The Coca-Cola Company has announced that it has completed the acquisition of Costa coffee from Whitbread Plc in a transaction pegged at US$5.1 billion following the approval from regulatory authorities in the European Union and China.
With the deal, Coca Cola will benefit from Costa’s scalable platform across multiple formats and channels from the existing Costa express vending system and is set to explore opportunities of introducing ready-to-drink products.
Costa limited operates in the coffee business globally in more than 30 countries across Europe, China, Africa, Middle East and Asia Pacific.
The acquisition of Costa will help Coca-Cola spring into the global coffee category which is projected to grow at 6% annual rate worldwide valued at US$0.5 trillion.
“We see great opportunities for value creation through the combination of Costa’s capabilities and Coca-Cola’s marketing expertise and global reach,” said James Quincey, CEO of The Coca-Cola Company.
“Our vision is to use the strong Costa platform to expand our portfolio in the growing coffee category,” he added.
Costa was acquired by Whitbread in 1995 and has since propagated its growth from 39 retail outlets to the current almost 4000 outlets, a position which Coca-Cola wishes to improve.
“Whitbread acquired Costa 23 years ago, when it had only 39 shops. Costa has grown to become a leading, international coffee brand, and Coca-Cola is the right partner to take Costa to the next stage of expansion,” said the CEO.
Coca-Cola, however has said that Costa will continue its operations in a similar manner as it does currently rather than being engulfed into Coca-Cola’s business in a connected but not integrated model.
Earlier last year, Coca-Cola CEO James Quincey said that Costa will give Coca-Cola new capabilities and expertise in coffee, with a system that 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.
Costa gives us access to this market with a strong coffee platform,” he added.
James Quincey also said the company ventured into coffee business through Costa which presents a global coffee platform that will complement Coca-Cola’s existing system.