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Costa Coffee deal: Coca-Cola to Purchase UK's Greatest Espresso Chain for £3.9bn

Coca-Cola is in deals to purchase the Costa coffee chain from owner Whitbread in a deal worth £3. 9bn.

United Kingdom: Coca Cola has consented to purchase the UK chain Costa Coffee for £3.9 billion ($5.1 billion) to pick up a worldwide brand to grow in hot beverages. Whitbread agreed to offer Costa at a value that is 16 times the current year's income before interest, taxes, depreciation and amortization.

The company’s chief executive officer said that Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand.

Costa was one of the few big coffee chains available to be purchased after Nestle SA and the Reimann family's venture organization JAB both went on an acquisition spree in the segment.

Manufacturers of soft drinks are splitting out as customers seek replacements to sugary sodas. Earlier this month, PepsiCo agreed to pay $3.2 billion for SodaStream, which makes carbonated-water dispensers.

Whitbread said in April that it would strip Costa, after weight from activist investors the business should be separate from its hotel operations.

Whitbread said that the deal will yield a "significant premium" to the approval that would have been made through a spinoff. Moreover, the group will return a large portion of the returns to its investors.

According to TechSci Research, the acquisition of Costa by Coca Cola is in line with its vision of performance with purpose that aims of expansion in the coffee segment. The acquisition of Costa will allow Coca Cola to diversify its product offering as well as have a positive impact on the Coffee Market globally. Persistently rising consumption of coffee in various parts of the world, growing young population and the working class, rising disposable income that is being spent on consumption of coffee at coffee shops is expected to propel demand for Coffee market over the next five years.

According to the recently published report by TechSci Research, “Global Ready to Drink Tea & Coffee Market, By Product Type (Tea and Coffee), By Packaging Type (Glass Bottle, Canned, Pet Bottle and Others), By Distribution Channel (Supermarket/Hypermarket, Food Service, Convenience Store and Others), By Company and By Geography, Forecast & Opportunities, 2023,”, Global Ready to Drink Tea & Coffee Market is projected to reach USD 137.82 Billion by 2023, growing at a CAGR of over 10% during the forecast period. The major factors propelling the growth of the market are growing population, increasing per capita income, availability of different flavors and the improved nutritional benefits of the products. Moreover, rising demand of ready to consume health drinks has largely impacted the consumption of ready to drink tea and coffee market, especially in the developed region, owing to large number of working population and less time for making food at home. The demand for the Ready to drink tea & coffee market is anticipated to increase further in North America and Europe & CIS region due to increasing consumer awareness about health benefits of these products over other soft drinks.

According to the recently published report by TechSci Research, Global Coffee Machine Market By Type (Drip Coffee Machine, Steam Coffee Machine, Capsule Coffee Machine & Others), By End User (Commercial, Institutional, Residential), Competition Forecast & Opportunities, 2013 – 2023”, Global Coffee Machine projected to grow during 2018-2023. Persistently rising consumption of coffee in various parts of the world, growing young population and the working class, rising disposable income that is being spent on consumption of coffee at coffee shops is expected to propel demand for Coffee Machine over the next five years.

Relevant Reports

Global Ready to Drink Tea & Coffee Market, By Product Type (Tea and Coffee), By Packaging Type (Glass Bottle, Canned, Pet Bottle and Others), By Distribution Channel (Supermarket/Hypermarket, Food Service, Convenience Store and Others), By Company and By Geography, Forecast & Opportunities,

Consumer Goods and Retail | Apr, 2018

Rising per capita income, rising demand of on-the-go health drinks and growing innovation & productions, drives the Global Ready to Drink Tea & Coffee Market through 2024.

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