Coca-Cola Gets into Hot Beverages with $5.1B Costa Deal

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Atlanta, GA – With overall soda sales at a 31-year low, Coca-Cola Co. will buy coffee chain Costa Coffee from the UK hospitality company Whitbread for $5.1 billion, giving it a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with opportunity to grow. Costa has about 4,000 stores in 32 countries, as well as 8,000 or so on-the-go Costa Express outlets, a roastery and take-home coffee products.

Costa is the UK’s leading coffee maker, with a growing footprint in China. Coffee is one of the world’s fastest-growing beverage categories, at 6%. The deal is expected to be completed in the first half of 2019

“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand,” Coca-Cola CEO James Quincey said in a statement issued with the announcement. “Costa gives us access to this market with a strong coffee platform.

“A platform means Costa isn’t just one thing. Not just a brand. Not just a retail operation. Not just vending. Not just a coffee roaster,” he added. “Costa is a platform with a great supply chain in coffee, a world-class roastery, a strong retail presence and a vending system.

“People still want to enjoy beverages, but they want choice,” Quincey said in an interview with CNN Money. “We’re trying to be more than a soda company.”

While Coke will remain the heart and soul of the brand for some time, he said the company is aware of the growing drumbeat against sugary drinks and their link to obesity.

“We’re focused on reformulating some of our great drinks, bringing sugar levels down,” he said. “A lot of experiments are going on around the world” with sugar substitutes and smaller packaging.

Nestle and Starbucks earlier this year agreed to a $7.2 billion global coffee alliance in which Nestle markets, sells and distributes Starbucks products outside its stores worldwide. JAB coffee brand Keurig merged with Dr. Pepper Snapple, a Coca-Cola competitor, in January.

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