Pepsi Cola Was the 6th Largest Military in the World
Many companies in the world diversify from their core products, which is why you see a beverage company venturing into the airline industry, but one company took “diversification” to the next level.
Enter Pepsi Cola.
At the height of the Cold War, Pepsi became an instrumental brand in the Soviets. It all started in 1959 when then-president Dwight Eisenhower attempted to show the Russians how nice it would be to become a capitalist nation, not a communist one.
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The U.S. arranged the "American National Exhibition" in Moscow to showcase the best American products to the Soviets. Then-Vice President Richard Nixon attended the exhibit, but instead of placating the Russians, things came to a head when a bitter argument about capitalism versus communism got the better of both parties.
Vice President Nixon, in an act of exasperation, offered his Russian counterpart and leader of the Soviet Union Nikita Khrushchev a bottle of Pepsi. Khrushchev took a sip of the ice-cold beverage and felt the overwhelming power of American capitalism tickle his palate.
Although it did not convince the Soviets to abandon their communist ideals, it was the catalyst for the opening of the floodgates to the Pepsi invasion of the Soviet Union.
Years later in the ’70s, Khrushchev’s brush with Pepsi’s explosive flavor and fizzling sensation reached the leaders of the Soviet Union, who became desperate to strike a deal to bring the product into their country.
Pepsi Bottles in the Kiev, Ukraine, Formerly a Member of the Soviet Union
But there was a problem. Soviet money was not recognized as legal tender around the world at the time. Nevertheless, the Soviets found a way to barter with Pepsi, so they agreed to exchange their vodka for bottles of Pepsi.
Although Russian vodka was a superior alcoholic beverage, it was not enough to pay for the bottles of Pepsi the Russians were yearning for.
So, in the ultimate deal, the Soviets agreed to pay for Pepsi drinks in 1989 by exchanging part of their naval fleet.
The Russians gave Pepsi 17 submarines, one frigate, one cruiser, and one destroyer for three billion dollars’ worth of Pepsi! This effectively made Pepsi the sixth largest military in the world.
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The exchange became so legendary, that Pepsi’s head joked to the U.S. National Security adviser, “We’re disarming the Soviets faster than you are!”
Pepsi eventually sold all their military assets for parts, ending their stint as the world’s sixth-largest military. To this day, Pepsi dominates the Russian market.
Pepsi’s unbelievable deal with the Soviets is a textbook example of how countries and their corporations can use soft power to their advantage in international relations.