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odoo.com/this day. That's

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odoo.com/this day. Hello

0:37

and welcome to this day in esoteric

0:39

political history from Radiotopia. My name is

0:41

Jody Avergate. This

0:44

day, early May 1989, a New

0:47

York Times story runs that points out

0:49

that as the Cold War is thawing,

0:51

more and more American companies are doing

0:53

business in Russia, sending their products behind

0:55

the Iron Curtain. And one company is

0:58

Pepsi, which had actually done that for

1:00

a long time. There's a long history

1:02

of Pepsi showing up in Russia, going

1:04

back decades. And over the years, they'd

1:06

accepted a bunch of things in exchange

1:08

for those soft drinks, not just cash,

1:10

but also vodka and pizza sauce. And

1:13

according to this New York Times article, in

1:15

exchange for this most recent shipment

1:17

of Pepsi, the company was given

1:19

17 submarines, a cruiser, a

1:22

frigate, and a destroyer. That is

1:24

right, a naval fleet for a

1:26

sugary drink, a classic swap. So

1:28

let's talk about the time Pepsi

1:31

got its hands on some leftover

1:33

Russian naval weaponry. Here

1:36

as always, Nicole Hammer of Vanderbilt and Kelly

1:38

Carter Jackson of Wellesley. Hello there. Hello,

1:41

Jody. Hey there. You Pepsi

1:43

folks, you Coca-Cola folks, you RC Cola

1:45

folks, where do you come down? Oh,

1:49

Coke all the way. I come down

1:51

hard on Coke Zero. Not Coke Zero, no! Oh

1:54

yeah, I've moved away from Diet Coke. into

2:00

the Coke Zero realm and so

2:02

we were have never been a

2:04

Pepsi household but I didn't know

2:06

that the exchange rate for Pepsi

2:08

was so high and exotic maybe it's

2:11

worth doing a switch yeah I know I used

2:13

to be a Pepsi fan and then I switched

2:16

to Coke and I can't go back and now when

2:18

I go to restaurants and like sorry although we have a

2:20

Pepsi product I'm like I'll take

2:22

water Wow I'm right there

2:24

with you Kelly well listeners that is how you all know

2:27

that none of us grew up behind the iron curtain because

2:29

otherwise it is true

2:31

that Pepsi has this long history maybe let's

2:33

start there before we get to the naval

2:35

swap but Pepsi has this long history in

2:38

the USSR going back you know all

2:40

the way into the 60s it seems

2:42

like I find this to be kind

2:45

of surprising because it's contra the story

2:47

I think we're often told that the

2:49

Soviet Union is wrapped in this iron

2:51

curtain and they had no no choice

2:54

in consumption they had real really no

2:56

consumer culture but as

2:58

part of the kind of

3:01

thought in US-Soviet relations in the late

3:03

1960s the importation

3:05

of US products became part

3:08

of what it meant to

3:10

set up formal relations with

3:12

Russia it wasn't just you

3:14

know diplomatic relations it

3:17

wasn't just talks about nuclear weapons but

3:19

it was also introducing US businesses

3:21

into the Soviet Union and the

3:23

Nixon administration apparently they were big

3:26

Pepsi fans because they were helping

3:28

out behind the scenes to get

3:30

Pepsi behind the iron curtain yeah

3:32

I mean to me this seems sort of

3:34

like I mean we did an

3:36

episode of when we talk about McDonald's yeah Russia

3:39

yeah I feel like we did that

3:41

not too long ago but when I think

3:43

about sort of like how a lot

3:45

of these relationships saw it's so interesting

3:47

to me that it's the commodities it's

3:49

these like either music

3:52

or a sport or some

3:54

sort of product that becomes

3:57

like this gateway drug into

3:59

allowing other ideas

4:01

and influences to sort

4:03

of take over. But no

4:06

one would think a drink would do

4:08

that. And yet somehow these things have

4:10

ways of being quite pervasive and sort

4:13

of spreading to other things. And not

4:15

to take us too far down this road, but

4:17

it is sort of like this is the opposite

4:19

of a boycott in a way. I

4:22

was thinking about this because

4:24

Coca-Cola plays a big role

4:26

in the anti-apartheid boycotts in

4:28

South Africa. It's a big

4:30

move when the Coca-Cola Company

4:32

starts to make demands on

4:34

South Africa. And

4:37

there were also all these boycotts around Soviet products

4:39

in the 1950s and 1960s. And

4:42

so here you're seeing kind of the

4:45

carrot to the stick, I think. Yeah.

