Thousands of US stores to switch beverage supplier in blow to PepsiCo

A bottle of Pepsi-Cola. [Reuters]
A bottle of Pepsi-Cola. [Reuters]

KFC, one of America's most recognizable fast-food chains, is ending its four-decade partnership with Pepsi and switching its beverage supplier to Coca-Cola.

According to the Wall Street Journal, KFC said it has signed a contract to sell Coca-Cola products at thousands of US stores starting in January.

The deal means PepsiCo will lose one of its major restaurant customers.

The supplier switch is expected to affect the ongoing market-share battle between longtime rivals Coca-Cola and PepsiCo in the US beverage market. The split has drawn particular attention given the two companies' shared history: PepsiCo acquired KFC in 1986 and owned it until 1997, when it spun off its restaurant division — which also included Pizza Hut and Taco Bell. Even after the separation, KFC remained one of PepsiCo's largest US restaurant accounts.

KFC is among the biggest sellers of Pepsi products among US restaurant chains, according to Beverage Digest, an industry research firm. Its US stores currently carry a range of PepsiCo beverages, including Pepsi, Mountain Dew and Aquafina.

The change comes as PepsiCo's US beverage business struggles with sluggish sales. CEO Ramon Laguarta has recently acknowledged that Pepsi and other carbonated drinks in the company's portfolio have fallen short of expectations in terms of market competitiveness.

Meanwhile, KFC itself has been grappling with declining sales and store closures in the US market. Once the country's largest chicken chain, KFC has slipped to fifth place by sales, according to market research firm Technomic.


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