Coca-Cola to acquire Costa Coffee in £3.9bn deal

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The Coca-Cola Company has agreed to acquire Costa Coffee, the UK’s largest coffee chain, from parent company Whitbread in a deal worth £3.9bn.

The deal will include the Costa brand, 4,000 retail outlets, its Costa Express vending operation, for-home coffee formats and roastery.

The Coca-Cola Company has said it wants to expand its existing Coca-Cola coffee lineup by using Costa’s coffee supply chain, including sourcing, vending and distribution. The acquisition is designed to give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion.

Coca-Cola president and ceo James Quincey said: “Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide.

“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market with a strong coffee platform.”

Costa managing director Dominic Paul added: “The Costa team and I are extremely excited to be joining The Coca-Cola Company. Costa is a fantastic business with committed and passionate associates, a great track record and enormous global potential.

”Being part of the Coca-Cola system will enable us to grow the business farther and faster.I would like to say a huge thank you to our customers and to everyone in the Costa team who have helped us build the business to this position, and I look forward to the next exciting chapter in Costa’s vision of Inspiring the World to Love Great Coffee.”

Commenting on the deal, Kantar Worldpanel head of retail and consumer insight Fraser McKevitt said: “This is a big deal for Coca-Cola and a strategic play to further expand beyond soft drinks and move into the hot drinks sector. Coca-Cola doesn’t currently have any coffee outlets in its arsenal and this is an opportunity for the business to plug that gap and tap into this growing market. The out of home coffee market is not one to be underestimated: worth £6.3 billion a year in Great Britain and growing by 4.3%, our nation’s taste for coffee doesn’t look set to turn any time soon.

He added: “By acquiring a favourite out of home coffee brand, Coca Cola is leap-frogging its way to having a substantial hot drinks offer and bolting on the UK’s favourite coffee brand. It also offers intriguing possibilities for the Costa name to appear in new formats, such as chilled variants, and reach a wider audience through Coca-Cola’s well-established distribution network.”

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