PepsiCo is keeping the drinks flowing at Taco Bell through 2036, extending a decades-old partnership. The announcement landed a week after Taco Bell's sister brand KFC said it will move its U.S. beverage business to Coca-Cola.
An Oct. 15 memo from KFC U.S. President Catherine Tan-Gillespie, reviewed by CNBC, said Pepsi is still an important partner for Yum Brands and for KFC outside the U.S. That relationship dates back to when Pepsi owned Taco Bell and KFC prior to divesting them into an independent publicly traded company in 1997.
Big chains do not often change soda suppliers, but they do as Coke and Pepsi compete with perks to win contracts. KFC's U.S. switch was described as more symbolic, another instance of the Atlanta-based Coca-Cola outpacing Pepsi in the soda category.
Taco Bell's ties with Pepsi go beyond fountain rights. The chain has long offered exclusive items built on PepsiCo brands, including Mountain Dew Baja Blast and Doritos Locos Tacos. The renewed deal also notes that Taco Bell's international markets - including Canada, the UK, Ireland, and Thailand - will offer Pepsi beverages.
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For investors tracking beverage contracts with major restaurant chains, the Taco Bell renewal runs through 2036 and confirms Pepsi products in key Taco Bell international markets. It also comes alongside KFC's U.S. switch to Coke, while the KFC memo states that Yum and KFC's international operations continue to view Pepsi as a significant partner.
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