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Costa Coffee Sale Collapses Amid High Hopes
14 Jan
Summary
- Coca-Cola halted Costa Coffee sale talks in December.
- Bids failed to meet Coca-Cola's £2bn valuation target.
- Rising costs and competition impacted Costa's performance.
Coca-Cola has reportedly decided to scrap the sale of its Costa Coffee chain, as bids from interested private equity firms did not meet the company's valuation expectations. Discussions were halted in December, concluding a months-long auction process managed by investment bank Lazard. The US-based beverage giant had initially sought around £2 billion for the coffee business it acquired in 2018.
The decision comes after Costa faced significant headwinds, including rising operational costs, particularly for coffee beans, and intensified competition on the high street. These challenges led to widening operating losses in the 2024 financial year, despite revenues seeing a slight increase. Coca-Cola's outgoing chief executive had previously noted that Costa had not met the company's investment objectives.
Costa, founded in 1971 and acquired by Whitbread in 1995, has grown to approximately 2,700 outlets across the UK and Ireland. While the current sale has been called off, Coca-Cola has not definitively closed the door on future divestment possibilities for the coffee chain.
