Ronald Reagan’s efforts to obliterate the communist regime and later Mikhail Gorbachev’s “Glasnost” policy for more open government…but it’s hard to argue the effect that products like Pepsi have had on the Soviet population.

Shortly after taking possession of the Pepsi Navy, the soda brand sold the twenty warships to a Swedish scrap metal recycling company to recoup the cost of their Pepsi shipment.

Alex Hollings is a writer, father, and Navy veteran specializing in foreign policy and defense technology analysis. He holds a master’s degree in communications from Southern New Hampshire University, as well as a bachelor’s degree in corporate and organizational communications from Framingham State University. This first appeared in Sandboxx news.


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