This is an iHeart podcast. Guaranteed human. Did you know Microsoft has officially ended support for Windows 10? Upgrade to Windows 11 with an LG Gram laptop. voted PC Mag's Reader's Choice Top Laptop brand for 2025.
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All rights reserved. My favorite thing about shipped since I signed up for Target Circle 360? No price markups when I order same-day delivery from tons of local stores. Only a handful of alcohol retailers and items don't count. I won't lie, I've had too much fun being like, markups on groceries?
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The History Guy is also heard right here on Our American Stories. Today, the history guy remembers rubles, cola, and a kitchen that changed history. It is a forgotten moment during the Cold War that deserves to be remembered. Here's the history guide.
Soft drinks are hard business. The total worldwide beverage market value in 2018 was estimated at $2.2 trillion. The Coca-Cola Company's net operating revenues in 2016 were over $40 billion. The industry is so lucrative that it represents one of the longest lasting wars in modern history. The Cola Wars.
While beverage industry giants Pepsi and Coke have been competing since their creation in the 19th century, the Cola Wars refer to particularly aggressive advertising against each other since the 1980s. And that war took an odd turn in 1990 when PepsiCo purchased a fleet of warships. Yes, actual warships that gave them at the time. the sixth largest submarine navy in the world. That odd event had to do with the peculiarities of the world's second oldest national currency, the most significant world conflict of the post-World War II era, and a visionary businessman.
It is a story that deserves. to be remembered. The ruble offered a unique challenge for the Bolsheviks following the Russian Revolution. In Marx's theory, money should not be necessary, and only encouraged the sort of personal desire that was contrary to the idea of a classless society. As Leon Trotsky explained, in a communist society the state of money will disappear.
But the Marxist revolutionaries realized that abolishing money would not be easy, as Trotsky continued. Money cannot be arbitrarily abolished, nor the state and the old family liquidated. They have to exhaust their historic mission, evaporate, and fall away. But while the Soviets kept the ruble, an important aspect of the new Soviet ruble as opposed to most national currency is that the ruble was not convertible. That is, Russians were not allowed to use their rubles to buy foreign currencies.
There's a reason for this. In capitalist countries, currency is a market. In fact, its purpose is to support market mechanisms. But in the Soviet Union, currency was a tool of centralized planning. With non-convertible currency, Russians could only use the money that they were paid to buy from government stores that only sold products sanctioned by the government with prices set by the government.
This difference in economic philosophy would be a primary driver of the defining conflict of the period following the Second World War. The Cold War. and it would become the topic of a well-known debate that would eventually result in a novel challenge to the convertibility of the ruble. And that famous debate. would occur In a kitchen.
During a period of rising tensions, the Eisenhower administration and Soviet premier Nikita Khrushchev decided to have a cultural exchange to promote understanding between the two nations. Each nation would host an exhibition in the other's country, showcasing the daily life of their citizens. The Soviet exhibition was held in New York in June of 1959, and the American exhibition was held in Moscow in July. For their exhibition, the Americans built a model home, meant to represent a typical American home. The model home was based on an actual house, 398 Town Line Road in Comeck, Long Island.
For the exhibition, the model was split down a central hallway to allow the public to view the inside and thus earn the nickname Splitnick. and it included a model kitchen full of modern appliances. And it was there that Soviet Premier Khrushchev and U.S. Vice President Richard Nixon got into an impromptu debate about the relative value of their competing economic systems that became known. as the kitchen debate.
The kitchen debate is interesting for a number of reasons, but it was notable that in the middle of a tense Cold War, it was not a debate about armies and rockets, but of homes and tractors and kitchens and how each system provided for its citizens. It was certainly pointed, but cordial, and became a propaganda point for both sides. Not many minds were changed as Khrushchev summarized: I am a lawyer for communism. You are a lawyer for capitalism. Let's kiss.
But during that debate, a particular capitalist was watching closely. Donald M. Kendall was the Vice President of Marketing for Pepsi-Cola. which had a booth at the American National Exhibition just around the corner from the famous kitchen. While soda was popular in America, it was virtually unknown in the Soviet Union.
Kendall saw opportunity in that market and had been desperate to get Khrushchev to take a drink of Pepsi. As the debate grew heated, both literally and figuratively, Khrushchev began to sweat, and Kindle dropped in with a cold cup A Pepsi. The photo op was a marketing coup. But it would be nearly a decade before Don Kendall could take advantage of that opportunity. By 1968, he was the CEO of PepsiCo, and his friend, Richard Nixon, had been elected President of the United States.
Leveraging his White House connection, Kendall was able to negotiate an exclusive contract to produce and sell Pepsi-Cola behind the Iron Curtain. But there was a problem. The Soviet Ruble. Since the ruble was non-convertible, the Soviets had very little foreign currency to pay for that Pepsi-Cola, and rubles had no value outside the Soviet Union. The answer came in the form of a trade.
