Coca-Cola is getting into the coffee game. No, I’m not talking about Coke Plus Coffee, which saw a wider international release at the end of July. The Atlanta-based soft drink company announced of Friday their plans to purchase the UK’s Costa Coffee for $5.1 billion. Cash.
According to the New York Times, this is Coke’s largest-ever acquisition, edging out 2007’s purchase of Vitaminwater. This now puts them in pretty direct competition with behemoths like Starbucks and JAB Holdings for global coffee domination. Costa was already making a push into China to compete with Starbucks and upstart Luckin Coffee, and the acquisition allows the brand to make an even greater push in global markets. “Coca-Cola’s distribution muscle will no doubt help close the gap and boost sales significantly in the long run,” GlobalData research analyst Jonathan Davison tells the New York Times.
Now the proud owner of nearly 4,000 retail locations worldwide, Coca-Cola plans to use their strong distribution channels to push Costa into more grocery stores and restaurants. “The Costa brand has potential for expansion into ready-to-drink coffee across many markets globally,” Coke’s chief executive James Quincey stated in a blog post.
The $5.1 billion sales figure is 16 times Costa’s pro forma earnings for the 2018 fiscal year, which Alison Brittain, chief executive at Whitbread—the British company that owned Costa—called an “absolute stonking” deal. We’re pretty sure that means they liked it.
So you can expect to see Costa popping up a whole lot more now. Especially in America, presumably. The home of Costa’s new parent company is a relative unknown to the UK brand, so a US push seems imminent as this point. Hopefully we’ll at least get some Coke Plus Costa out of it.
Digital illustration by the author.