The Pepsi Fleet?

Addendum, 2024: I am less certain of my conclusion here than I was when this first went up. Dr. Paul Musgrave wrote a piece on the Pepsi Fleet in Foreign Affairs, and when I contacted him about it, said that he had other sources which weren't accessible to Google, and which I wasn't willing to pay to try to track down. I was later pointed at a second source,¹ although it's still weird how little contemporary coverage of this incident there was, relative to the amount since 2012. I now put about 75% on this being real. I would expect at least some mention, in purely naval sources if nothing else, but a contemporary book on the Soviet Navy is silent.

That said, it is indisputable that Pepsi never really had possession of operational warships, and most likely they never had physical control over even the scrap. The ships almost certainly went straight from Soviet control to the scrapyard, who then paid Pepsi the money.

Pepsi's operations behind the Iron Curtain began in 1959, during the American Cultural Exhibition in Moscow. This exhibition, best known for the Kitchen Debate between Khrushchev and Nixon, also saw Khrushchev sampling the beverage. In 1972, Pepsi finally reached an agreement with the Soviets, giving them exclusivity in the Soviet cola market until 1985. The Soviets, unwilling to spend hard currency on a luxury beverage, instead chose to trade vodka to Pepsico, which would be sold in the US.

But in 1989, the volume of Pepsi's business in the USSR had grown to the point that they needed more than just vodka to trade. In exchange, the Soviets offered 17 submarines and three surface warships, including a cruiser, a destroyer, and a frigate. Pepsi promptly turned around and sold the obsolete vessels for scrap. Briefly, this made Pepsico the owner of the world's 6th-largest navy, or possibly the 6th-largest submarine force on the planet.

All of this makes an interesting story, but it has one serious problem. As best I can tell, it's essentially false.

When I first heard of this, my initial response was to try to track down what ships were involved. (Yes, of course this is my reaction. I'm a weirdo.) Unfortunately, I came up blank. Nobody had a list of the ships involved, and there were only a handful of Soviet cruisers retired in the appropriate timeframe. All of them appear to have been sold to Indian scrapping companies, and there are no specific links between the only ship that doesn't have a specific scrapping location, Aleksandr Nevsky, and Pepsi. The chances of the ship not being identified are very low.

To make things worse, there are contemporary newspaper accounts of a deal between Pepsi and the Soviets. All of them discuss a deal for vodka and for merchant ships, and only one mentions the warship deal. It's in the New York Times opinion page from May 10th, 1989, and does contain the rather amusing quote, "We're disarming the Soviet Union faster than you are", from the head of Pepsico to a senior Bush advisor as well as the traditional list of ships involved. However, all of the other sources I have, including the NYT, suggest that the big Soviet-Pepsico deal was in 1990, with lots of details. I'd guess that the warship deal was explored at one point, but ultimately didn't come through. The New York Times, acting with all of the accuracy and good sense it has become famous for, somehow reported it as fact, and forgot to retract it later. Someone then found the old NYT article, and assumed it was right. In the best presentation of the story I've found, this appears to be explicitly what happened. As best I can tell, at some point in the last 7 years or so,² somebody ran across the old editorial and didn't bother to check that it was true. It's been picked up by media up to and including the BBC.

But Naval Gazing has higher journalistic standards than the BBC, so I decided to get to the root of the issue by emailing Pepsico to ask them if it was true. Unfortunately, they never got back to me, despite asking them several times.

The bottom line is that there are lots of places that should have information on the sale that don't, and every account can trace back to a single editorial from 30 years ago. Pepsi never owned warships, and was certainly not the 6th-largest fleet in the world.³