New Bern, NC

Pepsi for Vodka and Warships: How an American Company did Business with the Soviet Union

Jax Hudur

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When Caleb Bradham, a university dropout, opened a drug store in North Carolina’s New Bern, little did he know that his Pepsi recipe would lead to founding a company that became an international icon and for a brief moment, a global military power.

Pepsi, a leading company and a favorite soft drink for many around the world, was originally called Brad’s Drink when Caleb Bradham first sold it in his drug store in New Bern. However, the company was renamed Pepsi Cola in1898 to advertise the soft drink as the cure for indigestion or dyspepsia as it was then commonly known. Nonetheless, the success of expanding and the global politics of the time came with their challenges as the Pepsi Cola company declared bankruptcy in 1923 because of high sugar costs caused by World War I.

Although Caleb Bradham returned to his drug store after selling Pepsi Cola for $30,000, the company made a successful comeback, partly due to taking advantage of the great recession and intense marketing campaign. Pepsi Cola had once again gone through a name change, and in 1961, the company's name was shortened to Pepsi.

During the cold war, after a heated exchange (famously known as the kitchen debate) between the leader of the Soviet Union, Nikita Khrushchev, and the US Vice President Richard Nixon in 1959 at the opening of the American National Exhibition at Sokolniki Park in Moscow, the two men retired to a Pepsi refreshment booth where the two leaders enjoyed the soft drink.

Nixon vs. Khrushchev - The Kitchen Debate (1959)

Naturally, the communist leader immediately enjoyed Pepsi, and in 1972, Pepsi struck a barter agreement deal with the Soviet Union. This deal made Pepsi the first foreign product licensed for sale in the Soviet Union. However, the barter trade meant the Soviets would receive their Pepsi, and in return, they would trade the Pepsi with Vodka.

While the first trade agreement between the Communists and the Capitalists was Pepsi for Vodka, as amusing as the notion was, what followed was even more bizarre.

In the 1980s, the Soviet economy was in bad shape as the Soviets were fighting their version of America’s Vietnam war in Afghanistan, and Vodka was not enough to cover the cost. As a result, the Soviets came up with an ingenious plan; they would exchange military hardware costing billions of dollars for Pepsi.

The new arrangement gave Pepsi 17 submarines, a destroyer, a frigate, and a cruiser. The new deal catapulted the company to a global military ranking that made Pepsi the 6th most significant military power globally.

While Pepsi later sold the naval fleet to Sweden for scrap recycling, for a moment, Pepsi was the only company in the world to ever hold such a global military position.

From Caleb’s drugstore to an international icon and briefly, a global military power, Pepsi’s history is a reflection of America’s entrepreneurship spirit. It’s a journey that best defines the essence of the American dream.

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I write about history, politics and true crime. Not to mention anything else that takes my fancy or newsworthy. "No special talents. Only passionately curious." Albert Einstein

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