Pepsi Owned Soviet Attack Submarines | Why PepsiCo Won't Boycott Russia

Man those “Cola Wars” with Coca-Cola in the late-1970s into the early-1980s must have really made Pepsi angry because did you know they went out and made a deal with the former Soviet Union to acquire a whole bunch of naval ships including attack submarines? The story starts with the Soviet Union getting a taste of Pepsi during the 1959 American National Exhibition in Moscow. More than a decade later, now President Nixon sent a Department of Commerce commission to the Soviet Union to encourage trade between the two Cold War rivals. On the trip was Pepsi CEO Donald Kendall, who was then the head of Pepsi international relations back in 1959 and had arranged for his good friend Nixon to give Khrushchev the Pepsi taste-test. This time Kendall nailed down what would become a hugely lucrative deal for Pepsi, with the two countries signing a countertrade agreement that brought Stoli vodka to the U.S. market. When the original trade agreement became close to expiring in 1989, PepsiCo wanted more cash to offset the countertrade agreement. With its faltering economy, the USSR did not have many consumer products that it could successfully sell to the West. But one thing it did have, thanks to its bloated Cold War military budget, was a lot of surplus equipment for its armed forces. And so, in what must be one of the oddest commercial agreements ever signed, then Soviet leader Mikhail Gorbachev agreed to new $3 billion deal that saw PepsiCo take ownership of…17 Soviet Navy attack submarines, 3 warships, and a handful of other ships. Under the new agreement, PepsiCo retained exclusive rights to Stoli, as well as Cristall, and another Vodka brand. PepsiCo would double their bottling plants and use sale credits to bring Pizza Hut to Moscow. However, the “deal of the century” (which it was dubbed collapsed when the Soviet Union broke apart in December 1991. 

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