A Toast in Moscow
In July 1959, at the American National Exhibition in Moscow, U.S. Vice President Richard Nixon handed a cup of Pepsi to Soviet Premier Nikita Khrushchev.
The gesture, captured in a now-famous photo, marked the beginning of a decades-long relationship between Pepsi and the USSR. Behind the scenes, Pepsi executive Donald M. Kendall had orchestrated the encounter to introduce the soda to a market few American brands had ever reached.
From Soda to Submarines
Kendall’s gambit paid off. By 1972, Pepsi became the first U.S. consumer product to enter the Soviet market, locking out Coca-Cola until 1985. Since rubles couldn’t be converted internationally, Pepsi accepted Stolichnaya vodka in exchange for syrup concentrate.
This barter system worked for years, but in 1989, with vodka sales hindered by a U.S. boycott over the Soviet invasion of Afghanistan, Pepsi wanted something else: ships. That year, Pepsi received 17 submarines and 3 decommissioned warships—a cruiser, a destroyer, and a frigate—which it sold for scrap. The company also acquired oil tankers, which it leased through a Norwegian partner.
The $3 Billion Soda Deal
In April 1990, Pepsi and the USSR struck a ten-year deal valued at $3 billion. It allowed Pepsi to expand its bottling operations and launch Pizza Hut in the Soviet Union.
The agreement was the largest of its kind between an American corporation and the Soviet state. At its peak, Russians consumed a billion servings of Pepsi annually. The deal’s value came from projected sales of Pepsi in the USSR and Stolichnaya in the U.S., with products exchanged through long-term barter.
Collapse and Competition
When the Soviet Union dissolved in 1991, Pepsi’s agreement fell apart. With 15 new republics, inflation, and privatization, the company had to renegotiate with multiple governments. Its supply chains crumbled—cheese for Pizza Hut came from Lithuania, plastic bottles from Belarus.
Partially built ships were trapped in Ukrainian shipyards. Coca-Cola, entering the region in full force, soon overtook Pepsi in popularity. Though Pepsi had pioneered the market, it lost its edge. The brand’s influence waned, and by 2013 its iconic billboards were removed from Moscow’s Pushkin Square. What began with a Cold War photo op had, for a brief time, made Pepsi the owner of warships and a key player in U.S.-Soviet trade.
In 1959, a Pepsi executive put a soda in Soviet Premier Khrushchev’s hand during a Cold War expo.
It wasn’t just a publicity stunt—it sparked a decades-long deal that led to Pepsi trading cola for vodka, submarines, and warships, briefly making it a naval power…🧵👇 pic.twitter.com/w6SpBomXLn
— Detective Tiger's Stories (@TigerDetective) June 4, 2025