In 1989, PepsiCo Inc., the maker of Pepsi, acquired 17 submarines, a cruiser, a frigate, and a destroyer from the Soviet Union. In recent years, an internet legend has grown up around this deal, which holds that Pepsi briefly possessed the sixth-largest fleet in the world. In one way, that isn’t far off. According to an analysis of Jane’s Fighting Ships 1989-90, a country operating a squadron of 17 submarines would have tied with India for possessing the seventh-largest fleet of attack submarines.
Yet in any real sense the story is false. What PepsiCo acquired were small, old, obsolete, unseaworthy vessels. The Pepsi navy no more conferred military power than a rusting Model T could have been a Formula 1 contender. What’s more, the ships themselves were immediately turned over to a Norwegian shipyard to be scrapped. PepsiCo was more a middleman than a maritime power.
Most interpretations of the story get its meaning wrong, too. The Pepsi navy is sometimes portrayed as an embarrassment for the USSR. Far from it. The multinational firm and the country founded by Vladimir Lenin were business partners, and in 1989 Pepsi executives were bullish on Soviet prospects. PepsiCo acquired the rusting fleet as part of a multibillion-dollar bet on the long-term stability of the Soviet Union, an enormous market that had little to trade immediately besides raw material and the promise of future profits.
The Pepsi navy isn’t a story from the era of Soviet collapse. It’s from the brief moment right before, when the Soviet Union looked likely to survive even though the Cold War had ended. The rusting submarines were one way in which Soviet leaders and Western corporations could establish world peace and a new, post-communist prosperity led by business.
American leaders hoped that exposure to Western business could transform the Soviet Union into a country just like theirs. Pepsi executives influenced U.S. policymakers to gain a major advantage in its rivalry with Coca-Cola. Soviet officials saw the deal as part of a larger strategy of external trade that could help revitalize their creaking economy. In the end, almost nobody got what they wanted.