By Deena Shanker | Associated Press
Subway is proceeding with a switch to PepsiCo Inc. beverages in the US after a major franchisee group dropped its opposition to the terms of the agreement.
“We are ready to go,” Anne Fink, president of global foodservice at PepsiCo, said in an interview at the Future Smarts 2024 beverage conference. While there are still a few holdouts among Subway franchisees, it is “not a material number,” she said.
PepsiCo, which makes Mountain Dew and Starry sodas, scored a major win in March when the sandwich chain announced it would be serving beverages from the company after years of being a customer of Coca-Cola Co. With more than 20,000 stores, it has more US locations than any other restaurant chain.
But in the summer, the North American Association of Subway Franchisees, which represents about half of Subway’s stores, advised members not to sign the agreement largely due to a section that the association objected to including, according to Bill Mathis, the group’s chair. In October, that section was removed and the organization stopped advising against signing it, he said.
Under the agreement, which begins on Jan. 1, Subway will offer PepsiCo beverages including Pepsi, Pepsi Zero Sugar and Gatorade. PepsiCo has reported declining volumes in North America in both beverages and snacks in recent quarters as consumers pull back on spending. In the company’s most recent earnings report, Chief Executive Officer Ramón Laguarta referred to a “subdued growth environment.”
During remarks at the conference, Fink said that foodservice is an opportunity for growth. “My job is to make sure it’s growing faster than the rest of the company,” she said, referring to the segment.