Coca-Cola Explores Sale of Costa Coffee Chain
Eight years after a $4 billion acquisition, Coca-Cola is reportedly seeking to offload the Costa Coffee business, potentially to private equity firms.
Coca-Cola is reportedly exploring the sale of its Costa Coffee chain, just eight years after acquiring it for approximately £4 billion ($5 billion USD). The beverage giant has initiated discussions with potential buyers, with the chain expected to be acquired by a private equity firm, according to reports.
This move follows a previous attempt by Coca-Cola to sell Costa earlier in the year, which was called off after failing to secure a desired price. The company had been seeking around £2 billion for the brand, a significant reduction from its initial purchase price from Whitbread in 2018.
Costa Coffee, founded in London in 1971, operates around 2,700 cafes across the UK and Ireland. The company has been working to revitalize its business, including opening new outlets. In the last fiscal year, Costa opened a net of 50 new locations in the UK, with plans for an additional 50 this year. The business reported an operating profit of £20 million for the year ending December 31, 2025, a turnaround from a £13.5 million loss in 2024. Sales for the period increased by 5% to nearly £1.3 billion.
The coffee market remains highly competitive, with Costa facing challenges from rivals such as Greggs and Pret A Manger, who have introduced meal deals to attract cost-conscious consumers. Newer brands like Blank Street and Black Sheep Coffee are also capturing market share with offerings appealing to younger demographics.
Coca-Cola has acknowledged that the Costa acquisition has not met expectations. In July of last year, Coca-Cola CEO James Quincey stated that the business had "not quite delivered" and was "not where we wanted it to be from an investment hypothesis point of view." Operating labor-intensive coffee shops is seen as a departure from Coca-Cola's core, higher-margin concentrate business.
Experts suggest that a sale could lead to concerns about store closures, particularly if acquired by a private equity firm known for streamlining operations. However, a sophisticated buyer might also focus on modernizing remaining locations and improving efficiency to ensure long-term profitability. Coca-Cola is increasingly focusing on growth areas such as sports drinks and energy products.