KFC announces deal to switch U.S. beverage provider to Coca-Cola from Pepsi

Investing.com -- Yum! Brands Inc’s (NYSE: YUM) KFC is transitioning its beverage vendor to Coca-Cola Co (NYSE: KO) across thousands of domestic locations, according to a Thursday press release from the company. The deal initiates the rollout of Coca-Cola products across KFC’s U.S. network starting in January.

The strategic pivot represents a notable blow to PepsiCo Inc (NASDAQ: PEP), which has maintained a long-standing supply agreement with Yum! Brands since spinning off its restaurant division in 1997. With KFC currently operating 3,718 U.S. restaurants according to its website, losing fountain pouring rights at scale underscores shifting vendor dynamics in the quick-service industry and threaten a highly visible source of domestic volume for the beverage maker.

Wall Street reacted swiftly to the supplier realignment during trading. Shares of Yum! Brands advanced 2.7% following the news, while Coca-Cola edged up 0.2%. Conversely, PepsiCo stock slid 0.7% as investors digested the prospective loss of a core food service partner.

For Coca-Cola, securing the fountain rights at KFC strengthens its competitive footprint in the domestic foodservice segment at the direct expense of its primary rival.

Catherine Tan-Gillespie, President of KFC U.S., noted the partnership "is another step in our work to evolve KFC, strengthen our restaurants, menu offerings and create a more relevant experience for today’s customers."

Original Article

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