Coca-Cola acquires Costa coffee chain

The Coca-Cola Company has acquired the Costa coffee chain from its parent company Whitbread for £3.9 billion (approximately AU$7.0 billion).

“Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide,” says James Quincey, Coca-Cola President and CEO.

“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 purchase 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.

“This move will have appealed to Coca-Cola for two reasons,” says Jonathan Davison, Beverage Analyst at GlobalData.

“The most apparent is the potential growth of Costa Coffee on an international scale. The chain might be the biggest in the UK, but it lags well behind Starbucks globally.

Of particular value will be the chain’s 449 stores in China, where hot drinks volumes across all channels have more than doubled in the last five years.”

Costa operations include a leading brand, nearly 4000 retail outlets and staff, a coffee vending operation, for-home coffee formats and Costa’s roastery.

Costa ranks as the leading coffee company in the United Kingdom and has a growing footprint in China, among other markets.

The acquisition will expand the existing Coca-Cola coffee line-up. The portfolio already includes the Georgia brand in Japan, plus coffee products in many other countries.

Costa also provides Coca-Cola with expertise across the coffee supply chain, including sourcing, vending and distribution. This will be a complement to existing capabilities within the Coca-Cola system.

“The Costa team and I are extremely excited to be joining The Coca-Cola Company,” Costa Managing Director Dominic Paul says.

“Being part of the Coca-Cola system will enable us to grow the business farther and faster.”

Upon closing the transaction, Coca-Cola will acquire all issued and outstanding shares of Costa.

Whitbread will be seeking shareholder approval for the transaction, which is expected to take place by mid-October. The deal is expected to close in the first half of 2019.

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