In exchange for selling soft drinks in the Soviet Union, Pepsi got the rights to sell hard liquor to the West. Pepsi was paid. In vodka. Specifically, Stolych Naya, a premium brand produced in Russia that had won a gold medal in an international competition in 1953. Pepsi was given the exclusive right to sell stolage Naya outside the Soviet Union.
Pepsi became the first Western consumer item to be manufactured and sold in the Soviet Union. and Stolich Naya became the first premium vodka to be imported for sale in the United States. The deal was struck in 1972, but production did not start until 1974, and that started the 15-year exclusive contract that shut rival Coca-Cola out. But when it came time to renew the contract in 1989, the situation in the Soviet Union had changed. Mikhail Gorbachev had become the premier in 1985 and had instituted significant reforms called glasnost and perestroika.
or openness and restructuring. The Soviet economy was facing challenges as a result, and Gorbachev was supporting more connection between markets. Pepsi was only too happy to expand, looking to increase from 26 factories in the Soviet Union to 50. But the ruble was still not convertible and would not be for many years. And the $3 billion deal was simply too big to be paid in vodka.
So the Soviets sold them something of which they had an excess. Warships. specifically a cruiser, a destroyer, a frigate, and 16 submarines. At the time, PepsiCo had the sixth largest submarine navy Unearth. Don Kendall, then chairman of the PepsiCo Executive Board, quipped to U.S.
National Security Advisor Brent Scowcroft. that we are disarming the Soviets. Faster than you. The kitchen debates and the national expositions actually represented a relative thaw in US-Soviet relations, but in 1960 a US U-2 spy plane was shot down over the Soviet Union and relations sank to a new low. The Cold War will continue for another three decades.
Donald M. Kimball became the CEO of Pepsi-Cola in 1963 and didn't retire from that position until 1985 and then continued as chairman of the executive board until 1991. In addition to his deal to sell Pepsi behind the Iron Curtain, he shepherded the company through the merger with Frito-Lay that created PepsiCo Inc. The 96-year-old is now retired and lives in Washington State. The modest ranch house at 398 Townline Road in Comack, Long Island, that was the model for the 1959 American National Exposition, is still there, although the famous kitchen has been remodeled.
Making the ruble convertible was not an easy feat. The Soviet ruble was replaced by the Russian ruble in 1992, but significant marketing and banking reforms were required to make the currency convertible. was not made fully convertible in 2006. As the ruble is tied to Russia's energy trade, its value has been volatile, but many argue that it is set to become a larger player in currency markets that are becoming less dependent on the US dollar. No, Pepsi did not use its submarines to sink cargo ships carrying Coca-Cola.
They were actually sold for scrap, just another barter. But it is ironic that at the very center of the Cold War, the lawyer for communism would take a sip out of a cup bearing one of the world's most recognized symbols of capitalism. And as a result, Pepsi would play a notable role more than three decades later in the end of that Cold War. Right down to bringing up the weapons of war. but selling them for scrap.
The day that Pepsi got a Navy, deserves to be remembered. Let's go. And special thanks to the history guy. History deserves to be remembered, and you can find all of his work at YouTube, and we treasure our partnership. And again, that is the history guy.
And if you've got some history stories like this, family stories, town stories, state stories, send them to us. The Cold War, the Cola Wars, the story of Pepsi. and the ruble, all of it here, on our American Stories. Did you know Microsoft has officially ended support for Windows 10? Upgrade to Windows 11 with an LG Gram laptop.
Voted PC Mag's Reader's Choice Top Laptop brand for 2025. Thin and ultra-lightweight. The LG Gram keeps you productive anywhere, and Windows 11 gives you access to free security updates and ongoing feature upgrades. Visit lgusa.com/slash iHeart for great seasonal savings on LG Gram laptops with Windows 11. PC Mag Reader's Choice used with permission.
All rights reserved. This time of year, most of us are checking off our holiday gift lists. But identity thieves have lists too, and your personal information might be on them. Protect your identity with LifeLock. LifeLock monitors millions of data points every second and alerts you to threats you could miss.
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Sunday mornings, I've got my game day ritual. Coffee. Lucky socks. And now, new morning uncrustable sandwiches. It's all about that 12-gram protein boost with the new uncrustables, bright-eyed berry, or up and apple flavors.
Bright-eyed berries got a feisty. Receiver energy up in Apple. Your classic do-it-all tight end.
Soft, pillowy-packed with protein, and easy enough. for Grunk to grab from the freezer. Whether you're on the couch, driving to the tailgate or heading to the locker room. New morning uncruscible sandwiches. Are the MVP of snacks?
Your new Sunday kickoff ritual starts here. with new morning uncrustable sandwiches packed With 12 grams of protein. My favorite thing about shipped since I signed up for Target Circle 360, no price markups when I order same-day delivery from tons of local stores. Only a handful of alcohol retailers and items don't count. I won't lie, I've had too much fun being like, markups on groceries, not in my fridge.
Markups on pet food, not for my DOG, markups on tools, electronics, home goods, meds, not in my house. Anyway, it's awesome. Order now at shipped.com/slash 360 terms apply. Running my small business was like playing basketball five-on-one, and I was the one.
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