Coca-Cola considers sale of Costa Coffee as rising costs pressure brand 

USA – U.S. soft drinks giant Coca-Cola is exploring strategic options for its British coffee chain Costa, including a possible sale, according to a source familiar with the matter who spoke to Reuters.  

The company has engaged investment bank Lazard to advise on the review, which remains at an early stage. 

Sky News first reported that Coca-Cola had held initial discussions with a small group of potential buyers, including private equity firms. While indicative offers are expected in early autumn, sources stressed that no final decision has been made and a sale is not guaranteed. 

Coca-Cola acquired Costa Coffee in 2018 for over $5 billion in a move aimed at expanding its presence in the global coffee market and competing with industry leaders Starbucks and Nestlé. Costa currently operates in 50 countries, with more than 2,700 stores in the UK and Ireland and over 1,300 outlets worldwide. 

Operational Struggles 

Despite modest revenue growth, Costa has faced profitability challenges driven by rising costs, intensified competition, and evolving consumer preferences.  

In 2023, the chain reported revenues of nearly £1.22 billion (US$1.43B), up 9 percent from the previous year. However, it posted a pre-tax loss of £9.6 million (US$11.2M), a sharp reversal from the £245.9 million (US$287.6M) profit recorded in 2022. 

Speaking during an earnings call last month, Coca-Cola Chief Executive James Quincey acknowledged the pressures facing Costa. “Our investment in Costa is not where we wanted it to be from an investment hypothesis point of view,” he said, noting that the company is evaluating options for growth in the coffee segment. 

Market Valuation 

Industry analysts suggest that Costa could be valued at around £2 billion if sold—less than half of Coca-Cola’s purchase price. Such a figure reflects the financial strain facing the brand and broader investor caution about long-term growth in the coffee sector. 

The potential divestment comes amid heightened deal activity in the packaged food and beverage space, where companies are pursuing consolidation and efficiency to offset inflationary pressures and adapt to consumers seeking healthier alternatives. 

In the U.S., Coca-Cola has already begun shifting strategies in response to changing demand. In July, the company agreed to adopt real cane sugar across its products as part of Health Secretary Robert F. Kennedy Jr.’s “Make America Healthy Again” campaign. 

While no outcome has been finalized, the review underscores the mounting challenges for Costa and Coca-Cola’s wider efforts to reshape its global portfolio. 

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