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How Pepsi Became a Global Military Power
How an American company acquired a world-renowned navy
The 80s was a period of global uncertainty. With the change in leadership of the second biggest military power in the world, the wind of change started to blow over the world. With this came some radical changes to the once completely isolated Soviet Union as its new leader Gorbachev opened up its borders to a free flow of information through a program he called “Перестройка” also known as Perestroika which translates to “openness”. As a result came an influx of western ideas and businesses to the country most notably Pizza Hut, for which Gorbachev did an advert for. Before this history-changing event, most western businesses weren’t allowed behind the Iron Curtain, with the exception of Pepsi which was started with the introduction of Pepsi to Khrushchev in 1959 at the New York exhibition.
Due to this introduction to the Soviet people to cola syrup, it resulted in the creation of a very large market in the states beyond the Iron Curtain. As a result, several years later, in 1972 Pepsi Co. signed a contract with the Soviet Union locking its prime competitor Coca Cola from importing their own product into any Warsaw pact states, therefore securing multiple country-wide monopolies for Pepsi to exploit. They set up multiple factories where their imported syrup could be combined with local water and gas to create Pepsi. This process had to be refined as many said that the first Pepsi’s to come out of the factories “tasted like shoe polish”.
This became a problem when it came to importing the syrup as the Soviet ruble was next to worthless outside of its borders, as well as the USSR government forbidding the extraction of the currency out of the country. To solve this issue the Soviet government and Pepsi Co. reached a bartering deal. For every bottle of cola syrup that Pepsi would send the USSR, an equal amount of Russian vodka had to be returned. This barter worked very well throughout the 70s due to the Russian Stolichnaya vodka being received well among the US market.
