To Pepsi From Russia: Love is Fleeting

What starts as a casual joke about where we’re “from” steers into one of the strangest corporate chapters of the Cold War: the day Pepsi traded soft drink syrup for decommissioned Soviet warships. We rewind to the 1959 cultural exhibitions and the Kitchen Debate, where a single glass of Pepsi handed to Khrushchev set the stage for the brand to enter the USSR in 1972. Because rubles couldn’t convert, Pepsi took payment in Stolichnaya, selling vodka in Western markets to make the math work—until sanctions squeezed that channel shut.

As the Soviet system cracked and a major contract came due in 1989, cash was scarce and policy walls were high. The workaround? Assets, not currency. Pepsi accepted a bundle of naval vessels—submarines, a cruiser, a frigate, a destroyer—then sold the lot for scrap to Sweden. It wasn’t a private navy so much as steel turned into liquidity, but on paper it briefly vaulted a soda company into the ranks of mid-tier sea powers. Along the way, we explore why barter resurfaces when money fails, how sanctions redirect trade into goods-for-goods swaps, and what this says about corporate flexibility under geopolitical stress.

We also trace modern echoes: companies trading planes for rice, nations swapping energy for staples, and local barter emerging under hyperinflation. The through line is simple and unsettling—when traditional finance jams, value finds another rail. This story isn’t just a quirky footnote; it’s a playbook for navigating shocks with creativity, pragmatism, and a stomach for odd optics. If a cola can become scrap metal to keep markets open, what could your business convert when rules change?

If you enjoyed the ride, follow the show, share this episode with a friend who loves Cold War oddities, and leave a quick review telling us the wildest barter you’ve ever heard of.

Transcript

Where Are You From, Really

SPEAKER_00 0:48

Uh hoy hoy. Hey, what's up, my uh my friend from Montana nowadays?

SPEAKER_01 0:54

You know, do you consider yourself from Montana since you've been I do not I do not I love you know aspects but I'm not from here yeah and I think I would I mean I think that would be from here again I do a bad Montana accent as pretty one but it seems I don't know but uh no I do not I consider myself a resident and so I'm part of the community I try and do as best I can for where I am yeah no that's great but no I'm definitely well I always say uh where I where I'm from is not geographic.

SPEAKER_00 1:38

Yeah I come from my heart you know so it's like I don't care if somebody's from Nebraska or wherever, but nonetheless, um the I was just gonna ask this question real quick and this may even be something we should have saved for an upcoming episode, but who knows? So like anyway it's kind of a weird thing, like so now I've been basically in the cove or in Washington for like going on 10 years, you know. And like um that is crazy, yeah. And so now when I go somewhere and they're like, where are you from? It's like what do I say? You know, like well, I live in in Washington nowadays, you know what I'm saying? So but the reaction would be to say Montana, Billings, Montana, but it's more complex than that these days, people. I'm not really I don't live there no more. I'm disconnected, I'm not in the streets like I used to be, guys.

SPEAKER_01 2:35

I mean that's where sometimes when you go somewhere and they ask where you're from, you're in the wrong neighborhood. Yeah, they're hitting you up. Yeah. Well no, like where are you from? I'm like, I I'm from nowhere. I I'm from the suburbs. Sorry, we'll get back on the interstate, but yeah.

SPEAKER_00 2:52

Apocalypse pit, uh, more than a friend of the show, but say he's from Donner, you know, Crippin' that's what's up. Anyway, we know how that goes, guys. So I don't know, man. That you're a Hoyhoy made me feel uh very nautical.

SPEAKER_01 3:11

But we do have an interesting uh subject here for you, people, and we'll go on tangents as we promised to always do. If we ever stop, please uh send us hate mail.

SPEAKER_02 3:22

Yeah.

SPEAKER_01 3:23

But uh this occurred in 1989, and 1989 was an interesting year, my friends. Well, 10-year-old McMe played Super Mario Bros. 2. The Berlin Wall would fall November 9th. Incidentally, four years to the day before the release of the most pivotal group of all time's baby album. But I guess. Yes. And if you don't know, you better ask somebody. They love the children. No, don't be sorry. Yes. The unspeakable massacre of protesters in China Tiananmen Square opened the world's eyes to human rights violations beyond that of even Walmart employees. Peaceful notes included Poland's first partially free election since World War II on June 4th, and Hungary opening its border with Austria allowing East Germans to escape. Also, the Czechoslovakian Velvet Revolution resulted in the peaceful overthrow of the communist government by December of 89. So sorry, serious stuff. I have to throw a couple of my dumb jokes in there about Walmart, but you say the Velvet Revolution? I did. I thought I was like, I wonder did they listen to like Velvet Revolver or not since it's around, but yeah.

