PepsiCo has renewed its long-standing beverage partnership with Taco Bell through 2036, securing a major restaurant customer just days after KFC announced plans to replace Pepsi products with Coca-Cola at its U.S. locations.
Announced on October 22, the 11-year renewal covers participating Taco Bell, Taco Bell Cantina and Live Más Cafe locations across the United States. The agreement also maintains PepsiCo’s role as Taco Bell’s beverage partner in Canada, the United Kingdom, Ireland and Thailand.
PepsiCo Secures Long-Term Partnership With Taco Bell
Under the renewed agreement, Taco Bell restaurants will continue serving beverages from PepsiCo’s portfolio, including Pepsi, Pepsi Zero Sugar, Mountain Dew and Starry. The partnership also supports signature collaborations such as Mountain Dew Baja Blast, which has become closely associated with Taco Bell’s menu.
The companies said they will continue working together on new food and beverage offerings, with a focus on changing consumer preferences and creating new experiences for customers.
Their collaboration may also expand into crafted drinks, functional beverages and energy options, particularly for younger consumers and different dining occasions.
KFC’s Move to Coca-Cola Creates a Contrast
The announcement comes shortly after KFC confirmed that Coca-Cola will become its beverage partner in the United States, ending a relationship with PepsiCo that dates back nearly four decades.
The transition is expected to begin in January 2027, with Coca-Cola products reaching KFC’s U.S. restaurants by spring. The change affects thousands of locations and marks a significant shift in the competition between the two beverage companies.
Despite the change at KFC, PepsiCo continues to maintain important relationships within Yum! Brands, the parent company of KFC and Taco Bell. PepsiCo has also renewed beverage agreements covering KFC’s international operations.
Why the Deal Matters for PepsiCo
The Taco Bell renewal gives PepsiCo long-term visibility across an established restaurant network at a time when competition in the U.S. beverage market remains intense. Securing the partnership through 2036 helps preserve a key sales channel while the company works to strengthen its North American business.
For Taco Bell, the agreement provides continuity while leaving room for new drinks and collaborative products. The relationship has already produced popular offerings such as Baja Blast and Doritos Locos Tacos, demonstrating how food and beverage partnerships can help differentiate a restaurant brand.
What Comes Next?
The renewed agreement signals that PepsiCo’s relationship with Yum! Brands remains significant, even as individual restaurant chains make different choices about their U.S. beverage suppliers.
While KFC prepares for its transition to Coca-Cola, Taco Bell will continue serving PepsiCo beverages under the extended contract. The next phase of the partnership will focus on product innovation, expanding beverage choices and responding to evolving customer tastes.
