Taco Bell has chosen to renew its partnership with PepsiCo for another decade, a move that comes just days after its sister chain KFC switched to Coca-Cola. The decision is a significant win for PepsiCo, which has faced challenges in recent weeks, including a 2% decline in its North America beverage unit and the loss of the KFC contract. Taco Bell, which generated $17 billion in US system-wide sales last year, will continue collaborating with PepsiCo on new beverages and foods until 2036.
The Baja Blast drink, a popular item exclusive to Taco Bell, has become a $1 billion brand. The chain is aggressively expanding its beverage sales, aiming to generate $5 billion in revenue by 2030. Last year, Taco Bell introduced a lineup of “Refrescas” drinks and plans to develop new Baja Blast options, including a limited-time pink lemonade with singer Olivia Rodrigo.
Taco Bell’s focus on beverages is part of a broader strategy to attract consumers searching for value in the fast-food industry. The chain has been a bright spot in the industry but saw a traffic decline over the summer due to a cyclospora outbreak linked to lettuce. The company will provide a fuller view of the sales impact when it releases earnings next month.