Coca-Cola Co. today (Aug. 31) revealed an agreement to acquire Costa Ltd., what looks like the Starbucks of Britain, for $5.1 billion. Coke called it an already major and growing coffee brand across the world.
The business, bought from parent company Whitbread PLC, operates nearly 4,000 retail outlets, a coffee vending operation, for-home coffee formats and a roastery. Coca-Cola officials called it “a scalable coffee platform with critical know-how and expertise in a fast-growing, on-trend category.”
Costa, which was founded in London in 1971, is the leading coffee company in the United Kingdom and has a growing footprint in China, among other markets, Coke said. Other markets include Europe, Asia Pacific the Middle East and Africa. And it has the potential for further expansion with customers across the Coca-Cola system.
“The acquisition will expand the existing Coca-Cola coffee lineup by adding another leading brand and platform,” the announcement said. “The portfolio already includes the market-leading Georgia brand in Japan, plus coffee products in many other countries.”
“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand,” said Coca-Cola president/CEO James Quincey. “Costa gives us access to this market with a strong coffee platform.”
Two weeks ago, Coke bought an unspecified stake in sports drink company BodyArmor.
Coffee is a significant and growing segment of the global beverage business. Worldwide, coffee remains a largely fragmented market, and no single company operates across all formats on a global basis, Coke said.
The transaction is expected to close in the first half of 2019.