This is the second part from the previous post. If you haven’t seen it yet, I suggest you go and read it here.
If for some reason you can not be persuaded to go and read it, here’s a quick recap Top Gear / Grand Tour Style
In the previous episode
Khrushchev drinks a Pepsi…
Nixon becomes president…
Tom Hanks orders a Stoli…
Back to the 1970s and 1980s
Pepsi Cola enjoyed a long lasting popularity in the USSR, and it was one of the very, very, very few “openings” towards the West and Western culture allowed by the then Party Secretary Brezhnev. Pepsi was, in fact even able to “outlive” Brezhnev (in spite of his 28 year tenure as leader of the Soviet Union), his successor (and former KGB director) Andropov , his successor Chernenko and even thrive during the following years of Gorbachev‘s Perestroika, when even McDonalds arrived in Moscow.
Too successful, too unsuccessful
In 1989, the commercial agreement between the Pepsi Corporation and the USSR is about to expire and negotiations to sign a new one begin. Two opposing factors make it rather complicated. Pepsi in the USSR has been hugely successful, with over 20 factories in the country needed for bottling and distributing its cola. Gorbachev’s economic policies, on the other hand, have been a disaster and the whole USSR is broke and on the verge of collapse (it will outlive the 1989 agreement with Pepsi by just over a year).
The new trade contract was worth a whopping 3 Billion USD (yes, Billion, with a “B”, as in three thousand million dollars!) and it was obvious that the amount couldn’t be all payed in vodka this time. Besides, Russia at the time suffered from severe shortages of pretty much anything, and that included vodka itself, which was not any longer produced in the quantities of 20 years earlier. Russian people, who as a rule are not big fans of Gorbachev sometimes argue that the shortage of vodka was due to the incalculable amount of the liquid that Gorbachev himself drank…
The Soviet Union was not about to give up it syrupy drink from the West and again it found a solution against all odds.
A tale of two wars
The Russian knew two key facts:
- The Cold War was over. And it had left them as an inheritance an insubordinate amount of outdated and expensive to maintain military equipment
- The Cola Wars were still raging hot and Pepsi could not, in any way, let go of such a huge market and consequent global market share
So the USSR offers to pay for the new contract with a fleet (non nuclear) warships and submarines and Pepsi accepts the deal as it understands that it’s the only way to continue to sell their product in the USSR.
It turns out that in 1989’s money 3 Billion Dollars is equivalent to:
– 17 submarines
– 1 Cruiser
– 1 Frigate
– 1 Destroyer
Instead of roaming the seas and sinking Coca-Cola ships, Pepsi soon sold all its “military assets” to a Swedish company for scrap recycling. But for a brief period the Pepsi Corporation owned the sixth most powerful navy in the world, especially thanks to the 17 diesel-electric submarines.
Don Kendall, still the President of the company at the time, apparently remarked to the US National Security Advisor that “We [Pepsi] are disarming the USSR faster than you“.
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