KFC, owned by Yum! Brands, announced Thursday that Coca-Cola will become KFC's new U.S. beverage partner, ending a nearly 40-year relationship with PepsiCo. The agreement covers all 3,600 KFC restaurants across the U.S. The transition will begin in January 2027, with Coca-Cola products expected at all U.S. KFC restaurants by spring. However, international KFC locations will continue serving PepsiCo beverages. The companies did not disclose the financial terms of the agreement.
CNBC reported that the beverage switch supports KFC's broader "Kentucky Fried Comeback" strategy to attract customers and regain market share from Chick-fil-A and Popeyes. KFC U.S. President Catherine Tan-Gillespie said the partnership represents an important step in KFC's turnaround. Tan-Gillespie highlighted opportunities to introduce new beverages, strengthen restaurant operations and improve customer experiences. KFC faces intense competition in the U.S. chicken market, where rivals have gained ground through menu innovation and aggressive expansion.
The agreement is a competitive win for Coca-Cola as PepsiCo struggles to revive growth in PepsiCo's North American beverage business. PepsiCo's relationship with KFC dates back to PepsiCo's ownership of the restaurant chain. PepsiCo spun off KFC in 1997 but remained a key beverage supplier to Yum! Brands. PepsiCo's North American carbonated soft drink business continues to underperform the broader category.
PepsiCo lowered the company's fiscal 2026 earnings outlook during a recent earnings call amid ongoing margin pressure in North America. PepsiCo outlined additional cost-cutting measures to control expenses and support growth. Jay Woods, chief market strategist at Freedom Capital Markets, said losing a high-profile customer like KFC could further damage PepsiCo's image. Activist investor Elliott Investment Management is pressuring PepsiCo to shed underperforming assets and improve PepsiCo's North American operations.
However, Reuters reported that PepsiCo has renewed beverage agreements with Taco Bell and KFC International. The Taco Bell agreement runs for 10 years. PepsiCo also secured a 10-year beverage agreement with Subway in 2024, replacing Coca-Cola at Subway's U.S. restaurants.
The KFC agreement strengthens Coca-Cola's position in the U.S. quick-service restaurant market. Coca-Cola already supplies major chains including McDonald's and Wendy's. CNBC reported that Coca-Cola has also secured partnerships with Culver's, Arby's and Panda Express in recent years. Dagmar Boggs, Coca-Cola's president of foodservice and on-premise operations in North America, said the partnership would combine KFC's food offerings with Coca-Cola's beverage portfolio and innovation capabilities.
Benzinga Pro data showed Yum! Brands shares unchanged at $150.83 during premarket trading on Friday. Benzinga Pro data showed Coca-Cola shares up 0.80% at $92.74 during the same session. Benzinga Pro data showed PepsiCo shares up 0.51% at $129.03 during the same session.
Coca-Cola Replaces Pepsi as KFC's U.S. Beverage Partner After 40 Years
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Summary
KFC has announced Coca-Cola will replace PepsiCo as its U.S. beverage partner in 2027, ending a 40-year deal. The shift affects all 3,600 U.S. locations but not international outlets. As altcoins to watch gain attention, KFC’s move aligns with its 'Kentucky Fried Comeback' strategy. Coca-Cola now supplies McDonald’s, Wendy’s, and recently added Culver’s, Arby’s, and Panda Express. Meanwhile, PepsiCo has renewed deals with Taco Bell and KFC International. With market moves like this, the fear and greed index remains a key barometer for traders.
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