Coca-Cola has beaten Pepsi-Cola to be named as the exclusive beverage provider for Subway. The deal, which was announced yesterday, covers all of Coke's products and package forms across all 20,000 Subway outlets in 72 countries.

Prior to the agreement, Coke had held only 15% of Subway's beverage business. Pepsi-Cola had the remaining 85%.

In an internal memo, Steve Heyer, Coke's president and chief operating officer, said: "This is a real win for our system and I know the entire Coca-Cola family is honoured by Subway's vote of confidence."

Pepsi, however, is very disappointed with the decision, particuarly as it has been Subway's supplier of the year for the last seven years. Dow Jones quoted a Pepsi spokesman as saying: "It's inconceivable to think this has anything to do with products or service. This is about an incredibly big bag of cash, and we hope Coke is offering the same deal to the rest of its customers."

Subway was not able to confirm when the move would be completed.