SPEAKER_00 4:43

Were they wearing a lot of velvet? I don't understand. Like, I think they'd be isn't that expensive or I don't know. We're gonna have to look that up one of these days, people.

SPEAKER_01 4:52

Uh be on the lookout when I saw that, I was like, uh it's okay.

The Pepsi Navy Tease

SPEAKER_00 4:56

I don't want to be on the lookout for a velvet episode, I guess. The Velvet Revolution. Yeah, very interesting. So, you know, this this episode we got cracking off here, guys. That's my gun, gun sound effects without you know using sound effects. And anyway, is about Pepsi and their procurement of a naval fleet. I don't know if you want to lead this one off, Owen. This is kind of your this is your big one. I can I can feel you're excited about this guy. So I'm gonna let you have it. Uh, everybody out there in podcast land, you just enjoy this, okay guys.

SPEAKER_01 5:34

No, I I think you've done more research and we'll say um maybe I don't know a friend of the show. I don't know if he's even listening, but uh friend of Boogie's Bodega, Jeremy, uh brought this to my attention that at one point, and there's some dispute, I think, between the sixth and the seventh largest naval power in 1989 was uh Pepsi.

SPEAKER_00 5:58

Yeah.

SPEAKER_01 5:58

And Colt uh, you know why this is the case, yes?

Kitchen Debate And First Pepsi Sip

SPEAKER_00 6:02

Yeah, I I do know why. Well, so the big deal here is with the this Pepsi naval fleet is it actually like the process of it began thirty years earlier in 1959 when the US and USSR agreed to hold a cultural exhibition of sorts uh in each other's countries to showcase like the differences in their lifestyles and some of their achievements because they were you know at each other's throats most of this time. In this US exhibition, Moscow featured a model American house where uh vice president Richard Nixon, vice president at the time, guys, uh and Soviet leader Nikita Khrushchev engaged in a uh heated debate over capitalism and communism, and it was labeled as the kitchen debate. I uh do kind of remember reading about this and or hearing about it in school, maybe. I don't know, who knows? Uh one of the attractions at this exhibition, Ellen McMichael, was a Pepsi vending machine. Okay. Uh well, Nixon offered Khrushchev a glass of uh Pepsi, is how this worked out. I don't know how he offered him a glass from a vending machine. It was a different time, guys. Um I didn't uh didn't look into this. I'm sorry, dropped the ball. Maybe he poured it into a glass.

SPEAKER_01 7:08

I don't know. Yeah, but I did I did see that and found it. Found it out as well, my friend.

SPEAKER_00 7:13

Yeah, okay. Fair enough. Hey, and you know what? I wonder if there was ice in that glass, because if it was American, you know, there should have been ice, but since there weren't, you know, people don't know this, they don't use ice in Europe and uh Asia, I feel I don't know.

SPEAKER_01 7:26

Honestly, understanding here, I will say I love ice very much and have recently it's been brought to my attention that I should not. As uh like ice? Why? Well, we could say, you know, there's a pun there. But uh no, really, like somebody from an HVAC company, very good dude. I won't mention he said he wouldn't mention the place, but he said it's pretty much all of them unless you just do something. He showed me pictures of an ice maker, like at a commercial. Oh yeah. Yeah, it's it's frightening. And I yeah. Any anywho, um, yeah, this is taking a dark turn, but uh back to communism and Pepsi.

SPEAKER_00 8:12

Yes, indeed. Yeah, so apparently offering him an ice free glass of this drink called Pepsi Cola, guys. Uh so anyway, the Soviet premier liked it so much that he asked for a second one, is what is said. And then he reportedly also said, I quote, this is Khrushchev, not my words, guys. This is very refreshing. Hold on. This is very refreshing. Is that is that right? I don't know. Anyway, give me like some effort points. This was a historic moment, I feel. Um, it marked the first time a Soviet leader had publicly tasted an American product. That's crazy, guys. Okay, this is 1959, people. This is way back. Um, you know, Pepsi Pep CDC's document.

SPEAKER_01 8:55

Before DJ Premier, even who was never a Russian premiere, just in case. But look at my people.

SPEAKER_00 9:01

Yeah, that's definitely, yeah. I'm with you on that. DJ Premier is one of the illest. The illest? I don't know. I was in my soul.

