PepsiCo has renewed its US beverage partnership with Taco Bell for 11 years, keeping its drinks in the chain’s restaurants through 2036. The deal was announced on 22 October 2026, a week after KFC, a sister brand under Yum! Brands, chose Coca-Cola as its US supplier.
The agreement covers Taco Bell, Taco Bell Cantina and Live Más Cafe sites in the US, and PepsiCo also remains the chain’s drinks partner in Canada, the United Kingdom, Ireland and Thailand. Financial terms were not disclosed. Pepsi, Pepsi Zero Sugar, Mountain Dew, Starry and the exclusive Baja flavours stay on the menu at participating US restaurants.
KFC will begin moving its 3,600 US restaurants to Coca-Cola in January 2027, with every site expected to pour Coke by spring. PepsiCo had supplied the chain since it bought KFC in 1986, and kept the account after Yum! was spun off in 1997. Bank of America analysts estimate the loss could cost PepsiCo about $500m in annual sales.
PepsiCo says Mountain Dew Baja Blast, created with Taco Bell, has grown into a billion-dollar brand. That figure comes from the company and has not been independently confirmed. Doritos Locos Tacos, another joint product, reaches its 15th anniversary in 2027, and both companies plan more functional and energy drinks.
The Taco Bell renewal lands as PepsiCo’s North American soft drinks business lags the wider category, and the company has lowered its earnings outlook for 2026. Activist investor Elliott Investment Management is pressing it to shed weaker assets. PepsiCo also renewed its agreement for KFC restaurants outside the US, which reaches African markets such as South Africa, Nigeria and Kenya, although supply terms by country were not disclosed.
