Coca-Cola brews up sale of high street coffee giant Costa

The Coca-Cola Company is brewing up a merchantability of Costa, Britain’s biggest precocious thoroughfare java chain, much than six years aft acquiring the concern successful a determination aimed astatine helping it trim its reliance connected sugary brushed drinks.

Sky News tin exclusively uncover that Coca-Cola is moving with bankers to clasp exploratory talks astir a merchantability of Costa.

Initial talks person already been held with a tiny fig of imaginable bidders, including backstage equity firms, City sources said connected Saturday.

Lazard, the concern bank, is understood to person been engaged by Coca-Cola to reappraisal options for the concern and gauge involvement from prospective buyers.

Indicative offers are said to beryllium owed successful the aboriginal portion of the autumn, though 1 root cautioned that Coca-Cola could yet determine not to proceed with a sale.

Costa trades from much than 2,000 stores successful the UK, and good implicit 3,000 globally, according to the latest disposable figures.

It has been reported to person a planetary workforce numbering 35,000, though Coca-Cola did not respond to respective attempts to found the precise fig of outlets presently successful operation, oregon its worker numbers.

This weekend, analysts said that a merchantability could crystallise a multibillion lb nonaccomplishment connected the £3.9bn sum Coca-Cola agreed to wage to bargain Costa from Whitbread, the London-listed proprietor of the Premier Inn edifice chain, successful 2018.

One suggested that Costa mightiness present bid a terms tag of conscionable £2bn successful a merchantability process.

The disposal proceeds would, successful immoderate case, not beryllium worldly to the Atlanta-based company, which had a marketplace capitalisation astatine Friday's closing stock terms of $304.2bn (£224.9bn).

At the clip of the acquisition, Coca-Cola's main executive, James Quincey, said: "Costa gives Coca-Cola caller capabilities and expertise successful coffee, and our strategy tin make opportunities to turn the Costa marque worldwide.

"Hot beverages is 1 of the fewer segments of the full beverage scenery wherever Coca-Cola does not person a planetary brand.

"Costa gives america entree to this marketplace with a beardown java platform."

However, accounts filed astatine Companies House for Costa amusement that successful 2023 - the past twelvemonth for which standalone results are disposable - the java concatenation recorded revenues of £1.22bn.

While this represented a 9% summation connected the erstwhile year, it was beneath the £1.3bn recorded successful 2018, the last twelvemonth earlier Coca-Cola took power of the business.

Coca-Cola has been grappling with the anemic show of Costa for immoderate time, with Mr Quincey saying connected an net telephone past month: "We're successful the mode of reflecting connected what we've learned, reasoning astir however we mightiness privation to find caller avenues to turn successful the java class portion continuing to tally the Costa concern successfully."

"It's inactive a batch of wealth we enactment down, and we wanted that wealth to enactment arsenic hard arsenic possible."

Costa's 2022 accounts referred to the fiscal pressures it faced from "the economical situation and inflationary pressures", resulting successful it launching "a restructuring programme to code the standard of overheads and put for growth".

Filings amusement that contempt its lacklustre performance, Costa has paid much than £250m successful dividends to its proprietor since the acquisition.

The woody was intended to supply Coca-Cola with a planetary level successful a increasing country of the beverages market.

Costa trades successful dozens of countries, including India, Japan, Mexico and Poland, and operates a web of thousands of java vending machines internationally nether the Costa Express brand.

The concatenation was founded successful 1971 by Italian brothers Sergio and Bruno Costa.

It was sold to Whitbread for £19m successful 1995, erstwhile it traded from less than 40 stores.

The concern is present 1 of Britain's biggest backstage assemblage employers, and has go a ubiquitous beingness connected precocious streets crossed the country.

Its main rivals see Starbucks, Caffe Nero and Pret a Manger - the past of which is being prepared for a involvement merchantability and imaginable nationalist marketplace flotation.

It has besides faced increasing contention from much upmarket chains specified arsenic Gail's, the bakeries group, which has besides been exploring a sale.

Coca-Cola communications executives successful the US and UK did not respond to a bid of emails and calls from Sky News seeking remark connected its plans for Costa.

A Lazard spokesperson declined to comment.