SPEAKER_01 9:09

Mount Rushmore, I would say. I mean, that's a tough one, but still. Anyhow, we told you we'd have tangents. Yeah, I promise.

SPEAKER_00 9:17

I'm gonna find an alternate word for that because I just feel like we say it too often sometimes. And then I'm gonna have to use the horn a lot. You know, so anyway, nonetheless, uh, no, we're okay. Uh Pepsi seized this opportunity, seized it, seized it by the throat, apparently, seized the Russian market, uh, which was mostly closed to Western goods based on, like, you know, the Cold War, you know, a lot of trade embargo stuff and whatever. Who knows really what was going on there? I'm assuming that with communism, they weren't exactly trying to buy up a bunch of like capitalist products, is the basis of that. Um but but after a long uh negotiation, Pepsi became the first uh foreign consumer product to be sold in USSR. Isn't that crazy? 1972, guys. Yeah. And for you youngsters out there, Russia, okay, wasn't Russia back then, it was the USSR, USSR, the United Soviet something republic, right? What the fuck was it again? I can't even remember. See, look at me go.

SPEAKER_01 10:18

So just so easy for us to say, United Socialist Soviet Republic, I believe. And that's I am not reading this, obviously, as I'm yeah, yeah, yeah. No, special needs, but I believe that it is like it stands for socialist and Soviet. I think United Soviet Socialist Republic. There we go. Uh third time, fourth time, fifth time is a time. Yeah, you know.

Pepsi Enters USSR Via Vodka

SPEAKER_00 10:44

I don't want to hear anybody writing in about this, okay? I don't know how I'd hear you writing in. Maybe this is. What is going on? Okay, anyway, so back to it. Yeah, so however, however, guys, uh you know, so where the fuck was I at? Pepsi became the first foreign consumer in 1972, okay, and they're very popular. Uh, however, there was a problem, everybody. You know, uh Pepsi couldn't uh accept Soviet rubles, not just because they were totally worthless, well, mainly because they were totally worthless, they had no value on them.

SPEAKER_01 11:18

Yeah, to like ship them across the ocean and probably sink the ship, even like paying for the Pepsi. Yeah, exactly. The weight of the worthless money.

Sanctions, Collapse, And A New Deal

SPEAKER_00 11:28

Yes, very much so. Well, they weren't worth, you know, because of the communist thing and all these this type of shit. They weren't yeah, so they weren't like you couldn't spend them anywhere else. Um so what you know, Pepsi Pepsi being the the bright, the bright, uh, bright corporation that it is, you know, very smart people, top men work there. Uh Pepsi struck a deal with the Soviet government, and instead of rubles, Pepsi would receive uh Stolic Naya, I can't say that I tried to Stolik Naya vodka. Stolik Naya, I don't know, guys. Which it would then sell in the US then it would sell this stuff in the other countries. Uh which it would sell then, uh which it would then sell in the US and other countries. So that that worked out pretty well, kind of a straight across, like trade Pepsi for vodka, you know, allowed Pepsi to expand into the world market in general, right? So there's a there's a big deal. So what exactly happened in 1999? 89, guys. I didn't say 99, sounded like it though in my head. So in 1989, Owen, what exactly happened? Do you know that caused like a stirrup of this whole situation they had going where they could not exchange their goods anymore?

SPEAKER_01 12:42

I mean, essentially it was the I mean the it was devolving, right? The not devolving, I shouldn't say, but uh dissolving. Jesus. The USSR was about to fall apart. It took till ninety-one, but I think it was like already just clear that it was.

SPEAKER_00 12:58

Yeah, that's yeah, pretty close. Yeah, I mean that's that's basically spot on, my friend. Uh in 1989, uh the US imposed sanctions on Soviet products, including vodka. So that took it away from our market, and this is a result of the USSR invading Afghanistan, which is where the Taliban comes from, guys. It's kind of a weird thing. Um, a lot of people don't know that, I don't think, because that was quite a while ago.

SPEAKER_01 13:25

It I feel like kind of as we back when Afghanistan was fighting the Russians, pushing yeah, it's okay.

SPEAKER_00 13:33

We got this.

SPEAKER_01 13:33

Bush and Reagan gave him weapons and told them get to Boston. Yeah. Sorry, thank you, Razcad. There we are. I almost had it, but I just fucked up Reagan for some reason.

