Is it true that Pepsi briefly owned Soviet warships?
Did Pepsi briefly become one of the largest navies in the world? Historian Kristy Ironside considers the real history, as part of our Q&A series in which historical conundrums are answered by experts…
As remarkable as it may seem, Pepsi did indeed own Soviet warships. It all started back in 1989, when a Norwegian shipping company owned by a friend of Pepsi CEO Donald M Kendall announced it had brokered a deal to buy Soviet warships and pay for them, in part, with Pepsi. A joint venture was formed between Pepsi, the Norwegian firm and the Soviet government to facilitate the trade, with Pepsi taking 25 per cent of the ships’ sales price as payment for Soviet Pepsi imports. One year later, Kendall signed another deal, worth an estimated $3bn, this time trading Pepsi for Stolichnaya vodka and at least 10 Soviet-built ships.
Both deals worked around a longstanding obstacle to trading with the Soviets. The rouble was non-convertible – that is, it was worthless outside the Soviet Union. Because the Soviet government was perpetually short of convertible, or “hard”, currency, it often resorted to bartering for imports. Since 1972, it had bartered vodka for Pepsi syrup, which it mixed with carbonated water and bottled domestically. Pepsi embraced this arrangement, reasoning its first-mover advantage would pay off when the rouble became convertible. In the meantime, Stolichnaya vodka became less desirable, especially after American consumers boycotted it in response to the Soviet invasion of Afghanistan. This helps explain why ships were thrown into the 1990 bargain.
It has often been suggested that, by owning these ships, Pepsi became one of the largest navies in the world. In reality, it never took possession of the vessels acquired under the 1989 deal, which were always intended to go to the Norwegian firm, and were in fact sent to the scrap heap because they were obsolete. As for the 1990 deal, it collapsed along with the USSR.
Kristy Ironside is assistant professor of Russian history at McGill University
This Q&A first appeared in the April 2022 issue of BBC History Magazine