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Coke Bets On Coffee With 51B Costa Pact Has Big Plans For Vending

ATLANTA -- Coca-Cola Co. said it will acquire international coffeehouse titan Costa Ltd. (Dunstable, England) for $5.1 billion. Coke president and chief executive James Quincey said plans include bringing Costa coffee vending machines and beans to U.S. gas stations, college campuses and quick-service restaurants. The soft drink giant's move to diversify beyond its cold-beverage base follows the merger of hot and cold beverage giants Dr Pepper and Keurig in July. The news also comes days after Swiss food ...

August 30, 2018

ATLANTA -- Coca-Cola Co. said it will acquire international coffeehouse titan Costa Ltd. (Dunstable, England) for $5.1 billion. Coke president and chief executive James Quincey said plans include bringing Costa coffee vending machines and beans to U.S. gas stations, college campuses and quick-service restaurants.

The soft drink giant's move to diversify beyond its cold-beverage base follows the merger of hot and cold beverage giants Dr Pepper and Keurig in July. The news also comes days after Swiss food giant Nestlé announced a $7.15B deal to license Starbucks packaged coffees and teas around the world.

Costa Coffee, founded London in 1971, is the United Kingdom's largest coffeehouse chain and has grown to become a major coffee brand across the world. It has nearly 4,000 coffee shops and also sells its coffee in supermarkets and convenience stores. The acquisition will give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion. Costa's portfolio includes the market-leading Georgia brand in Japan, along with coffee products in many other countries.

Its Costa Express program, which includes its vending machines, offers barista-quality coffee in a variety of on-the-go locations, including gas stations, movie theaters and travel hubs. Costa showcased its coffee machine at the National Retail Federation Big Show in New York City in 2013. The Costa Express program began when the company acquired Coffee Nation, a pioneer self-serve premium coffee vending operation, in 2011. It now has several thousand machines on location.

"Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide," 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."

The deal is expected to close in the first half of 2019.