Coca-Cola explores sale of Costa Coffee
UK chain hit by rising costs and competition from upmarket rivals
Coca-Cola is exploring a sale of Costa Coffee, according to two people familiar with the matter, after rising costs and competition from upscale competitors dented the company’s performance.
Coca-Cola bought Costa, the UK’s largest coffee chain, for £3.9bn in 2018 in an effort to diversify beyond its namesake fizzy drinks business. But soaring coffee bean prices have increased its costs.
Coca-Cola chief executive James Quincey told analysts in July that Costa had “not quite delivered” and was “not where we wanted it to be from an investment hypothesis point of view”.
He added that the drinks maker was “reflecting on what we’ve learned [and] thinking about how we might want to find new avenues to grow in the coffee category”.
Costa is the UK’s largest coffee chain but has faced competition from rivals, which have squeezed established chains with their artisanal offerings.
Coffee groups such as Costa, Starbucks and Caffè Nero were battered by lockdowns imposed during the Covid pandemic. Then rising inflation and a cost of living crisis hit the chains in the years that followed. In 2022, Costa launched a restructuring programme as a result of the “challenging economic environment and inflationary pressures”.
Coca-Cola said it did not comment on “market rumours or speculation”. News of the sale was first reported by Sky.