Pepsi renews contract with Taco Bell after KFC Coke deal

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A staff member is seen at a Taco Bell restaurant in London.

May James | Sopa Images | Lightrocket | Getty Images

PepsiCo and Taco Bell renewed their long-running partnership through 2036, the food and beverage company said on Thursday.

The announcement comes one week after Taco Bell’s sister chain KFC said that it will switch to Coca-Cola as its U.S. beverage supplier. While it is unusual for large restaurant chains to switch drink providers, the move is not unprecedented, as Coke and Pepsi try to win contracts through perks and other inducements.

Coke’s win over Pepsi was more symbolic, representing another example of how the Atlanta-based company has been beating its rival in the soda category.

Pepsi’s relationship with Taco Bell and KFC parent Yum Brands spans decades, back to when the beverage giant owned the restaurant chains before spinning them into a separate public company in 1997. Despite KFC’s defection in the U.S., Pepsi remains an important partner for Yum and the chain’s international markets, KFC U.S. President Catherine Tan-Gillespie wrote in a memo on Oct. 15 that was obtained by CNBC.

Thanks to its partnership with Pepsi, Taco Bell has long served exclusive menu items that use Pepsi products, like Mountain Dew Baja Blast and Doritos Locos Tacos, at its restaurants.

The renewed deal also means that Taco Bell international markets such as Canada, the United Kingdom, Ireland and Thailand will serve Pepsi products.

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