Coca-Cola Considers Sale of Costa Coffee Amid Strategy Shift
Beverage giant rethinks $5B coffee bet as growth lags and market pressures mount
Coca-Cola is exploring a potential sale of Costa Coffee, the UK-based coffee chain it acquired for over $5 billion in 2018, as the company reassesses its global coffee strategy.
According to reports, the beverage giant has enlisted investment bank Lazard to evaluate options for Costa, including a possible sale. Initial discussions have already taken place with a select group of potential buyers, including private equity firms. Indicative bids are expected in early autumn, though a deal is not yet guaranteed.
A Big Bet That Fell Short
Founded in London in 1971 by brothers Sergio and Bruno Costa, the brand has grown into an international chain with operations in 50 countries. Coca-Cola acquired Costa from UK hospitality group Whitbread as part of a broader strategy to diversify beyond soft drinks and compete more directly with coffee giants like Starbucks and Nestlé.
However, Costa’s performance has not met expectations. “Our investment in Costa is not where we wanted it to be from an investment hypothesis point of view,” Coca-Cola CEO James Quincey said during a recent earnings call. He noted that the company is reassessing how best to grow within the coffee space while continuing to manage Costa effectively.
Market Reaction
News of the possible sale comes at a time of heightened deal-making in the food and beverage industry, driven by inflation, margin pressures, and changing consumer habits. On Friday, Coca-Cola shares closed down 0.75% at $70.13, though the stock saw a slight uptick in after-hours trading. The company’s market valuation stood at $301.82 billion, according to MarketWatch.
Broader Industry Trends
If Coca-Cola moves forward, the sale would represent one of its most significant divestments under Quincey’s leadership. It would also signal a broader shift in priorities, as the company focuses on more promising or resilient growth categories.
Coca-Cola is already making changes in its core markets. In the U.S., the company recently announced it will begin using real cane sugar in select beverages, aligning with Health Secretary Robert F. Kennedy Jr.’s “Make America Healthy Again” campaign.
As the company repositions itself in a changing global landscape, Costa Coffee’s future remains uncertain, but the move could reshape Coca-Cola’s strategy for years to come.