KFC Drops Pepsi for Coke After Nearly 40 Years, and Analysts Put $500M in Annual Sales at Stake

KFC will replace Pepsi with Coca-Cola across its US restaurants, in a move Bank of America analysts say puts around $500 million (approximately £377 million) in annual sales at stake for Pepsi's beverage business.

The change, ending a partnership of nearly 40 years, was announced on 15 October and is expected to begin in January 2027, with Coca-Cola products planned across all US locations by spring.

Bank of America analysts estimate the account represents about $500 million in annual sales, or roughly 3 per cent of Pepsi Beverages North America's concentrate sales, according to Reuters. The conversion uses the 15 October exchange rate.

For context, the move applies to KFC's US restaurants. Coca-Cola already supplies the chain in some other markets, including Indonesia, according to Inc. The US announcement does not mean Pepsi is disappearing from every KFC worldwide.

KFC says the switch is part of an effort to refresh its menu and beverage offering. The Coca-Cola Company confirms that the transition is due to begin in January 2027, with its products expected across US restaurants by spring.

A Historic Partnership Reshaped in the US

The agreement carries added significance because PepsiCo acquired KFC in 1986. PepsiCo spun off its restaurant businesses in 1997, forming the company that became Yum Brands. Inc. reports that Pepsi remained KFC's beverage partner after the separation.

Coca-Cola now takes over the US account. For customers, the most visible change will be the drinks on offer. For the companies, the deal brings changes in restaurant reach, brand visibility and sales tied to a large chain.

KFC says the partnership will create opportunities for new drinks and food pairings. A company spokesperson told Inc.the agreement would help the brand 'modernize its menu, expand its beverage offerings and create more reasons for customers to visit.'

Those are KFC's stated aims. Whether new drinks bring more people through the door remains to be seen.

How the $500M Estimate Could Affect Both Sides

The $500 million (approximately £377 million) figure is an estimate of annual sales associated with the KFC account, not a forecast of PepsiCo's total revenue or profit.

Reuters reports that Bank of America analysts estimate the account represents roughly 3 per cent of Pepsi Beverages North America's concentrate sales. The analysts also estimate the deal could lift Coca-Cola's North American sales by about 2.5 per cent.

That distinction matters. An estimate tied to one restaurant account does not show how much profit either company will gain or lose. Nor does the figure mean Coca-Cola will automatically record $500 million in new revenue. It indicates the estimated scale of the account.

Restaurant beverage contracts can matter beyond the number of drinks sold. Ralph Homer, founder of Praxis Model, told Inc. that fountain drinks are among the highest-margin items on many fast-food menus because syrup costs relatively little per serving.

His point helps explain the commercial value of a supplier relationship, even when drinks seem like a small part of a meal.

A change in supplier does not guarantee a lasting change in customer behaviour. R.J. Hottovy of Placer.ai told Inc. that Culver's and Panda Express saw small increases in visits after switching beverage suppliers, followed by a tapering off. Those examples offer context, not a prediction for KFC.

The transition is due to start in January 2027. KFC is presenting the change as part of a broader menu and customer experience effort, while Pepsi loses a long-standing US restaurant account and Coca-Cola gains a new one. The customer response will become clearer after the switch reaches restaurants.