Over thirty years ago, PepsiCo unexpectedly became the owner of part of the Soviet fleet, acquiring 17 submarines, a cruiser, and several warships. For a brief moment, the soft drink company was counted among the world’s largest naval powers, as reported by NDTV.
The unusual deal was born out of the Soviet Union’s limited ability to trade in hard currency. Since the ruble had little value outside the country, barter agreements became the norm. In the 1970s, Pepsi struck an arrangement that allowed it to sell its cola in the USSR in exchange for Stolichnaya vodka, which it could then sell in the United States for cash.
This setup worked until the late 1970s, when geopolitical tensions, particularly the Soviet invasion of Afghanistan, soured the American market on Soviet vodka. By 1989, vodka had lost much of its appeal abroad, leaving the Soviets unable to pay Pepsi in their usual way. Instead, they transferred a fleet of decommissioned submarines and warships. The vessels were never used militarily and were eventually sold for scrap.
PepsiCo executives even poked fun at the strange deal. Then–CEO Donald M. Kendall quipped to US national security adviser Brent Scowcroft that the company was disarming the Soviet Union faster than Washington.
Kendall’s ties with the Soviet Union stretched back decades. In 1959, at an American exhibition in Moscow, he poured Pepsi for Soviet leader Nikita Khrushchev and US Vice President Richard Nixon as the two clashed in what became known as the Kitchen Debate. The photo opportunity helped Pepsi make its mark in the Soviet Union.
By 1972, Kendall had secured a formal agreement to sell Pepsi in the USSR. As part of the deal, Coca-Cola was kept out of the Soviet market. But with rubles effectively worthless outside Soviet borders, Pepsi continued to rely on barter trade, first with vodka and later with Soviet naval vessels.
