KFC will switch its U.S. beverage supplier from PepsiCo to Coca-Cola beginning in 2027, ending a partnership that has lasted nearly four decades. The rollout will be complete by the end of the first quarter of 2027, according to a memo from KFC U.S. President Catherine Tan-Gillespie obtained by CNBC.
The shift marks the first time since PepsiCo acquired KFC in 1986 that the chain has changed fountain drink suppliers in its domestic market. At the time of that 1986 purchase, KFC was Coke's second-largest fountain account, behind only McDonald's. PepsiCo later spun off KFC along with Pizza Hut and Taco Bell as Yum Brands, but the company maintained its Pepsi relationship even after the sale.
Tan-Gillespie framed the decision as part of KFC's effort to recapture U.S. market share. "This decision is a critical step in the Kentucky Fried Comeback," she wrote. "A new beverage offering, with a new partner in Coca-Cola, gives us a platform to innovate, meet changing tastes and give customers more reasons to choose us." KFC has faced competitive pressure from chains like Chick-fil-A and Popeyes.
The beverage industry sees fountain drink partnerships as essential to attracting customers. McDonald's and Taco Bell have expanded offerings with products like refreshers and specialty sodas. KFC has tested new drink categories including iced coffees and shakes at its Open House innovation restaurant in McKinney, Texas. Coca-Cola told CNBC it has worked with restaurant partners to develop new beverages.
One complication remains: Taco Bell, which is part of Yum Brands and currently serves PepsiCo products, would lose access to Mountain Dew Baja Blast if it switched suppliers. The source material does not specify whether Taco Bell will also transition to Coca-Cola.
Large restaurant chains rarely switch beverage suppliers, though precedent exists. Pepsi secured Subway, the largest U.S. restaurant chain by location count, from Coca-Cola in 2024. Coca-Cola has also recently recruited Culver's, Arby's and Panda Express from Pepsi. Tan-Gillespie said PepsiCo remains an important partner for Yum Brands in international markets.