The American fast-food restaurant chain KFC has decided to stop serving Pepsi beverages and switch to Coca-Cola products at its U.S. locations. Analysts forecast that, due to the loss of its long-standing partner, PepsiCo could miss out on approximately $500 million in annual sales. Reuters reports, according to UNN.
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According to estimates by Bank of America analysts, ending its cooperation with KFC could lead to an approximately 3% decline in sales of Pepsi beverage concentrates in North America. At the same time, Coca-Cola could increase the corresponding figure by 2.5% thanks to the new partnership.
KFC's decision has created an additional challenge for PepsiCo, which is already facing weak demand and rising costs in the North American market. The company's return to profitability is progressing more slowly than expected, forcing it to step up cost-cutting measures.
Why the loss of KFC could become a problem for PepsiCo
Jefferies analysts believe that the main threat to PepsiCo lies not so much in the financial losses as in the weakening of the brand's position and the possible review of other long-standing contracts with restaurant chains.
The fact that a longtime Pepsi customer is switching to a competitor raises the question of whether other partners that previously seemed out of reach could now also change suppliers
Richard Exon, founder of the independent creative agency Joint, also believes that investors view KFC's decision primarily as a signal of changing competitive positions in the market, rather than as a critical financial loss for PepsiCo.
Thus, KFC's switch to Coca-Cola could have broader implications for the U.S. soft-drinks market, as it draws attention to the stability of PepsiCo's other partnerships with major restaurant chains.
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