Coca-Cola to get coffee supply chain expertise from Costa deal

Will Green is news editor of Supply Management
31 August 2018

The Coca-Cola Company’s (CCC) £3.9bn acquisition of Costa will give it “strong expertise across the coffee supply chain”.

CCC said coffee was one of the fastest-growing beverage categories, at 6%. It sees opportunities to expand Costa’s 8,000 coffee machines, found at filling stations and supermarkets, and offer coffee alongside CCC’s current offering in the restaurants and cafes it supplies.

CCC also has its eyes on ready-to-drink beverages. “The Costa brand has potential for expansion into ready-to-drink coffee across many markets globally,” said CCC president and CEO James Quincey.

“The Coca-Cola system has enormous reach in many channels, and we see the potential to expand and offer these high-quality Costa coffee solutions to our existing customers. This great coffee capability will also allow us to expand at-home offerings.”

CCC said the deal would provide Coca-Cola with “strong expertise across the coffee supply chain, including sourcing, vending and distribution”.

Costa, founded in the UK in 1971 and owned by Whitbread since 1995, has around 4,000 retail outlets in more than 30 countries in Europe, Middle East, Africa and Asia Pacific. In April Whitbread, which has a market value of around £7.3bn, announced plans to spin off Costa into a separate company.

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

“This is not an acquisition where we’re looking for places to save costs in the business. We’re buying Costa to grow the business and our participation in the category.”

The deal is subject to shareholder approval.

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