TD Cowen: Coca-Cola Company (KO.US) KFC business will bring a 10 to 20 basis point revenue boost, continuing to take market share from PepsiCo, Inc. (PEP.US)

The Coca-Cola Company (KO.US) will supply beverages at KFC locations in the United States for the first time. Under a new partnership, the collaboration will cover all KFC locations in the United States by next spring. TD Cowen believes that the news that The Coca-Cola Company has taken the KFC business from PepsiCo, Inc. (PEP.US), which is owned by Yum! Brands, Inc. (YUM.US), is a positive for the Atlanta-based beverage giant, although its symbolic significance outweighs its quantitative impact. Analyst Robert Moskow and his team estimate that the move will provide a 10 to 20 basis point boost to The Coca-Cola Company's total revenue in 2027, when the contract takes effect. Moskow continues to view PepsiCo, Inc.'s North American beverage business as the party "transferring" market share to The Coca-Cola Company and Keurig Dr Pepper (KDP.US) in the U.S. market. Moskow emphasized: "Our retail tracking data shows that over the past two years, The Coca-Cola Company has gained 70 basis points of market share in carbonated soft drinks, while PepsiCo, Inc. has lost 130 basis points." He added: "If energy drinks are included, KDP's share is also rising. We believe these two companies are investing more heavily and more consistently in the U.S. beverage market to drive revenue growth, while PepsiCo, Inc. often describes cost cutting and margin expansion as important priorities."