Cold War and Cold Pop

Episode Transcript

Speaker 1 (00:00):
Democracy is not efficient, it's not orderly. Democracy is actually
legal chaos. So shouldn't we take a day off, enjoy
a cease fire in this national argument about who's right
and who's wrong in our government? What do you say
we'd give each other a break today for a few minutes.
Let's remember the time an American soft drink company owned

(00:22):
the sixth largest navy in the world. About how one
country traded on armada of warships and submarines for a
cold beverage. It all began in the deep freeze of
the Cold War nineteen fifty nine. The US and it's
arch enemy, the Soviet Union. We're aiming missiles of mass
destruction at each other. But thanks to our vice president then,

(00:45):
who had a talent for speaking to others, even in
different languages, suggested the Soviets might like us better and
we them if we agreed to hold cultural exhibitions. We'd
show them a model American house, and they'd show us
advanced farming techniques and modes of production. Soviet General Secretary
Nikita Kruzchef, in touring the American exhibit, found a vending

(01:09):
machine filled with bottles of cold pepsi Cola Vice president
Richard Nixon pulled out a bottle, popped the top and
handed it to the head. Red took a gulp, loved
it through. An interpreter said, this is very refreshing. It
was history. Never before had a Soviet leader experienced an

(01:29):
American product. The entire event was telecast nationally. In the
following morning. Pepsi's corporate headquarters was a buzz. The company's
executives began to fantasize about a bottle in every Soviet apartment.
Hard scrabble Russians didn't have much income, but at the
time a bottle retailed for just ten cents. Pepsi's chief executive,

(01:51):
Mister David Kendall, set a goal, we will be the
first American consumer product sold in the Soviet Union. Took
him third eighteen years, but finally, in nineteen seventy two,
the first shipment arrived at Soviet ports, but there the
bottles sat for The Russians were sure they could pay
with their own national currency. The ruble problem. The ruble

(02:14):
was so depressed it was not convertible to other currencies
and had no value outside of the USSR. But Kendall
had not risen to the perch as one of the
United states most successful and revered corporate executives. By allowing
a closed door to become a brick wall. What might
the Soviets have to exchange for these crates and crates

(02:36):
of pepsi cola? They settled on a straight trade, Pepsi
for the famous Soviet vodka stolich Naya. Take the booze
at wholesale and sell it over here at high end
bars and country clubs retail. Nothing screams mark up louder
than something you can't just get anywhere. For the next

(02:57):
seven years, it worked perfectly. They get to Pepsi, we'd
get the world's best vodka. And then the Soviet Army
invaded sovereign Afghanistan. President Jimmy Carter got tough, embargoed American
grain and imposed sanctions on any Soviet imports, including Stolichnaya.
It would cost Pepsi billions. Kendall, at considerable personal risk,

(03:21):
flew to Moscow to meet with the Communists. They owed
him three billion dollars on product sitting in Soviet ports,
ready to turn around and come home, But the Russians
liked two things. Pepsi and Kendall. They were determined to
make a deal, so they put this on the table.
Give us the pop and we'll give you seventeen Soviet

(03:44):
military submarines, a cruiser, a frigate, and a destroyer, a
fleet of Soviet military naval vessels. Kendall jumped at it.
The Soviets would sail them into American waters, Pepsi would
fly the seamen back to mother Russia. In a day,
Pepsicola was made the sixth largest navy in the world,

(04:05):
bigger than the likes of Australia and Spain. Now these
were decommissioned ships, certainly not combat ready. Kendall knew this
was and certainly was a where American law forbid anybody,
and certainly any private citizen or company from owning military
grade equipment. So he sold all of it to Sweden
for scrap metal, made three million on the three billion.

(04:29):
It stands as one of capitalism's finest hours. We showed
the world how fair trade can bridge ideological differences, and
how occasionally to win a war, put the gun down
and pick up a glass