Coca-Cola acquires Costa Coffee for $5.1B

Sep 4, 2018

Coca-Cola is purchasing Costa Coffee – , a British multinational coffee house company founded in London in 1971, for $5.1 billion. Costa Coffee is one of the world’s major coffee brands from UK drinks and hotels group Whitbread, and world’s major coffee brands. Costa has almost 4,000 stores in 32 countries, and is currently being sold across Europe, the Asia Pacific, the Middle East and Africa.

Coca-Cola CEO James Quincey said, “Coffee is one of the strongest growing categories in the world and Coca-Cola needs to expand into coffee and hot drinks and over time we are looking to bring Costa to more people in more places.”

And with Whitbread planning to spin off Costa Coffee into an independent company in order to focus on its hotel business, it was only a question before Coca-Cola — which has not expanded its portfolio beyond beverages —  to get into the mix.

Expanding into the coffee marketplace could be a smart move for the brand as sugar-conscious consumers move away from traditional soda. According to research from the National Coffee Association, gourmet coffee now represents half of all consumption for the first time in history.

And coffee is growing by 6 per cent a year, making it one of the fastest-growing beverage categories in the world. This acquisition will give Coca-Cola a strong coffee platform across Europe, Asia Pacific, the Middle East and Africa, with “the opportunity for additional expansion.

As the second largest coffeehouse chain in the world, Costa Coffee offers Coca-Cola opportunities to not only expand its facilities, but also its offerings. Coffee has a variety of different retail products, from vending to coffee shops to roast-and-ground to instant. The deal may allow Coca-Cola to break into the retail market with its own locations — or it may divest that portion to a company with more expertise. Given Coca-Cola’s expertise, the next move for the brand is likely to be expanding Costa ready-to-drink coffee across markets globally.

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