KFC US Swaps PepsiCo for Coca-Cola Partnership After Nearly 40 Years

Key summary

KFC in the United States has announced a strategic shift in its beverage partnership, ending a nearly 40-year collaboration with PepsiCo to begin working with Coca-Cola. The new agreement was officially declared on October 15, 2026, with the transition of beverages scheduled to start in January 2027. Coca-Cola expects this rollout to cover approximately 3,600 locations across the US by the spring of that same year. This move marks a significant change for KFC US, which previously had a deep historical tie to PepsiCo; PepsiCo owned KFC before spinning off the restaurant business in 1997, after which the beverage partnership continued for decades. While financial details and contract values remain undisclosed, the deal is specific to the US market only. PepsiCo confirmed it will maintain its partnerships with KFC International and Taco Bell, meaning the global brand does not necessarily follow suit. The announcement comes amidst KFC's broader efforts to revitalize its US business, including the launch of its 'KWENCH by KFC' beverage platform in June 2026 featuring items like Boba Refreshers and Krunch Shakes, and the opening of an Open House prototype restaurant in McKinney, Texas, in September 2026. Industry analysts suggest that beverage partners now play a more strategic role in driving menu innovation, marketing campaigns, and customer traffic. Robert Moskow from TD Cowen noted that Coca-Cola and Keurig Dr Pepper have been investing heavily to drive growth, whereas PepsiCo has focused on cost reduction and margin expansion, with Coca-Cola gaining soft drink market share while Pepsi lost some over the past two years. Critics also raise concerns about brand perception among long-time customers and whether this shift opens the door for other competitors. The success of the new partnership will be measured starting in 2027 by metrics such as drinks per bill, total spend, customer frequency, and overall reception.