Financing

Coca-Cola buys Costa Coffee for $5.1B

The deal makes the beverage giant a more direct competitor with Starbucks.
Costa logo
Photograph courtesy of The Coca-Cola Co.

Starbucks Corp. is getting a giant new direct competitor: The Coca-Cola Co.

The beverage giant on Friday announced that it plans to acquire Costa Limited, a U.K.-based coffee brand that includes a chain of nearly 4,000 coffee shops, in a deal valued at $5.1 billion.

The deal “will give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion,” the company said.

Costa operations include its coffee brand, a coffee vending operation, at-home coffee formats and a roastery.

The Atlanta-based Coca-Cola said the acquisition of Costa gives it a scalable coffee platform “in a fast-growing, on-trend category.” It also gives the company a key, global brand in the hot beverage category.

Costa was founded in London in 1971 and has grown to become the leading coffee company in the United Kingdom. It also has a major presence in Europe and other markets and has a growing footprint in fast-growing China.

That takes it right up against Starbucks, which has viewed the Chinese market as critical for its future growth. Starbucks’ stock was up slightly Friday.

Coca-Cola has been getting more into the coffee business internationally, including its Georgia brand in Japan and coffee products in many other countries. “Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide,” Coca-Cola CEO James Quincey said in a statement. “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.”

The deal is expected to close in the first half of 2019. Coca-Cola has more than 500 beverage brands in more than 200 countries and it is a major supplier to the restaurant industry.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

Reaction to Wendy's dynamic pricing test reveals its risks

The Bottom Line: The burger chain mentioned last week that it would test the pricing strategy sometime next year. Consumers frustrated with prices reacted swiftly.

Financing

Why the Burgerim settlement exposes flaws in franchise oversight

The Bottom Line: The federal government allowed the chain’s founder to avoid major penalties by simply paying $1,000. What’s the point of regulation in the first place?

Food

Why the Smashed Jack sparked record-smashing demand at Jack in the Box

Behind the Menu: The chain’s newest menu addition aims to break the mold on what a fast-food burger can be, and customers are buying in.

Trending

More from our partners