4:48

I mean, you know, it is worth highlighting how kind

4:50

of there's ebbs and

4:52

flows to the relationship between consumer

4:54

products and business and these geopolitical

4:56

ties. And certainly, yes, in the

4:58

late 80s, those become very married.

5:01

And that's actually an amazing Pepsi

5:03

commercial that ran here in the

5:05

United States. Oh, yes. We'll

5:07

play a clip of it at the end of

5:09

the show, but it basically is like saying young

5:11

people in Russia are drinking Pepsi and their parents

5:14

are upset about it and a new change is

5:16

on the way and, you know, the

5:18

world is changing because of our product. I

5:21

would say, you know, 10, 15, 20

5:23

years earlier when Pepsi was also in the

5:25

Soviet Union, it was a little bit more

5:27

like there will always be businessmen in any

5:30

free country who just want to find a

5:32

way to make some money, you know. And

5:34

I think like that's a big

5:37

part of the story both on the Russian side and

5:39

on the US side that, you know, Pepsi is just

5:41

very aggressive about going into a new market. The

5:44

head of Pepsi is this guy Donald

5:46

Kendall in the 60s and 70s. And

5:49

Kissinger is quoted as saying, look at

5:51

Kendall of Pepsi-Cola. He would sell the country for

5:54

a contract, you know. And so he's just ruthless.

5:57

He's a market. But also, I think there's

5:59

this sort of... of dance that

6:01

the US has to play where they realize

6:03

they're like, okay, I don't know how we

6:05

feel about this hyper-capitalist going in there and

6:08

just exploiting this market behind the iron curtain.

6:11

But it may not be the worst thing in the

6:13

world that Russian consumers are becoming exposed to American goods.

6:15

And so I think there is just this always

6:17

swirling, sliding scale of tension. And

6:20

then it coalesces into the late,

6:23

as we said, into the late 80s

6:25

as a real wedge. I mean, it's

6:27

like Pepsi, McDonald's, and Blue Jeans, and

6:29

basketball, you know? Like they really kind

6:31

of start to change things. But Pepsi

6:33

in the 70s is the first American

6:35

consumer product manufactured and sold in the

6:37

Soviet Union. And Pepsi has

6:39

plants, 16 bottling plants in the 80s in

6:42

the USSR. That is both

6:44

surprising given the narratives back in the

6:46

US about the Soviet Union. I

6:48

think it's also worth probing a little

6:50

bit more into what this economic

6:53

relationship looked like because there are some

6:55

signs that this is not, you

6:57

know, Pepsi opening a factory in

6:59

the United States or Pepsi opening a

7:01

factory in France. In this case, the

7:03

ruble is not considered

7:06

the most stable of currencies. And

7:08

so Pepsi is getting paid for

7:11

its product, but it's not getting

7:13

paid in currency. It

7:15

is getting paid on sort of

7:17

the trade and goods. And

7:19

this is how we start to get to the story

7:21

of the frigates. It's military equipment. Because

7:24

for so long, Pepsi wasn't being paid in

7:27

cash. It was being paid in Stolachernalia Vodka.

7:30

And so they're like taking all this

7:33

vodka back to the United States and

7:35

selling that as this like authentically Soviet

7:37

product. They're being paid in

7:39

all of these different kinds of goods. And

7:41

by the late 1980s, you know,

7:45

vodka is less the product of choice.

7:48

And this military that the

7:50

Soviet Union is beginning to dismantle becomes

7:53

a source of new

7:56

soda funds. Interested

8:02

in the forces shaping our world? The

8:04

Council on Foreign Relations has you covered.

8:06

For those who like to look ahead,

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8:14

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8:16

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8:23

those who want to go beyond the headlines,

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8:32

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8:34

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8:36

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8:38

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8:52

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8:54

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8:57

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8:59

Who sees you? This is what kills me.

9:07

Like,

9:09

how do you go from Pepsi

9:11

for vodka to, like, you want

9:14

a submarine? It

9:17

doesn't translate, but in some ways you

9:19

see how Pepsi plays a

9:21

role in, I don't know if

9:23

you could call it the demilitarization of

9:26

Russia, because obviously they still have,

9:28

you know, weapons of warfare.

