PepsiCo Bets on Holiday Shelf Space and KFC's Youth Appeal While North America Still Drags

PepsiCo is throwing marketing weight at two very different problems at once. In North America, it is trying to reverse a slide in beverage volumes with a holiday push; overseas, it is leaning on a revamped KFC partnership to reach younger drinkers. Neither effort fixes the core issue on its own, but together they sketch out where management thinks growth can come from.

The domestic centerpiece is the "Holidays Deserve Pepsi" campaign running through November, which pairs Pepsi Zero Sugar with pizza in a seasonal spot. Pepsi plans 80% more retail visibility than in 2025, aiming to create extra purchase occasions over the holidays. The stakes are clear: PepsiCo Beverages North America posted a 2% volume decline in the third quarter of 2026, and CEO Ramon Laguarta conceded on October 8 that the company is not competing well in refreshment beverages. A visibility boost only matters to investors if it actually steadies the top line.

That makes North American beverage volume the metric to watch, and it covers more than the flagship cola — Gatorade and Mountain Dew sit in the same unit. A strong Pepsi campaign can help at the margin, but a genuine turnaround requires the whole segment to improve. Football activations are meant to add momentum: Pepsi has 15 partnerships with NFL teams and plans 30% more point-of-sale presence than a year earlier, so holiday advertising and sports tie-ins are pulling in the same direction.

Pepsi Zero Sugar offers a useful growth base, though a small one. Volume rose 18.1% in the first nine months of 2025, yet its share of US carbonated soft drink volume was just 1.4%. Coke Zero Sugar, by contrast, held 4.6% over the same period — a reminder of how much smaller Pepsi's sugar-free platform is and how much ground it would need to cover to move the overall business.

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The profit backdrop raises the bar further. Roughly a month ago, PepsiCo cut its 2026 core earnings-per-share growth forecast to 2.5–3.5%. Better volume would go a long way toward restoring confidence in the earnings outlook, and international markets are already doing their part: Latin America Foods grew organically by 14% in the third quarter of 2026, with EMEA and Asia-Pacific each at 9%.

The risk is timing. If extra shelf presence fails to lift segment volume, the competitive weakness Laguarta acknowledged will weigh more heavily than any single campaign. Persistent softness in snacks would also cap the earnings benefit, leaving international expansion to offset North American pressure. A further product hook arrives on November 19, when a Pepsi Vanilla & Cream pack is slated for Walmart; the variant launched nationwide on October 19. For income-focused holders, the dividend stands against these operating risks — though the case strengthens only once payout continuity is matched by a steadier North American business.

Abroad, the KFC relationship is being reworked rather than wound down. PepsiCo unveiled plans for the international KFC business aimed at younger customers and more locally tailored offerings, adding new flavors along with functional drinks and energy drinks. The framework is the already-announced extension of the international KFC partnership covering Australia, India and the UK, plus Spain, Germany, France, the Netherlands and Belgium, where PepsiCo remains the chain's beverage partner. The lineup varies by market and includes Pepsi Zero Sugar, Pepsi MAX and Lipton Peach Iced Tea, alongside joint menu items such as Doritos Loaded in selected markets — a collaboration that goes beyond simply supplying drinks.

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The contrast with the US could hardly be sharper. Coca-Cola is set to replace PepsiCo at KFC in the US from January 2027, with the switch reaching all 3,718 US restaurants by spring 2027 and ending a relationship spanning nearly four decades. Jefferies put KFC's share of the US fast-food market at about 1% and therefore expected limited direct volume impact for PepsiCo — a view that argues for a contained hit, provided the handover plays out as assumed.

Financial terms and the duration of the international renewal were not disclosed, so execution becomes the yardstick: local drink ranges and shared menu products are the levers for incremental business. The international KFC tie-up is a positive for PepsiCo if it generates durable volume, while the US supplier change weighs on the relationship — with Jefferies judging the direct consequences modest. Between those two developments sits the partnership's real economic significance for investors.

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