When Pepsi Had the 6th Largest Military in the World
In1989,theSovietUniontraded17submarines,acruiser,afrigate,andadestroyertoPepsiCoinexchangeforPepsi.Forabriefmoment,Pepsihadmorefirepowerthanmostcountries.
The Soviet Union couldn't buy Pepsi with rubles. The ruble was worthless outside Soviet borders — it wasn't a convertible currency. So when the USSR wanted Pepsi (and it really wanted Pepsi), it had to get creative with payment.
The Pepsi-Soviet relationship started in 1959, when Vice President Richard Nixon and Soviet Premier Nikita Khrushchev shared a Pepsi at the American National Exhibition in Moscow. Khrushchev liked it. A deal was struck: PepsiCo would sell Pepsi in the Soviet Union in exchange for Stolichnaya vodka, which Pepsi would distribute in the West.
It worked for years. But by the late 1980s, vodka sales weren't covering the bill. The Soviets were drinking enormous quantities of Pepsi, and there wasn't enough vodka demand to balance the trade.
So the Soviet Union paid in warships.
In 1989, the USSR transferred 17 submarines, a cruiser, a frigate, and a destroyer to PepsiCo — making Pepsi briefly the owner of the 6th largest navy in the world by submarine count.
PepsiCo had no use for a navy. The company immediately sold the vessels to a Swedish scrap dealer. But for a surreal moment in history, a soft drink company had more submarines than all but a handful of nations.
Pepsi's CEO, Donald Kendall, reportedly told National Security Advisor Brent Scowcroft: "We're disarming the Soviet Union faster than you are."
The Pepsi Navy explained
How a Cold War soft drink deal ended with a soda company owning more submarines than most countries.
What you now know
- The Soviet Union paid PepsiCo in warships because the ruble was not convertible — vodka sales alone couldn't cover the trade imbalance
- PepsiCo briefly controlled 17 submarines, a cruiser, a frigate, and a destroyer — the 6th largest submarine fleet in the world
- The entire fleet was immediately sold for scrap, but Pepsi's CEO joked they were "disarming the Soviet Union faster than" the US government