9:30

But the way in which Pepsi

9:33

is sort of taking advantage of this

9:35

opportunity to say, listen, we are getting,

9:37

like, real machinery or technology. Now it's

9:39

all used for scrap metal. I mean,

9:41

literally these, like... Oh, you mean they

9:43

don't retrofit the guns to shoot Pepsi?

9:46

Yes! The Pepsi Army. Yeah.

9:49

No, there's no Pepsi Army. But

9:53

I think it's an interesting way of thinking

9:55

about, hmm, this is what we want to

9:57

exchange or trade, and is the

9:59

government... Like. That that to me

10:01

as others on the that just. Feel sort

10:03

of like awkward. While

10:05

that the Soviet government as part of in

10:08

the Us government, I think part that there's

10:10

probably a conversation somewhere about what kinds of

10:12

products they're getting. See, by the way, we

10:14

just picked up the sub the subtlest as

10:17

was because picking up those subs med at

10:19

one point Pepsi had the seventh largest. an

10:21

easy in the world and let's see cola.

10:24

Multinational corporations thesis. It's probably more serve

10:27

sign than a symbol of something done.

10:29

Anything bad Russia has now come down

10:31

to like oh gosh, what is the

10:33

valuable thing that we have Last Voice

10:36

Land You know these these missions ships

10:38

as of be sold for scrap metal

10:40

vs. I don't think of some necessarily.

10:43

Exactly. Weakening.

10:45

The Soviets in our defense capabilities. but

10:47

it is a symbol of a weekend.

10:50

So the and for sure. If

10:52

it's and pretty well with that commercial are going

10:54

to play at the end of which is either

10:56

Pepsi his motto during the Nineteen eighties Us, the

10:58

choice of a new generation and then and there's

11:00

this generational change coming to the Soviet Union. Soviet

11:02

Union is about to collapse. But. Also

11:05

it that Pepsi as part of

11:07

that process of creating the old

11:09

military equipment for new consumer goods

11:11

get out of symbolism of that

11:14

is. For it at a powerful now

11:16

it is it is. So I just want

11:18

to go through the list of other things

11:20

that have imported over the years. Has is

11:22

really interesting. So yeah I'm in. The basic

11:25

idea here is that the basic couldn't pull

11:27

off a normal trade which is where you

11:29

would get sort of funds for your goods

11:31

and so there was always as barter. So

11:34

yes there was so cliche but there was

11:36

Vod Girth for Pepsi. Trade him in mistakes

11:38

chassis be t waiting that figure out. Of

11:41

it was a bargain for Pepsi traits. supposedly

11:43

Pepsi also. Bartered goods for tomato paste

11:46

which is then used. A European Pizza

11:48

Huts And so there's a nice little

11:50

sort of vertical integration into our duster.

11:52

and I'm it's Cold War. At

11:55

the Pepsi Co. company wasn't the only one

11:58

doing this, so apparently. the Supergroup,

12:01

Swedish supergroup ABBA, which is very

12:03

popular in the Soviet Union, when

12:05

it earned royalties, it did not get paid

12:07

in cash, but it actually got paid in

12:10

fruits and vegetables and crude oil, which it

12:12

then turned around and sold on the global

12:14

market. And so I just love that someone

12:16

on ABBA's management team had to watch the

12:18

crude oil markets in order to sell the

12:20

barrels that were coming their way because their

12:22

songs were so popular. Wild. The

12:24

Iron Curtain. Yeah. They're waiting

12:26

for another embargo so they can really, really make bank. And

12:30

it's worth saying that these kinds of trades still

12:32

happen. I mean, people trade goods

12:34

for goods. Iran trades oil for Indian rice. You know

12:36

what I mean? It's not like,

12:38

but I don't know of any that are kind of this random

12:42

seeming. Yeah. Yeah, yeah,

12:45

yeah. And I do

12:47

think that the Iran oil for

12:49

Indian rice is two

12:51

states in trade

12:53

with one another, essentially. Yes,

12:56

yes. And not a corporation. It makes

12:58

it special that it's Pepsi that is

13:01

bringing in all of these former Soviet

13:04

military equipment. Yeah. There's

13:06

an interesting thing that happens into 1989 and into 1990

13:08

with this. So

13:11

first off, this guy, Donald Kendall, same guy.

