The Fall of the Soviet Union
The Fall of the Soviet Union
The Beginning of the End

The Pepsi Navy

USSR Bartered with Decommissioned Soviet Warships

Posted Tuesday February 6th 2024

The Pepsi Navy
The First Capitalist Product
In 1972, Pepsi became what the New York Times called "the first capitalistic product" available in the Soviet Union.

Don Kendall, CEO of PepsiCo, had negotiated a deal where it would provide the U.S.S.R. with Pepsi to sell in the Soviet Union and the Soviets would provide Pepsi with Stolichnaya vodka to sell in the United States.

Over the next two decades, Pepsi became enormously popular. By the late 1980s, more than a billion servings of Pepsi were being enjoyed every year by Soviet citizens. But when Americans started to boycott Russian products when the Soviets invaded Afghanistan in 1979, Pepsi sought another means of payment from the Soviets.

It took a decade to reach a deal, but in 1989, the Soviet Union gave Pepsi 17 submarines, a frigate, a cruiser, and a destroyer from their navy as payment for Pepsi. At the time, it was said that the deal made PepsiCo the owner of the sixth largest navy in the world.

The ships, old and outmoded, were quickly sold for scrap. So, Pepsi's warships were never used for the purposes for which they were built — not even in the long running "Cola Wars" between Pepsi and Coca-Cola.

The Pepsi Navy Vessels
The Pepsi Navy
  • Beyond repair, Pepsi delivered the Soviet naval vessels to a Norwegian scrap yard to be dismantled and sold for parts.

The Pepsi Navy Vessels


In 1959, the USSR held an exhibition of Soviet technology and culture in New York. The United States reciprocated with an exhibition in Sokolniki Park, Moscow, which led to the famous kitchen debate. One of the American products exhibited was Pepsi Cola. After obtaining a photo of U.S. President Richard Nixon and Soviet Premier Nikita Khrushchev sipping Pepsi, PepsiCo executive Donald Kendall was able to capture the attention of the Soviet people and, in 1972, negotiate a cola monopoly in the USSR. Due to Soviet restrictions on transporting roubles abroad, PepsiCo struck a barter deal whereby Stolichnaya vodka would be exchanged for Pepsi syrup.

This deal lasted until 1990, when the USSR and PepsiCo renegotiated a US$3 billion deal to exchange syrup for vodka and a small fleet of decommissioned Soviet warships including 17 submarines, a frigate, a cruiser and a destroyer. This deal fell through before it could take place due to the fall of the Soviet Union and was renegotiated with the former nations of the USSR. The new trade deal included receiving cheese from Russia to supply its Pizza Hut locations and receiving double-hulled tankers from Ukraine. The deal also originated an erroneous factoid which claims that, after acquiring the Soviet fleet, PepsiCo briefly possessed one of the most powerful navies in the world. This is false because not only did the deal ultimately not take place but it would have only granted PepsiCo "small, old, obsolete, unseaworthy vessels".

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