How the USSR Made Pepsi a Naval Power

Updated: Dec 8, 2020

There is a saying in Slavic countries, that when one does something utterly over-the-top – or more specifically, solves a problem in such a way that it causes a bunch of problems all its own – that they have utilized the ‘Russian Solution’. The old saying points to that uniquely-Russian tendency to go crazy and overdo things or get it to a point where the project is never even complete.


While the Soviets initially resisted all attempts at trade from capitalist nations, America’s dominance in the world market eventually became unignorable. The sudden integration of American businesses into the Soviet market resulted in a state of affairs in which the Russian government, owing money it did not have, proceeded to pay instead in surplus military equipment. The result was that about three months in the ‘80s PepsiCo had the sixth-largest navy on the planet.


PepsiCo, eager to corner the market after getting roundly trounced by Coke in the West, was more than happy to step in. A deal was struck: Pepsi agreed to distribute Stolichnaya products throughout North America, and in return, Russia would let Pepsi set up factories in Russia for distribution to the Middle and the Far East.


It was the first time an American company had ever set up shop in Russia, and the first time a Western power had done so since the Revolution. There were diplomatic reasons for this sea-change: in a well-publicized 1959 debate, soviet Premier Nikita Khruschev and then-Vice-President Richard Nixon nearly shouted each-other hoarse in ideological combat before toasting their differences over a glass of Pepsi. This opened the door for PepsiCo to start making inroads with Russian state beverage producers, the largest of which was the Stolichnaya distillery.


But Russia is a huge country, and by the late ‘80s was not quite up to the task of maintaining a distribution network of that size. As a result, the Soviets asked Pepsi to intervene and paid them how they could; specifically, with four warships and seventeen submarines. And for a few shining moments, The Pepsi Corporation became a major naval power.


This wasn’t the first time the Soviets tried to pay a tab with strange cargo, and it wouldn’t be the last: Swedish supergroup ABBA was at once point reimbursed by the Soviet government in crude oil commodities. The Great Pepsi Naval Fleet was soon sold for scrap, but to this day Russia isn’t averse to accepting barter as a method of payment, recently accepting payment in palm oil from Malaysia for a fighter jet. It’s the Russian Solution again – Pepsi needs money? Pay them. Give them the fleet, if you have to.

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