PepsiCo announced on Thursday that it has renewed its long-standing partnership with Taco Bell, extending the agreement through 2036. The renewal comes approximately one week following KFC’s announcement that it will transition to Coca-Cola as its primary beverage supplier in the United States.
The timing of these developments highlights the competitive dynamics between major beverage companies seeking restaurant partnerships. While switches in beverage suppliers among large restaurant chains are uncommon, such transitions have occurred periodically as Coca-Cola and PepsiCo pursue contracts through various incentives and perks.
Coca-Cola’s acquisition of KFC’s U.S. business represents a symbolic victory in the ongoing competitive battle between the two beverage giants, particularly in the broader soda category where the Atlanta-based company has been gaining ground against its rival. However, PepsiCo maintains significant influence within the Yum Brands portfolio, which owns both Taco Bell and KFC.
The historical relationship between PepsiCo and the restaurant chains dates to the late 1990s, when PepsiCo divested its restaurant operations and spun them into a separate public company in 1997. Despite KFC’s defection in the U.S. market, Pepsi continues to serve as an important partner for Yum Brands and maintains its beverage supply role in KFC’s international locations, according to a memo from KFC U.S. President Catherine Tan-Gillespie distributed on October 15.
Taco Bell’s partnership with Pepsi has enabled the chain to develop exclusive menu offerings incorporating Pepsi products, including Mountain Dew Baja Blast and Doritos Locos Tacos. The renewed agreement will also maintain Pepsi’s presence in Taco Bell’s international markets, including Canada, the United Kingdom, Ireland, and Thailand.
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