Coca-Cola’s acquisition of Costa could lead to expansion in travel hubs

INTERNATIONAL. The Coca-Cola Company has reached a definitive agreement to acquire Costa Limited, in a move that will have implications for the travel channel.

There are many Costa Coffee outlets in travel locations across the world, operated under licence. The channel had been seen as ripe for expansion by Costa’s parent company Whitbread.

Coca-Cola noted that the acquisition, which is valued at US$5.1 billion, gives it its first global hot beverages brand.

Costa ranks as the leading coffee company in the UK and has a growing footprint in China, among other markets, Coca-Cola said. Pictured is a Costa outlet at Edinburgh Airport.

Details of Coca-Cola’s plans for Costa in the travel channel are limited at this stage, as the acquisition is still subject to shareholder approval and customary closing conditions. But in announcing the deal, The Coca-Cola Company stated: “Costa has a solid presence with Costa Express, which offers barista-quality coffee in a variety of on-the-go locations, including gas stations, movie theatres and travel hubs. Costa, in various formats, has the potential for further expansion with customers across the Coca-Cola system.”

Coca-Cola President and CEO James Quincey said of the acquisition: “Costa gives Coca-Cola new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide.

“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand. Coffee is a significant and growing segment of the global beverage business. Worldwide, coffee remains a largely fragmented market, and no single company operates across all formats on a global basis.”

Costa believes the business can now grow “farther and faster” under the guidance of Coca-Cola.

Costa Managing Director Dominic Paul said: “The Costa team and I are extremely excited to be joining The Coca-Cola Company. Costa is a fantastic business with committed and passionate associates, a great track record and enormous global potential. Being part of the Coca-Cola system will enable us to grow the business farther and faster.”

Upon the closing of the transaction, The Coca-Cola Company will acquire all issued and outstanding shares of Costa Limited, a wholly owned subsidiary of Whitbread. This subsidiary contains all of the existing operating businesses of Costa. Costa operations include the brand, nearly 4,000 retail outlets with trained baristas, a coffee vending operation, for-home coffee formats and Costa’s roastery.

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

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