Coca-Cola said no to Moscow — Pepsi won the Soviet market

In 1959, the United States and the Soviet Union agreed to hold cultural exhibitions in each other's countries as part of a Cold War cultural exchange. The American National Exhibition opened in Moscow's Sokolniki Park on July 25, 1959, showcasing American cars, fashion, home appliances, and a futuristic model kitchen. It attracted 3 million visitors over six weeks.

The exhibition is most famous for the 'Kitchen Debate' between Vice President Richard Nixon and Soviet Premier Nikita Khrushchev. But a less famous decision had a longer commercial impact. Coca-Cola, the dominant American soft drink, declined to participate. PepsiCo executive Donald Kendall saw the opportunity and convinced Nixon to arrange for Khrushchev to sample Pepsi. Khrushchev tasted both Pepsi made with New York water and Pepsi made with Moscow water, and spoke positively of it.

The impact was not immediate. The Cold War continued. But the positive interaction greased the wheels for Pepsi's entry into the Soviet market. In 1972, following Nixon's re-election and the policy of Détente, the US and USSR signed a 10-year countertrade agreement: Pepsi was introduced to the Soviet Union in exchange for Stolichnaya vodka entering the American market.

Pepsi became the first American consumer product to be produced, marketed, and sold in the Soviet Union. Coca-Cola, the company that had declined the 1959 opportunity, spent the next two decades trying to catch up. The decision to skip the Moscow exhibition — a 'mistake' of missed opportunity — gave Pepsi a market that Coca-Cola could not reach for years.