Coca-Cola mulls Costa Coffee sale

Coca-Cola is working with bankers to hold exploratory talks over the sale of Costa Coffee more than six years after acquiring it, according to reports from Sky News.

Investment bank Lazard is understood to have been engaged by Coca-Cola and initial talks have already been held with a small number of potential bidders, including private equity firms.

Indicative offers are said to be due in the early part of the autumn, although one source cautioned that Coca-Cola could yet decide not to proceed with a sale.

Analysts believe that any sale would lead to multibillion pound loss on the £3.9bn sum Coca-Cola agreed to pay to buy Costa from Premier Inn owner Whitbread. It is thought the high street coffee chain could fetch a sum of around £2bn.

The disposal proceeds would not be material to the Atlanta-based company, which had a market capitalisation at Friday’s closing share price of $304.2bn (£224.9bn).

Accounts filed at Companies House for Costa show that in 2023 the coffee chain recorded revenues of £1.22bn. While this represented a 9% increase on the previous year, it was below the £1.3bn recorded in 2018, the final year before Coca-Cola took control of the business.

James Quincey, Coca-Cola’s chief executive, said on an earnings call: “We’re in the mode of reflecting on what we’ve learned, thinking about how we might want to find new avenues to grow in the coffee category while continuing to run the Costa business successfully. It’s still a lot of money we put down, and we wanted that money to work as hard as possible.”

Costa trades from more than 2,000 stores in the UK, and well over 3,000 globally, according to the latest available figures. It has been reported to have a global workforce numbering 35,000.

Catering Today has contacted Coca-Cola for comment.