13:13

I mean, 60s, 70s, 80s into the 90s

13:15

is still the one running Pepsi. He seems

13:17

to really be the

13:20

engine behind all of this and super aggressive

13:22

about this market. Funnily enough,

13:24

I think there's some anxiety when the Iron

13:27

Curtain falls that Pepsi has lost

13:29

the market that it has been super exclusive in,

13:31

you know? And it's sort of counterintuitive, but from

13:33

a purely kind of bottom line perspective, I don't

13:35

know how good Pepsi feels about the US, quote

13:37

unquote, winning the Cold War. Yeah.

13:39

I think that is a fair concern,

13:42

especially because the Soviet Union may be

13:44

falling apart and opening its markets, but

13:47

the biggest competitor of Pepsi, Coca-Cola, still has

13:49

a corner on the market in China. Yeah.

13:52

And that is sort of operating exclusively.

13:54

And So Pepsi is potentially losing its

13:56

market advantage at the same time that

13:59

Coca-Cola. Still secured, it's.

14:02

So be addressing to to think about with

14:04

of. Geopolitics.

14:06

Of yeah, the soda companies are.

14:09

I was just thinking about like how we think

14:11

about. Almost like a like

14:13

a corporate like. Scramble

14:15

scoop either. For the rest

14:17

of the world to be able to get their

14:19

foot in the door to have these monopolies and

14:21

sustain them as long as they possibly can. Or

14:24

to have this sort of like market share

14:26

as long as they possibly can arm. It's

14:28

funny when I i i took a trip

14:30

to Ten M several years as a long

14:32

time ago actually. And to see like

14:34

Coca Cola is everywhere, to see

14:36

Pizza Heights there and Mcdonalds and

14:38

to see sort of like the

14:41

globalization of a white American products

14:43

look like overseas semitism ways that

14:45

is consumed as well Because when

14:47

you think about pizza in America

14:49

it's. Kind of want long five

14:51

things about it in China's considered

14:54

fine dining and know I wonder

14:56

too like how much are Russians

14:58

consuming this Pepsi with almost like

15:00

a cast say to it and

15:02

I am hosts you having like.

15:04

A patsy in America feels like

15:06

nothing. Yeah. No massacres

15:08

of am and understood kind of

15:10

statement there when you're when you're

15:13

consuming and American good that way.

15:16

So. Just to put a

15:18

finer point on the kind of what happens

15:20

after the breakup of the Soviet Union, I

15:22

mean, candles quoted as saying one of our

15:24

biggest partners has just gone out of business

15:26

and as a major problem for any company

15:28

and the ripple effects assassins of Pepsi. Been.

15:31

A runs Pizza Hut is wealth. And

15:33

Pizza Hut is a big part of the story.

15:35

The speed at all over Europe. They're moving into

15:37

Eastern Europe, but you know, The

15:40

Shipyard for instance that. These.

15:42

Tankers that Pepsi was selling to them

15:44

finance a pizza huts and the bottling

15:46

plants in Russia. Suppose we're now in

15:49

the In Ukraine and this new country

15:51

of Ukraine wanted. revenues from

15:53

a subset of the mozzarella cheese and it

15:55

needed to open pizza has in moscow we're

15:57

now in lithuania and it was a trick

15:59

to import those. And so you get all

16:02

of a sudden you have to deal with a bunch

16:04

more markets and a bunch more countries and a bunch

16:06

more trade regulations. And so yes, I

16:08

think we see that Pepsi kind

16:11

of liked the simplicity of having one partner.

16:14

Yeah, even if that partner was

16:16

offensively the bad guys. It

16:19

was nice of authoritarianism. But

16:22

Pepsi's doing all right. I mean,

16:24

they're doing fine. They're doing just

16:26

fine. Their sales grew by 2.1 billion

16:30

in 2022. So I think they're okay. Yeah.

16:35

And it is fascinating how you get these parts of the

16:37

world and even parts of the country where

16:40

it's Pepsi territory or Coke territory and you

16:42

wonder why. And a lot of times it

16:44

has to do with these kinds of little

16:47

geopolitical maneuvering. It's not just in coincidence or

16:50

local taste. All right. Well,

16:53

let's leave it there. That was a fun episode. We've been wanting

16:55

to get to it for a while. Nicole

16:57

Hemmer, thanks to you as always. Thank you,

16:59

Jodi. And Kelly Carter Jackson. Thanks to you.

17:02

My pleasure. Bye.