Taco Bell Extends PepsiCo Deal to 2036 After KFC Defects to Coca-Cola

Taco Bell announced Thursday it will keep PepsiCo as its beverage partner for another decade, extending their collaboration through 2036, just days after sister chain KFC dropped PepsiCo for rival Coca-Cola. The deal is a needed win for PepsiCo, whose North America beverage unit posted a 2% decline in its most recent quarter. CEO Ramon Laguarta said on the earnings call the company is "not competing well in soft drinks," including the newly acquired Poppi brand. Keeping Taco Bell matters more than losing KFC by volume: Taco Bell generated $17 billion in U.S. system-wide sales last year versus roughly $5 billion for KFC. Both chains are owned by Yum! Brands. The companies said Baja Blast has grown into a $1 billion brand, and the extension covers new flavors for Doritos Locos Tacos and expansion into functional and energy beverages aimed at Gen Z consumers. Taco Bell is targeting $5 billion in beverage revenue by 2030, though it saw a traffic decline over the summer tied to a cyclospora outbreak linked to lettuce.