Did you know that Pepsi had the Sixth-Largest Navy in 1989: Here's What Happened
We've all heard how barter was formerly used in place of money. However, this antiquated method of exchange has even been utilized to make a bargain in our contemporary world. Take, for example, the case of Pepsi and the Soviet Union.
The Story
So, Pepsi had been attempting to set up shop in the USSR for decades. Finally, in 1971, after years of negotiations between Pepsi executive Don Kendall and Soviet authorities, the company was able to strike a deal to sell Pepsi in the country. As a result, Pepsico became the first major US business to enter the Soviet market.
However, there was a catch. The Soviet Union would only allow Pepsi in if the company took payment for their inventory in Soviet currency. That would have been akin to giving it away. The currency was not usable in the West and no one in NATO would take their communist cash. Instead, they needed goods they could turn around and resell for dollars.
Today, oil, gold, and grains are often good commodities to hold value. But instead of acquiring any of those usual goods Pepsi instead agreed to take an actual military navy. The Soviet Union offered Pepsi seventeen attack submarines, a cruiser, a destroyer, and a frigate in return for the promised delivery.
Pepsi understandably balked at this unusual offer but Kendall decided to take a risk that would pay off big. He agreed to the deal, on one condition: he insisted that Soviet ships arriving in US ports during annual world's fairs must be allowed to display Pepsi logos.
The Result
Coca-Cola did not have a navy. It was quite clear to me that this was intended as a power move by Pepsi. Soon, Pepsi-flagged submarines patrolled off the coast of Georgia, frightening Coca-Cola fans everywhere. Right?
Not exactly. The submarines, on the other hand, were not capable of being seaworthy. They weren't armed and they certainly weren't crewed. The subs were just floating pieces of scrap.
After the transaction, Pepsi temporarily had the world's sixth-largest military, which they then sold for scrap. Pepsi still sells most of its beverages in Russia, accounting for 22% of the market.
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Executive Coach for University IT Divisions | Developing Good Leaders and Their Teams into P.E.A.K. Champions & Influencers Within the Organization | Speaker | Author | Leadership Development
3 年I really liked the story. A morality tale about risk big-win big and about success through innovative, novel ways to secure a positive outcome.
DER BUNTE VOGEL ?? Internationaler Wissenstransfer - Influencerin bei Corporate Influencer Club | Wirtschaftswissenschaften Universit?t Münster
3 年Thank you Tausif Mulla - welcome ??
University Ranking Wizard, Associate Professor, International Business and Finance, Six Sigma Green Belt, Certified PMP?
3 年Astonishing fact! Beside Oil, grains, technology, arms is normal as form of bartar system in contemporary world but the way Pepsi accept the deal its really daring... hope to see more astonishing articles and info in future too.. Best wishes and good luck Tausif?