Costa Coffee to be sold to Coca Cola
Coca-Cola Co has agreed to buy coffee chain Costa for $5.1 billion including debt to extend its push into healthier drinks and take on the likes of Starbucks and Nestle.
The purchase from Britain's Whitbread of Costa's almost 4,000 outlets thrusts the world's biggest soda company into one of the few bright spots in the sluggish packaged food and drinks sector.
Paying about 1 billion pounds ($1.3 billion) more than some analysts had expected, Coke will use its distribution network to supercharge Costa's expansion as it chases current coffee chain market leader Starbucks and its almost 29,000 stores across 77 markets.
Beyond coffee shops, Coca-Cola CEO James Quincey, himself a Briton who is familiar with the Costa brand, said Costa would provide an important growth platform ranging from beans to bottled drinks in what is one of the world's fastest-growing drink categories, growing 6 percent. (https://bit.ly/2wyISYp)
"Coca-Cola doesn't have a broad, global portfolio in this growing category," Quincey said, highlighting Costa's retail footprint, roastery, supply chain and Costa Express vending system, which the company plans to expand.
But Coca-Cola will face a fight, as rivals are also bulking up in a fragmented market, keen to attract young people prepared to pay out for barista-made drinks and developing tastes for ever more exotic coffees.
Switzerland's Nestle, for example, has sealed a $7 billion licensing deal for Starbucks' retail business, while Europe's billionaire Reimann clan has built an empire spanning coffee brands such as Kenco, Douwe Egberts and soft-drink maker Dr Pepper Snapple.
The purchase of the biggest coffee chain behind Starbucks adds to Coca-Cola's drive to diversify away from fizzy drinks and expand its options for increasingly health-conscious consumers, after countries started introducing sugar taxes.Published: by Radio NewsHub