How Did a Soft Drinks Brand End Up Being Associated with the Military?
We all know that feeling of anticipation as we reach for a cool, blue can. As our fingers press down and the aluminum gives way to a frothy explosion on a liquid amber surface. Then pure satisfaction as the cold, sweet beverage slides across our tongue and down our throat, leaving the tingling bite of carbonation in its wake. Delicious. Refreshing. Power. Enjoyed by Americans since 1898, Pepsi, it turns out, is a favorite among the Russians as well. Find out just how badly Khrushchev wanted a sip in this article of The Infographics Show. How Pepsi Became the 6th largest Military in the World.
How Pepsi Became Coca-Cola’s Rival
While America of the 1800s was gulping down its Coke, pharmacist Caleb D. Bradham was watching. Hoping to create a similar beverage of his own, he made a sweet carbonated drink in 1898 which he coined Pepsi-Cola. It was met with great success, and by 1902 Pepsi-Cola Company, Incorporated was born. In the years that followed, it underwent several changes in ownership, a tweak to its formulation, and extensive advertising and promotion. By the 1950’s it had successfully become Coca-Cola’s rival. The company would later merge with Frito-lay, Incorporated in the ‘60s, acquire the Tropicana and Dole brands in the ‘90s, and merge with the Quaker Oats company two years later. Today, PepsiCo’s most successful brands include much more than Pepsi cola. It profits from Frito-Lay snacks, Lipton teas, Tropicana juices, Gatorade drinks, Quaker Oats cereals, and Rold Gold pretzels as well.
World’s Most Valuable Brands List Forbes 2018
A pharmacist from North Carolina’s dream from over a century ago has turned into a reality. His company with its humble beginnings has reached a level of success that he likely never believed possible. It even snagged a spot on the 2018 Forbes’ World’s Most Valuable Brands List. At number 29, Pepsi has an estimated worth of $18.4 billion. Pepsi, Diet Pepsi, and Pepsi Max alone each bring in over $1 billion in profits annually. Second only to Coca-Cola, Pepsi is among America’s top soda of choice. In Russia, Pepsi is second-to-none.
Pepsi Relationship with Russia
In fact, while the brand’s history is without a doubt impressive, it is its relationship with Russia that allowed it to achieve what no soda company had ever achieved before. For a time, Russia made Pepsi a top military power with an arsenal greater than that of most countries world-wide. But, just how did a soda company manage that?
It all started during the height of the Cold War when President Dwight Eisenhower and Soviet leader Nikita Khrushchev came to an agreement. The USSR wanted to open trade with the US and the US wanted to promote capitalism in the USSR, so they agreed on a form of cultural exchange. Each would design an exhibition highlighting the achievements of their country for display in the other’s. The Soviet exhibition portrayed its achievements in areas in which it was superior, namely in space, and it opened in New York City in June of 1959. America included examples from its own culture in which it was paving the way, such as with appliances of various sorts and soda. The “American National Exhibition” opened in Moscow in July of that same year and The United States sent Vice President Richard Nixon as its host. However, the Moscow-based event got off to a rather rocky start.
Khrushchev was unimpressed with color TV. In fact, he was unimpressed with most everything on display, claiming that Russia would have the same technology itself in a matter of years. Further, he took advantage of the opportunity to talk shop, commenting angrily on the US government’s resolution against his presence in Eastern Europe. And, if that wasn’t enough, he gave his opinion that Nixon only feared communism because he couldn’t understand it. Nixon had a ready response.
Pespsi became the first capitalist product to be sold in the U.S.S.R.
At some point as they argued, Khrushchev wiped his brow. This was when Donald Kendall saw his chance. The Pepsi representative gave Khrushchev a cool, refreshing drink. While the Soviet leader found the American exhibit lacking and the United States government meddlesome and uninformed, he could find no fault with the contents of his cup. And, just like that, Pepsi-Cola became the first capitalist product to be sold in the U.S.S.R.
Pepsi was not the only one to find opportunity that day; the press was handed a front-page story as well. Pictures of the two leaders as they argued beside a kitchen were soon published across America. The exchange itself was given the rather catchy and fitting title of “the kitchen debate.” Due to the publicity of the event, Nixon enjoyed benefits of his own. Photos with him thrusting a finger at Khrushchev were thought to demonstrate leadership and, some believe, helped him in his future bid for the presidency. But, between the soda company, the press, and the vice-president, Pepsi’s success following America’s exhibition in Moscow was inarguably the greatest and longest-lasting.
Now, the arrangement to sell Pepsi in Russia was not made without a few glitches here and there. Though the Russians wanted permanent access to the drink, there was the somewhat significant problem of its payment. Russian currency was not universally accepted, and so they needed to make an alternative arrangement. They turned to their other beverage of choice as a solution.
Pepsi in exchange for boats and submarines
The Russians gave PepsiCo the exclusive distribution rights for their Stolichnaya vodka. In turn, Pepsi became the only soda that could be legally sold to the Soviet population. This worked out well until the 1980s, when vodka was no longer high enough in value to cover the costs of the Soviet’s Pepsi. So, Russia proposed a different type of exchange and traded Pepsi some boats and submarines instead. Three billion dollars’ worth. For the price of 17 submarines and a cruiser, frigate, and destroyer, the Russian population could continue to enjoy its soda.
As for Pepsi, it had just become the sixth most powerful military world-wide. This is a distinction not shared by any other beverage-making companies either before or after this remarkable event as far as we are aware. However, as their specialty is drinks and snacks and not maintaining a maritime fleet, Pepsi eventually sold the lot for reuse of its materials. Mr. Kendall, who had made history that day by giving Khrushchev some happiness in a cup, later joked that his company was better at disarming the Soviet Union than our government.
Coca Cola Losing Further Ground in Russia
However, Coca-Cola was less than amused. Cut out of the Soviet market due to the exclusive agreement between Russia’s government and PepsiCo representatives, the competing brand was only allowed to sell its Fanta and Minute Maid products instead. They were far from the only ones upset about the arrangement. Other skeptics to the deal suggested that Pepsi purchases funded the manufacturing of Russian nuclear missiles. One could only hope that, if this were true, the joy the beverage gave both the Russian population and its leadership made it less likely that they would be tempted to use them.
Pepsi-Cola has come a long way since it was first made in 1898. What do you think the brand’s biggest accomplishment has been? Let us know in the comments!