Pepsi And The Legend That It Once Had The World’s 6th Largest Submarine Fleet
The story is real at its core but often exaggerated online. Pepsi really did accept old Soviet submarines and warships as part of a barter deal, but the idea that it truly became a military naval power is more legend than reality.
This story is often told in a slightly exaggerated way on the internet, but its core is genuinely true. At one point, Pepsi accepted warships and submarines instead of cash in its trade with the Soviet Union. The reason was simple: the Soviet ruble could not be freely used on international markets. In other words, the Soviets could not pay Pepsi in dollars, and Pepsi had to find another way to get paid for what it was selling.
The story begins in 1959. During the American National Exhibition held in Moscow, then U.S. Vice President Richard Nixon took Soviet leader Nikita Khrushchev to the Pepsi stand. During that visit, Khrushchev tasted Pepsi, and the brand became visible to the Soviet public for the first time on that scale. According to PepsiCo’s own account, that event became the symbolic starting point of the company’s entry into the Soviet market.
Richard Nixon and Nikita Khrushchev
The real turning point came in 1972. Pepsi chief Donald Kendall, also using his close relationship with Nixon, helped open the way for the brand to be sold in the Soviet Union. But there was a major problem: the Soviets could not pay with convertible currency. The solution was a barter system. Pepsi sent syrup and products to the Soviet Union, and in return received goods such as Stolichnaya vodka. Pepsi then sold that vodka in other markets and generated revenue that way, allowing trade to continue without direct cash payments. This agreement made Pepsi one of the first major Western consumer brands sold in the Soviet Union.
As the years passed, the scale of the business grew so much that vodka alone was no longer enough as a means of payment. By 1989, new agreements had reached much larger sums. This is where the most famous part of the story begins. The Soviet side offered old warships and submarines as part of the payment package instead of cash. Pepsi accepted. On paper, it looked as if the company had suddenly ended up with submarines and various warships. That later gave birth to the legend that “Pepsi once had one of the largest submarine fleets in the world.”
But this is the key point. Pepsi did not become a real military power. The vessels it received were not a modern, active fleet kept for war. They were largely aging Soviet naval assets headed for the scrapyard. Pepsi’s goal was not to operate them, but to dispose of them quickly and convert them into money. In fact, the ships were later evaluated through recycling and scrap sales. So while the core of the story is true, the claim that “Pepsi had a navy powerful enough to go to war” is technically too strong.
A Soviet Diesel Submarine
Even so, the strangeness of the story does not disappear. In the final years of the Cold War, one of the world’s biggest beverage companies first accepted vodka from the Soviets to get paid, and then, as the scale increased, accepted old warships as part of the deal. It remains one of the most absurd trade stories of the 20th century, a bizarre moment where capitalism and a planned economy collided in a way that still sounds unbelievable today.