PepsiCo, Inc. (NASDAQ:PEP) on Thursday renewed its landmark U.S. partnership deal with Yum! Brands, Inc. (NYSE:YUM)-owned Taco Bell for 11 years through 2036.
The announcement comes just a week after rival Coca-Cola Co (NYSE:KO) secured a major beverage supply agreement with KFC, ending PepsiCo’s nearly 40-year relationship with the fried chicken chain in the U.S.
PepsiCo stock is trading higher by about 3% on Thursday, while Yum! Brands stock is higher by more than 1%, with Consumer Staples up 2.59%.
• PepsiCo stock is moving in positive territory. What’s pushing PEP stock higher?
PepsiCo Retains Key Restaurant Partnership Through 2036
PepsiCo renewed its partnership with Taco Bell in the U.S. and several international markets.
The U.S. partnership is for 11 years and covers participating Taco Bell, Taco Bell Cantina and Live Más Cafe locations nationwide.
The deal covers drinks including Pepsi, Pepsi Zero Sugar, Mountain Dew, Starry, as well as iconic exclusives Mountain Dew Baja Blast and Mountain Dew Baja Midnight.
The companies will also expand their collaboration into crafted, functional and energy beverages, targeting evolving consumer preferences and younger customers, particularly Gen Z.
Internationally, PepsiCo will serve as Taco Bell’s beverage partner in Canada, the U.K., Ireland and Thailand,
The companies also plan to develop localized beverages and market-specific initiatives.
Anne Fink, president of PepsiCo Global Away from Home, highlighted the companies’ history of creating successful and innovative products, including Baja Blast and Doritos Locos Tacos.
PepsiCo North American Business Remains Under Pressure
The renewed partnership brings some confidence to the PepsiCo brand, which is struggling to revive growth in its North American beverage business.
During its recent earnings call in early October, PepsiCo also lowered its fiscal 2026 earnings outlook amid ongoing margin pressure in North America.
The company anticipates margin pressure in the fourth quarter due to rising input costs and the expiration of tariff benefits.
Management emphasized a strategic focus on cost reduction and reinvestment in growth areas, particularly in North America, to address competitive pressures and improve execution.
PepsiCo has witnessed price target reductions recently by analysts, including:
- Citigroup: Neutral (Lowers target to $163 on Oct. 21)
- TD Cowen: Buy (Lowers target to $177 on Oct. 7)
- Guggenheim: Buy (Lowers target to $155 on Oct. 6)
The stock carries a Buy rating with a consensus price target of $146.
Coca-Cola’s Recent KFC Win Intensifies Beverage Rivalry
The news follows Coca-Cola’s announcement on Oct. 15 that it would replace PepsiCo as KFC’s beverage supplier across approximately 3,600 U.S. restaurants. However, international KFC locations will continue to serve PepsiCo beverages.
The transition for KFC will begin in January 2027 and is expected to be completed by spring 2027.
Coca-Cola already supplies major chains, including McDonald’s Corporation (NYSE:MCD) and Wendy’s Company (NASDAQ:WEN).
PEP Price Action: PepsiCo shares were up 2.65% at $136.18 and Yum Brands shares were up 1.18% at $153.03 at the time of publication on Thursday, according to Benzinga Pro data.
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