Pepsi’s Fleet: Submarines To Scrap

SPEAKER_00 13:45

Bush and Reagan. Bush and Reagan. What a thing. So basically, once they invaded Afghanistan, uh, it just simply meant that Pepsi could no longer sell uh its vodka that it is procuring from Russia in its main markets. Because that was like kind of a big uh you know deal breaker. At the same time, Pepsi's contract with the USSR was about to expire and needed to renown renegotiate it anyway. I'm having a problem talking to you, man. Don't worry about it. So a lot of this USSR, that is like hard for me to say for some reason, guys. Uh Pepsi's CEO at the time, Donald Kendall, brilliant man I hear. I don't know though. Who knows? Maybe he's a never way, I don't know. But uh uh he had personally arranged this deal three decades earlier. So he was an old guy, he'd been around for a while, you know. I think that I did actually mention him in the beginning there, but I can't recall my friends. Um he asked for three billion worth of payment for his syrup. Can you imagine that? Three billion dollars for Pepsi syrup? What back in 1989? That's insane. The Soviets um didn't have any money though, guys. Not a damn thing. Because they're communists, okay? Coming pieces of trash, apparently. So that's how people used to think. I don't know what their thoughts on communism are anymore. Yeah, yeah, I guess I guess, yeah, Kim Jong-un and all them folks and whatever. Portly fellow he is. Movie lover right here. Okay, so anyway, instead they propose an unusual alternative. Mr. McMichael the Mike. Or the Mick. I I call you the Mick, man, but it's kind of funny that people do call you the Mike and it makes sense. Alright. They would give uh Pepsi a fleet of naval vessels that they no longer needed or could maintain. That means they couldn't even afford to maintain their fucking ships. Uh there's also a movie I watched about this kind of stuff one time that had Nicolas Cage in it. I think it's called like Lord of War or something like that. Pretty good movie, I feel. But when uh the USSR dissolved, it you know, you had a bunch of rampant like generals and shit who were basically their own little set of warlords, and they were just selling tanks and guns, and you know, people like this guy Nicolas Cage played would buy them and then sell them to African warlords and you know, all sorts of fun stuff like that. So very interesting times. If you want to live in interesting times, they're not usually happy ones, people. Just saying. Um, but yeah, so it's just the truth.

SPEAKER_01 16:12

Um, so and I did just see this one I didn't see but before I forget. Okay. Obviously, like you were saying that uh they weren't intending to use the navy. Well no, they were you know, they were just purchasing and it wound up being sold at Strap Battle to Sweden. But Kendall, this guy sounds like a funny dude because apparently when uh when they and they profited about three million selling the Swedish company, that he joked that he was disarming the USSR faster than Reagan.

SPEAKER_00 16:48

Yeah, I know that's that's fantastic, and it sounds about right. Yeah, so yeah, no, that's a good one. I love it. You know, it good old Ronnie though, man. Good old Ronald Reagan. What a guy.

SPEAKER_01 17:01

The Republicans were ergonomics were great for all of us uh poor people, but yeah, nothing unpull I mean, yeah, poor us, and but really, I don't know why. That was a thing that people that had no money were like, oh good old like his approval rating was great, and it's like you have no food, dude. Like, I don't know, but yeah, yeah, for real.

