- PepsiCo acquired 17 submarines, a cruiser, and warships from the Soviet Union in 1989
- The Soviet Union traded naval vessels to PepsiCo due to currency issues and vodka's declining sales
- PepsiCo's ownership briefly made it the sixth-largest naval power worldwide by ship count
In one of the strangest business deals in history, PepsiCo briefly became the owner of a small Russian Naval Fleet. Over three decades ago, the company acquired 17 submarines, a cruiser, and several warships, making PepsiCo the sixth-largest naval power overnight.
Back then, barter deals between countries were common, as cash transactions weren't always possible. PepsiCo previously traded soda with the Soviet Union in exchange for Stolichnaya vodka.
But by 1989, vodka's popularity had dropped, leaving the Soviets short on a way to pay. Instead, they handed over a fleet of submarines and warships. These ships, though, were never used for military purposes and were eventually sold for scrap, according to the BBC.
PepsiCo even joked that by owning Soviet warships, it was helping reduce the Soviet military faster than the US government.
Pepsi CEO Donald M. Kendall jabbed at President George HW Bush's national security adviser Brent Scowcroft, joking, "We're disarming the Soviet Union faster than you are."
In 1959, Kendall attended an American exhibition in Moscow, which showcased American products like cars, kitchen appliances, and even a full kitchen.
During the exhibition, Soviet leader Nikita Khrushchev and US Vice-President Richard Nixon got into a debate about capitalism versus communism right there in the kitchen, which is famously known as the Kitchen Debates, according to National Security Journals.
Kendall noticed an opportunity and poured cups of Pepsi for both leaders, and the photo became iconic. Years later, in 1972, Kendall finalised a deal to sell Pepsi in the Soviet Union but as part of the deal, Coca-Cola was barred from entering the Soviet market.
The Soviet currency, Ruble, had almost no value outside the Soviet Union. This made it impossible for Pepsi to get real cash from the Soviets to pay for their soda. So, in exchange, the Soviets started giving Stolichnaya vodka in exchange for that. Pepsi then sold that vodka in the United States, turning it into a profit.
The deal worked well for a while, but geopolitical tensions, especially the Soviet invasion of Afghanistan in 1979, made Soviet vodka unpopular in the US market. This eventually led to Pepsi trading for submarines and warships in 1989.
