Pepsi Had a Russian Naval Fleet – Summary and Key Points: Before cash transactions, bartering was essential—even between nations. In the late Cold War, Pepsi famously traded with the Soviet Union not for currency, but commodities like Stolichnaya vodka.
-When vodka lost popularity due to geopolitical tensions, the Soviets instead exchanged a fleet of submarines and warships in 1989, briefly making Pepsi an owner of naval vessels.
-Pepsi humorously claimed it was “disarming the Soviet Union faster” than the U.S. government, though it ultimately sold the fleet for scrap.
-This quirky historical footnote showcases how soda diplomacy briefly intersected with geopolitics, highlighting Pepsi’s creative adaptability to Cold War economics.
-That 1 Word Reason: Money
How Pepsi Bought a Chunk of the Old Russian Navy
Before the advent of money, there was bartering. Even before man traded coins, ingots of metal, bags of grain, or blocks of tea in lieu of cash transactions, trading one set of goods for another was the staple of early economies.
But it also has been used much more recently—and perhaps, most remarkably—by the Soviet Union for Western good. One of the most widely used of these Western commodities? Pepsi.
Soda Diplomacy
In 1959, Donald M. Kendall, an executive at Pepsi, scored an enormous coup for the company during an American exhibition in Moscow.
At the exhibition, which displayed American cars, appliances, a full kitchen, and other sundries, Nikita Khrushchev, the leader of the Soviet Union, and Vice President Richard Nixon, started up an impromptu conversation at the exhibition, now known as their Kitchen Debates.
Kendal smelled an opportunity, pouring the leaders’ cups of Pepsi. A photographer caught the moment in a now-famous image.
Much later, in 1972, then-Pepsi CEO Kendall concluded negotiations with the Soviet Union for the marketing and sale of Pepsi in the USSR while also barring Coca-Cola. It was a huge success: Pepsi’s sticky-sweet syrup sent to the Soviet Union flowed abundantly.
At its peak, a billion servings of the soda were consumed annually within the Soviet bloc. However, the company had to overcome an enormous issue: cold, hard cash.
On the international market, Soviet rubles were essentially worthless for trade, thanks to the arbitrary value given to them by Soviet economic planners. So Pepsi and the Soviet Union agreed to barter.
In exchange for Pepsi’s soda syrup, the Soviet Union would give the company Stolichnaya vodka. Pepsi, in turn, sold the vodka in the United States.
The deal was solid for a while. But worsening geopolitical tensions, exacerbated by the Soviet invasion of Afghanistan and subsequent Soviet-Afghan War, meant that Soviet-made vodka was no longer a popular drink.
The Kremlin had to find something else they could barter with for Pepsi’s popular fizzy drink.
Enter the Russian Submarines
In 1989, Pepsi became the owner of an enormous fleet of warships as part of a deal penned with the Soviet Union. The USSR gave away 17 old submarines—for just $150,000 each!—plus a destroyer, a cruiser, and a frigate in place of the customary Stolichnaya vodka.
At the time, Pepsi had 21 plants in the Soviet Union, with grand plans for building 26 more. Additionally, the company purchased oiling ships from the Soviet Union, selling and leasing them to various companies and governments.
And while that deal gave Pepsi, in theory, a not-insignificant fleet of warships, they weren’t armed. Pepsi didn’t accept their delivery to bolster their holdings abroad or force their way into new markets.
Foxtrot-class submarine. Image Credit: Creative Commons.
Instead, the American soda giant bought them for scrap, selling their metallic hulls for recycling.
Following the end of Cold War hostilities between the Soviet Union and the United States, Pepsi CEO Kendall jabbed at President George H.W. Bush’s national security adviser Brent Scowcroft, joking, “We’re disarming the Soviet Union faster than you are.”
Postscript
At the time, a journalist summed up the situation succinctly:
“So whatever the political-military climate, it will be a long time before East-West economic exchange becomes really important. Meanwhile, carting off excess arms for Pepsi isn’t a bad way to help perestroika and improve Russian humors.”
Russian Foxtrot-class Submarine. Image Credit: Creative Commons.
About the Author: Caleb Larson
Caleb Larson is an American multiformat journalist based in Berlin, Germany. His work covers the intersection of conflict and society, focusing on American foreign policy and European security. He has reported from Germany, Russia, and the United States. Most recently, he covered the war in Ukraine, reporting extensively on the war’s shifting battle lines from Donbas and writing on the war’s civilian and humanitarian toll. Previously, he worked as a Defense Reporter for POLITICO Europe. You can follow his latest work on X.
Andrew M Winter
March 10, 2025 at 9:23 am
Oh Gawd
I knew that there was a LOT of stuff that killed the Soviet Union, McDonald’s in Moscow, Used Blue Jeans, BIBLES and such. But this is one I am going to save. WTG Pepsi.