Coca Cola Buys into Coffee Industry with a $5.1 Billion Deal

by | Sep 3, 2018 | NEWS

The Coca-Cola Company (NYSE: KO) announced Friday their plan to acquire global coffee brand Costa Limited from parent company Whitbread PLC.

Costa – an English company founded in 1971 – has become one of the fastest-growing coffee chains in the world and is a competitor for Starbucks in the U.K.

The deal is valued at $5.1 billion and would give Coca-Cola a strong coffee platform across Europe, Asia, the Middle East, and Africa.

According to the press release issued by Coca-Cola, “The acquisition will expand the existing Coca-Cola coffee lineup by adding another leading brand and platform. The portfolio already includes the market-leading Georgia brand in Japan, plus coffee products in many other countries.”

With consumer demand for sugary drinks shifting to healthier alternatives, and several states in the U.S. passing legislation limiting access to soft drinks, the move may just be what Coca-Cola needs for long-term survival. While demand for sugary drinks like Coke has decreased in recent years, demand for coffee and gourmet coffee beverages is up worldwide.

The deal gives the Coca-Cola company access to a vast retail chain. Costa currently operates over 4,000 locations, as well as another product for the company to market to restaurants and grocery chains.

Coca-Cola is not the only “junk food” company to make this shift toward healthier products. Pepsi and Nestlé have recently made acquisitions that propelled them into the health food/drink arena as well.

Coca-Cola stock did fall slightly after the press release.