The cola war is back, and Coca-Cola is winning the latest battles. KFC said it will start serving Coke in January 2027 and have it in all of its roughly 3,600 US restaurants by spring. That ends a relationship with Pepsi dating back to 1986, when PepsiCo bought the chicken chain [1]. Marriott and Costco have also switched to Coke.
PepsiCo hit back by renewing its deal with Taco Bell, KFC’s sister brand, through 2036 [2]. Taco Bell is the bigger prize, with $16.8 billion of US sales last year against KFC’s $4.7 billion. Pepsi’s ties there run deep, from Mountain Dew Baja Blast to Doritos Locos Tacos.
#Restaurant Deals Are More Than Bragging Rights
Restaurant contracts put a brand in front of millions of diners every week, and they tend to last for decades. Losing one hurts sales volume and visibility at the same time.
The bigger issue is that these wins line up with very different results. Coca-Cola’s third-quarter revenue rose 7.4% to $13.38 billion, beating forecasts, and its global volumes grew about 5% [3]. It raised its 2026 forecast for comparable currency-neutral earnings per share growth, excluding acquisitions and divestitures, to at least 9%, from 7% to 8%. Its shares are up about 33% this year.
PepsiCo’s picture is weaker. Its North American drink volumes fell 2% in the third quarter, and it cut its 2026 adjusted earnings per share growth forecast to 2.5% to 3.5%, down from 5% to 7% [4].
#Pepsi’s Snacks Are Carrying the Load
Pepsi is not standing still. Revenue rose 5.6% to $25.27 billion, ahead of expectations, and global snack volumes grew 4%, the fastest pace since 2021, helped by strong demand in Asia. The company also plans to cut corporate costs.
That points to the core difference between the two. Coca-Cola is a pure drinks company. PepsiCo sells both snacks and drinks, and right now its snacks are doing more of the work. That mix can be a strength, but it also means Pepsi’s drinks business is falling behind its closest rival.
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#The Risks for Both Sides
Coke's North American volumes were flat, so its volume growth is coming from overseas, helped by demand for locally tailored drinks and affordable packs. After a 33% rally, much of the good news may already be priced in.
For Pepsi, the danger is that a few lost contracts turn into a pattern. Watch whether more chains switch sides, whether Pepsi’s cost cuts lift profit growth in 2027, and whether Coke can grow at home as well as abroad. Neither stock is a simple story, but this year Coke has the momentum.