Coca-Cola Considers Sale of Costa Coffee Amid Disappointing Investment Returns.

Coca-Cola is reportedly considering selling Costa Coffee, its £3.9bn ($5.2bn) acquisition in 2018. The decision comes as Coca-Cola reviews its options for the UK's biggest coffee shop chain, which operates in around 50 countries worldwide. Coca-Cola CEO James Quincey has expressed disappointment with the investment, citing slower-than-expected growth in the ready-to-drink coffee and Express machines at home segments. The company is now reflecting on its strategy and exploring new avenues for growth in the coffee category.

Coca-Cola is reportedly exploring options to sell Costa Coffee, its £3.9bn ($5.2bn) acquisition in 2018. The decision comes as the company reviews its options for the UK's largest coffee shop chain, which operates in around 50 countries worldwide. Coca-Cola CEO James Quincey has expressed disappointment with the investment, citing slower-than-expected growth in the ready-to-drink coffee and Express machines at home segments. The company is now reflecting on its strategy and exploring new avenues for growth in the coffee category [1].

The potential divestment of Costa Coffee is part of a broader industry trend where private equity (PE) firms are increasingly playing a dominant role in reshaping the coffee sector. Private equity firms are prioritizing operational efficiency over brand premiums, with EBITDA multiples ranging from 4x to 10x [2]. Coca-Cola's exit from Costa Coffee, if successful, would align with these trends and reflect a strategic realignment towards its core beverage segments.

Coca-Cola's recent earnings report shows a rise in net income to US$3.81 billion from US$2.41 billion year-on-year, despite volume pressures in key markets. This demonstrates the company’s ability to maintain margin resilience and execute robust strategies across its diversified brand offerings [3]. However, the company faces persistent risks from intensifying competition in health-focused categories and shifting consumer preferences.

The potential sale of Costa Coffee is unlikely to materially affect Coca-Cola's near-term focus on margin resilience and premium product growth. However, it could eventually reshape the company’s portfolio positioning. Coca-Cola's outlook anticipates $55.1 billion in revenue and $14.8 billion in earnings by 2028, assuming a 5.4% annual revenue growth and a $2.6 billion increase in earnings from the current $12.2 billion [4].

In conclusion, Coca-Cola's consideration of selling Costa Coffee is a strategic move that reflects broader industry trends and the company's desire to focus on its core competencies. As private equity firms continue to reshape the coffee industry through disciplined capital allocation and operational overhauls, investors must evaluate opportunities not just on brand strength but on margin resilience and scalability.

References:
[1] https://www.ainvest.com/news/coca-cola-strategic-divestiture-costa-coffee-implications-portfolio-rebalancing-2509/
[2] https://finance.yahoo.com/news/costa-coffee-possible-sale-coca-100600757.html
[3] https://www.ainvest.com/news/coca-cola-strategic-divestiture-costa-coffee-implications-portfolio-rebalancing-2509/
[4] https://finance.yahoo.com/news/coca-cola-q2-2025-earnings-100600757.html