Gates, 17, follows in the footsteps of celebrities such as Britney Spears, the Spice Girls and Robbie Williams, all of whom have appeared in campaigns for the drinks firm.
Gates will appear in TV ads and feature at Pepsi promotions, as well as carrying Pepsi branding at concerts. His picture will appear on millions of cans of Pepsi in the UK, alongside Pepsi's global marketing stars Britney Spears and Shakira, whose pictures appear on cans all over the world.
Karen Goffe, Pepsi marketing director, said: "Gareth is much better for the Pepsi brand than Will. We are linked with young people and mainstream popular music, whereas Will appeals to a more blues, jazz-style of music and an older audience."
Gates is not expected to appear in an ad alongside Britney. However, the brand is considering making a TV ad starring the young pop star. Pepsi is also looking into staging a Pepsi-backed concert starring Gates.
Gates said: "Robbie Williams is one of my ultimate pop icons. I remember seeing his Pepsi ad on TV. Now it's me that's being signed, I can't believe it. It seems that if you get signed by Pepsi you know you've already arrived."
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