Subway India has ended its five-year exclusive arrangement with beverages maker PepsiCo India for selling its products at the sandwich and salad chain’s outlets. Instead, the company has forged a new partnership with rival Coca-Cola, according to executives familiar with the development.
All 570-plus Subway stores in India will now exclusively feature Coca-Cola’s assortment of soft drinks, juices, coffee, tea, and water, as confirmed by one of the executives.
A representative from Coca-Cola verified the agreement with Subway. In response to queries via email, the spokesperson stated, “We constantly join forces with different brands.”
The sandwich franchise has initiated the process of incorporating Coca-Cola beverages into its online ordering app, available on aggregator platforms like Swiggy and Zomato.
Subway India and PepsiCo announced their partnership in 2018.
Exclusive beverage partnerships with major food service chains play a pivotal role in generating substantial sales through out-of-home and delivery channels for companies such as PepsiCo and Coca-Cola. Coca-Cola holds a worldwide exclusive partnership with McDonald’s, as well as with KFC, Pizza Hut, and Taco Bell, all owned by Yum Brands and operated in India by Devyani International, Sapphire Foods, and Burman Hospitality, respectively. On the other hand, PepsiCo has exclusive associations with Jubilant FoodWorks’ Domino’s Pizza in India.
George Kovoor, the vice president of PepsiCo India, stated that the company refrains from providing comments on individual partnerships. “Having said that, we continue to work with industry leaders in critical channels,” he said in an emailed response.
Executives from Subway India were not available for comment. The sandwich chain in India is managed by Culinary Brands, a division of the private equity firm Everstone Group. Everstone Group also holds the operating franchise rights for Lavazza coffee and Fresh & Honest Cafes in the country.
As per one of the executives, Subway made the change due to Coca-Cola’s broader brand portfolio and enhanced service reach.
The American sandwich chain has strategically partnered with Coca-Cola in the majority of its key markets. It has been reported that Burger King is also in advanced talks to secure Coca-Cola as its beverage partner. For nearly a decade, the burger chain has been associated with PepsiCo in India.
Despite a recent slowdown in sales over the past few quarters, all major listed quick-service companies in India have maintained their growth and expansion projections for the current fiscal year.
As per credit ratings firm ICRA, the leading five entities in the domestic Quick Service Restaurant (QSR) industry are anticipated to incorporate 2,300 stores from FY23 to FY25, with an approximate capital expenditure of INR 5,800 crore.
In addition to restaurant chains, multiplexes are also experiencing swift growth as out-of-home channels for food and beverage companies. Exclusive agreements with multiplexes ensure access to a captive consumer market.