Aug 31, 2018
Coca-Cola salivates over Costa Coffee deal prospects
In 1995, the UK leisure group Whitbread acquired Costa Coffee, a small chain of cafés across Britain, in a deal worth £19m. It was a small bet that a nation of tea drinkers were on the verge of becoming coffee addicts. Over the FTSE 100 group's 23-year ownership, Costa has grown just 39 shops to 2,400 shops in Britain, with a further 1,400 in more than 30 countries, becoming the world's second-biggest coffee shop in terms of outlets. In its core UK market, the rise of drinking coffee that Costa has helped to pioneer led to greater competition, including the growth of independent coffee shops. Coca-Cola aims to turn Costa into an international coffee "Platform", expanding the number of stores and vending machines around the world, while also using the Costa brand to sell home coffee products, from pods to instant coffee. The goal is to continue to expand Costa into new territories with an eventual push into the US - the world's biggest coffee market - though that will initially be through launching Costa vending machines and make-at-home products, rather than through opening cafés in the US. Coca-Cola's push into coffee comes as sales of carbonated soft drinks in the US increasingly loses market share to healthier options, such as bottled water and other drinks without artificial sweeteners.
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