TD Cowen: Coca-Cola (KO.US) and KFC’s business will bring a 10 to 20 basis point revenue boost, continuing to erode Pepsi (PEP.US) market share.

According to the Golden Ten Data APP, Coca-Cola (KO.US) will supply beverages for the first time at KFC outlets in the United States. Based on a new partnership, this collaboration will cover all KFC stores in the US by next spring. TD Cowen believes that the news of Coca-Cola capturing the KFC business under Yum! Brands (YUM.US) from PepsiCo (PEP.US) is positive for the Atlanta-based beverage giant, although its symbolic meaning outweighs the quantitative impact.

Analyst Robert Moskow and his team estimate that, when the contract takes effect in 2027, this move will boost Coca-Cola’s total revenue by 10 to 20 basis points.

Moskow continues to view PepsiCo’s North American beverage business as the party “transferring” market share to Coca-Cola and Keurig Dr Pepper (KDP.US) in the US market. Moskow emphasized: “Our retail tracking data shows that over the past two years, Coca-Cola has gained 70 basis points of market share in carbonated soft drinks, while PepsiCo has lost 130 basis points.”

He added: “If energy drinks are included, KDP's share is also increasing. We believe these two companies are investing more heavily and consistently in the US beverage market to drive revenue growth, whereas PepsiCo often describes cost-cutting and expanding profit margins as important priorities.”