PepsiCo has renewed a deal to supply Taco Bell with drinks, announcing the new contract days after sister chain KFC defected to Coca-Cola.
The drinks giant will remain Taco Bell’s US supplier through 2036, the companies said yesterday (22 October).
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They will also continue to work together on food concepts including new flavours planned for the Doritos Locos Tacos line-up.
In a statement, PepsiCo said the contract, which takes in markets outside the US, “will focus on staying ahead of emerging beverage trends across crafted, functional and energy beverages, including energy offerings designed to appeal to Gen Z consumers”.
The deal also extends the company’s supply contract with Taco Bell in Canada, Ireland, Thailand, and the UK.
Last week, PepsiCo lost its US contract with KFC, its partner of around 40 years, to rival Coca-Cola.
Both KFC and Taco Bell belong to Yum! Brands, which originally branched out from PepsiCo as an independent public entity in 1997.
Notably, in its latest quarter ending June, Taco Bell was a key growth engine for Yum! Brands in the US, delivering a 7% rise in same-store sales. KFC recorded a 2% increase across the same timeframe.
Losing KFC and its footprint of more than 3,700 locations across the US compounds regional troubles for PepsiCo.
Core operating margin for PepsiCo’s North American beverage unit fell 15 basis points in its third quarter results, over pressures on “volume and channel mix” as well as heightened marketing expenditures.
Divisional net revenue rose 5% in the period mainly attributed to acquisitions last year. Organic revenue dipped “slightly”, though “organic volume trends” showed sequential progress supported by “functional hydration” and flavoured fizzy soft beverages.
Faced with margin strain in its North American business, the Mountain Dew brand owner cut its 2026 earnings projection when announcing its third quarter results last week. The company now expects core earnings per share to grow 1% to 2% this year, down from its previous forecast of “low end” of the 4% to 6% range.
