Costco has reversed its long-standing beverage partnership, restoring Coca-Cola products to all 921 global food courts by early 2026 after 13 years with PepsiCo. This shift impacts 245 million hot dog-and-soda combos sold yearly, which generate about $367.5 million in revenue, marking one of retail’s largest fountain drink account changes.
Why the Switch Happened in 2013
Costco first moved to PepsiCo in 2013 to cut costs and maintain its signature $1.50 hot dog-and-soda combo, unchanged since 1985 despite inflation that would price it at around $4.50 today. When Coca-Cola declined to match Pepsi’s lower rates, Costco removed Coke products entirely for a month. Founder Jim Sinegal underscored the combo’s permanence by warning his successor: if the price rose, he would take drastic action. This commitment kept beverage expenses pivotal for slim food court margins.
Consumer Loyalty Drives the Reversal
Coca-Cola holds stronger appeal, with 52% of Americans favoring it over 40% for Pepsi, and fewer unfavorable views at 19% compared to Pepsi’s 29%. CEO Ron Vachris announced the change at the annual meeting, noting conversion started that summer. PepsiCo’s position eroded further in 2024 when Dr Pepper overtook it for second place in U.S. market share at 8.3% each, trailing Coca-Cola’s 19.2%. Member satisfaction also factored in; Costco’s score remained at 82 in 2025 per the American Customer Satisfaction Index, while rival Sam’s Club rose to 85, prompting Vachris to prioritize experience improvements.
High-Margin Economics and Operational Shift
Fountain drinks offer retail’s best margins, costing $0.10 to $0.40 per serving but selling for $2.00 to $3.00, often at 80-90% gross profit—even at Costco’s subsidized combo price. The food court acts as a loss leader, generating roughly $1 billion in 2018 sales to boost loyalty and a 90% membership renewal rate. Costco rolled out the switch uniformly across 14 countries from summer 2025 to early 2026, unlike rivals such as Sam’s Club with varying local deals. Coca-Cola’s Q3 2025 results showed 5% net sales growth and 14% for Zero Sugar, contrasting PepsiCo’s volume drops and modest 2-4% 2026 projections, minimizing Costco’s supply risks.
Member Reactions and Partnership Gains
Online platforms buzzed with enthusiasm for Coke’s return, reflecting deep brand attachments akin to longstanding rivalries. A minority of Pepsi fans expressed regret over losing options like Mountain Dew pairings, but national preferences favored the majority. Analysts expect Coca-Cola provided superior terms, including free equipment and maintenance for exclusive rights—common in deals locking in 5-10 years of concentrate sales. Costco’s volume, over 500 million servings yearly, elevates this as a key global foodservice win.
Future Stakes in Retail Competition
This move bolsters Costco’s edge in the warehouse sector, with 145 million cardholders and $192 billion in 2025 U.S. revenue. CFO Gary Millerchip highlighted ongoing efforts to enhance experiences through technology. Exclusive deals yield rebates, marketing aid, and infrastructure ties, compounding advantages over fragmented competitors and signaling how consumer trends and partner strength shape retail strategies ahead.
Sources:
“Coke is returning to Costco’s food courts. Pepsi is out.” CNN Business, January 2025.
“Coca-Cola notches a Costco-size win against Pepsi.” Fortune, January 2025.
“Visualizing the Market Share of U.S. Soft Drinks.” Visual Capitalist, June 2024.
“Costco Takes a Big Hit in New Consumer Ratings.” Eat This, Not That, February 2025.
“Costco sees more growth for its $31.9 billion real-estate empire.” Fortune, September 2025.
“Dr Pepper just passed Pepsi as the second biggest soda in America.” CNN Business, June 2024.