PEP Stock Gains After PepsiCo Locks In 11 More Years With Taco Bell Following KFC Loss To Coke

PepsiCo’s renewed Taco Bell partnership will keep its beverages available at participating U.S. locations, as the companies plan to develop new drinks and build on their existing food-and-beverage collaborations.

• PepsiCo will continue as Taco Bell’s beverage partner in Canada, the U.K., Ireland and Thailand, extending the relationship beyond the U.S.
• PepsiCo plans to continue supplying brands including Pepsi, Mountain Dew, Starry and Taco Bell exclusives Baja Blast and Baja Midnight.
• The renewal follows KFC’s decision to switch its U.S. beverage business to Coca-Cola, ending its nearly 40-year partnership with PepsiCo.

Shares of PepsiCo (PEP) traded 2% higher on Thursday after the beverage giant announced an 11-year renewal of its U.S. partnership with Taco Bell, extending the deal through 2036. 

The announcement comes about a week after KFC chose Coca-Cola (KO) as its U.S. beverage partner, ending its nearly 40-year relationship with PepsiCo. Both KFC and Taco Bell are part of Yum Brands (YUM). YUM stock gained around 1% in midday trade, despite broader market weakness.

“Together, we have co-created products consumers love, from the iconic Mountain Dew Baja Blast to DORITOS Locos Tacos,” said Anne Fink, president of PepsiCo Global Away From Home. She said the companies would continue working together on new offerings.

PepsiCo, Taco Bell Plan New Beverage Offerings

Under the renewed agreement, PepsiCo’s beverage portfolio, including Pepsi, Pepsi Zero Sugar, Mountain Dew and Starry, will continue to be available at participating Taco Bell, Taco Bell Cantina and Live Mas Cafe locations. The lineup also includes Taco Bell exclusives Mountain Dew Baja Blast and Baja Midnight.

The companies plan to focus on crafted, functional and energy beverages, including energy offerings designed to appeal to Gen Z consumers and open up new morning and afternoon occasions.

Mountain Dew Baja Blast has grown into a billion-dollar brand, according to the companies. Their Doritos Locos Tacos collaboration will mark its 15th anniversary in 2027, with new flavors planned.

Meg Farren, Taco Bell’s president of North America, said, “PepsiCo has been a trusted partner for over two decades, and we look forward to continuing to work hand-in-hand to drive long-term growth for the Taco Bell brand.”

PepsiCo will remain Taco Bell’s beverage partner in Canada, the U.K., Ireland and Thailand. The companies also plan to develop localized drinks and market-specific programs in those countries.

KFC Switch Puts Restaurant Partnerships In Focus

KFC’s move to Coca-Cola applies to its U.S. restaurants. The transition is expected to begin in January 2027, with Coca-Cola products planned across U.S. locations by spring.

According to a Reuters report, Bank of America analysts estimated that losing the KFC account represents about $500 million in annual sales for PepsiCo, equivalent to roughly 3% of Pepsi Beverages North America’s concentrate sales.

According to a Wall Street Journal report published earlier this month, PepsiCo will still supply beverages to Taco Bell and many KFC international markets. While the KFC switch removes a long-standing U.S. account, the Taco Bell renewal keeps another major restaurant partnership in place.

How Retail Views PEP

On Stocktwits, retail sentiment toward PEP remained in the ‘bearish’ territory over the past 24 hours.

A Stocktwits user suggested that despite having less buzz than AI stocks, PepsiCo remains a stock that can deliver steady returns.

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Another trader said they were taking profits, citing PepsiCo’s relatively high RSI and resistance at current levels.

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PEP shares have dropped over 3% year-to-date.

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