PepsiCo keeps Taco Bell close as Coca-Cola wins over KFC
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PepsiCo has renewed its US beverage partnership with Taco Bell for 11 years, keeping its drinks in Taco Bell restaurants through 2036.
The agreement, announced Oct. 22, covers participating Taco Bell, Taco Bell Cantina, and Live Más Cafe locations nationwide. PepsiCo will also remain Taco Bell’s beverage partner in Canada, the UK, Ireland, and Thailand.
Timing gives the deal extra weight. The previous week, KFC said it would replace Pepsi with Coca-Cola at its roughly 3700 US restaurants, ending a relationship of about 40 years. That switch begins in January 2027.
Taco Bell and KFC are both owned by Yum! Brands. Within about a week, PepsiCo lost one of Yum’s biggest US chains and secured another.
Fountain contracts are among the most valuable deals in beverages
Restaurant pouring rights rarely make headlines outside the trade, but they matter a great deal to beverage companies. An exclusive fountain contract puts a brand in front of customers every day, at the moment they are choosing a meal. Losing one means losing that presence for years.
Long contract terms suit both sides. A restaurant chain gets supply certainty, joint marketing, and a partner to develop new drinks. The beverage company gets guaranteed volume and a showcase for its products.
KFC’s decision shows these relationships are not permanent, even after decades. That makes the Taco Bell renewal more than a routine extension. PepsiCo has held on to one of its most closely integrated restaurant partners at a time when Coca-Cola has shown it can win major accounts.
Co-created products give Taco Bell reasons to stay
The Taco Bell relationship stands out because the 2 companies have built products together that customers associate with the chain.
Mountain Dew Baja Blast is the clearest example. The flavor was created through the partnership and has grown into what PepsiCo calls a billion-dollar brand. Doritos Locos Tacos, another product of the tie-up, reaches its 15th anniversary in 2027, and the companies say new flavors are planned.
The menu shows how far the collaboration now runs. Recent releases have included Baja Midnight, a limited-time pink Baja Blast, Baja Blast Gelato, and a Baja Blast Pie.
Products like these are hard to replicate with a new supplier. A chain that switched to a rival would lose drinks its customers ask for by name, which gives PepsiCo leverage that a standard cola contract does not.
Meg Farren, president, North America at Taco Bell, said: “Strong partnerships have always been critical to how Taco Bell grows and evolves.”
The next phase focuses on functional and energy drinks
The renewal also sets out where the companies want to grow. They plan to expand crafted, functional, and energy beverages, including energy drinks aimed at Gen Z customers and new morning and afternoon occasions.
That matters for a chain where drinks are usually an add-on to a meal. Beverages that give customers a reason to visit at other times of day could add traffic without changes to the core food menu.
Taco Bell’s premium Refrescas platform is part of that push. It is designed for elevated food and drink pairings, putting more attention on the drink itself.
Anne Fink, president of PepsiCo Global Away from Home, said: “We’re excited about what we can build together over the next 11 years.”
The question now is whether other restaurant chains reopen their beverage contracts. KFC’s move showed that a decades-old partnership can change hands, while Taco Bell’s renewal shows how co-created products can hold a relationship together. Which of those forces will shape the next round of fountain deals across fast food?
Source:
PepsiCo