Barter Economics Then And Now

SPEAKER_00 17:26

So Kendall agreed to this offer um with the Soviets. It's pretty exciting. Um, and he became the owner of 17 submarines, a cruiser, a frigate, and a destroyer. That's pretty badass. And like you said earlier, some estimates were sixth largest uh in the world, and others were seventh. Uh, but they were surpassing the likes of Australia and Spain. Go Pepsi. You know, and after all this is said and done, it sold off for scrap metal to Sweden, right? Uh they profited about three million dollars, right? So then at this point, you know, Pepsi doesn't have a military anymore, guys. And it's just a total like barter thing here, and that's the interesting part about it. But the fact that Pepsi actually like got a hold of these ships and it was just that easy for them to do so, it's kind of an insane thought. But they were also decommissioned and they weren't combat ready. There's a lot of things around this, so it's not like as crazy as the story sounds, to where like this is like some functioning warships, like we would think of like the ones we see that we own, or even like you know, anything near that, by the way. Um these are probably rusted, guns are probably kind of falling off, or whatever the fuck. I don't know. Use your imagination, people. But that's exactly what this was. So, within that though, Pepsi just showed how versatile of a company it was and its willingness to survive. I do believe at one point in time, wasn't there a thing where Pepsi was like giving away things for bottle caps or something like that? And they uh they actually had like a a jet in the commercial. Was that Pepsi? It sounds like yeah, it sounds familiar, but yeah, it's like a Harrier jet. And I think it was a joke, but uh there is a story around a guy actually saved up enough to get the Harrier jet. And then okay, yeah, it's a ringing bell. Yeah, yeah, it is a thing. So, you know, as interesting as this all sounds, guys, it's not like unheard of for countries to barter in these ways. It's just it's a part of like kind of what happens when you know times are hard and maybe a country's not doing so hot, or you know, other larger countries like the United States impose sanctions. You know, there's workarounds to it, because everybody just, you know, they need their shit, they're gonna figure it out, so they start bartering and doing it. So for example, fishermen in Venezuela, uh, who now swap their catch for their other foodstuffs or medicines, uh, because after years of hyperinflation, the country's currency is now nearly worthless. Uh-huh. Very similar to Russia. You know, so that's what they do. They they actually s uh swap their catches to nearby countries for medicines. Um there's a lot of factors in this, my friend. Bartering also continues to occasionally be used by companies, such as Indonesian aircraft maker industrial Pesawat, Turbang, Nusantara. I don't know. Anyway, yeah, agreeing to trade two of its transport aircraft for 110,000 tons of Thai sticky rice back in 1996. So yeah, that's a thing too. Stuff like this happens, guys, and that's kind of the the Pepsi thing. Uh Iran has a similar uh deal set up with India because we have a bunch of sanctions on them and you know, there's there's a lot of stuff, or did I guess that was a thing back then, but they're basically trading uh you know, India for food because you know it's just how shit works. People be broke on McMichael.

SPEAKER_01 21:03

Well, yeah, no I mean system is solid.

1989 Milestones And Closing

SPEAKER_00 21:09

Yeah, it's a solid, it's a solid thing. I mean it goes back to about any it's probably our first form of doing business, you know, our first form of commerce. Where like you have something that I want and then I have something that you may want or I make it worth your while and you know this is how that shit goes.

SPEAKER_01 21:27

Yeah, have some weed, dude has some garlic parm chicken wings, we can make a deal. Everyone will be happy.

SPEAKER_00 21:34

Yeah, for sure. Um, it may it reminds me kinda I mean, sex work's technically bartering. Or could be, and it's the first professional one. So, you know, that's a thing.

SPEAKER_01 21:45

I'm aware, thank you, not personally, but uh Yeah.

SPEAKER_00 21:49

Alright. I just wanted to make sure everybody else was aware too. Um I don't know. I hope everybody found this pretty interesting. I did think it's kind of a there's not a whole lot around the story, I won't lie. I mean, when you look into it, it's pretty basic and you just gotta like kinda do your best, I guess. That like when this guy tried the drink at that uh the kitchen table and the the the expose that they had yeah, whatever, sorry, sorry, sorry. Yeah, the expo they had in uh Russia there that uh that it changed his mind on something. He's like, Oh my god, I love this Pepsi product. I love American products, guys. You know, and he got all excited, and next thing you know, Russia's consuming tons of Pepsi.

SPEAKER_02 22:39

Yeah.

SPEAKER_00 22:40

Yeah, three billion dollars worth at one point, apparently. So that's pretty insane. Um, any thoughts on

SPEAKER_01 22:49

Uh one positive, I have a few other like well um but apparently well okay first GPS in 1989 Game Boy debuted on April twenty first. There's the Exxon Valdez, we'll gloss over that guess. That's another sunny topic. Uh HDTV was first broadcast in Japan. Weird. I'll be down. Wouldn't have known that. Uh World Wide Web.

unknown 23:18

Yeah.

SPEAKER_01 23:19

Tim Berners Lee. Don't know what that is. I have no idea. That's the guy who like he invented the World Wide Web, I guess. Like what we're supposed to be now. The interweb. I'll be there. And of course, beloved on the happy notes, my people, our people. Uh The Simpsons debuted on December 17th, 1989.

SPEAKER_00 23:43

I'll be down. And uh Pepsi was sailing a fleet to Sweden. Right. Alright. That sounds like a pretty good yeah. Alright. Sounds like a very 80s way to end the 80s.

SPEAKER_01 23:57

And we didn't even mention Taylor Swift, who was invented in 1989. Oh my god. That's ridiculous.

SPEAKER_00 24:06

On that note, my friend.

SPEAKER_01 24:08

I won't even use our parting slogan because I mentioned that. Yeah. Entity. Nah. Much love, everybody.

SPEAKER_00 24:17

All right, man. Peace.