Coca-Cola exploring sale of Costa Coffee with Lazard’s help
Private equity firms among early bidders; offers due this autumn
Move comes six years after $5B acquisition to rival Starbucks & Nestlé
US soft drinks major Coca-Cola is reportedly considering the potential sale of British coffee chain ‘Costa’, according to a Sky News report. The company has hired investment bank Lazard to explore the option. The beverage giant bought Costa in 2018 for more than $5 billion. However, there is no official announcement from the company.
The Atlanta-headquartered Coca-Cola started initial talks with a small number of potential bidders for Costa sale. These include some private equity firms, the report said, citing sources. The initial offers for Costa are expected in early autumn, though Coca-Cola could still decide against the sale, it added.
Costa Coffee, as per its website, has its presence in 50 countries with over 2,700 outlets in the UK and Ireland, along with 1,300-plus outlets globally.
Coca-Cola bought Costa Coffee over six years ago to bolster its move into healthier drinks and challenge Starbucks and Nestle in the global coffee space. Food companies in the US are rapidly turning to healthier alternatives, spurred by Health Secretary Robert F Kennedy Jr. ‘Make America Healthy Again’ campaign.
In July, US President Donald Trump announced that Coca-Cola had committed to using real cane sugar in its American product range.
Costa Coffee India FY25 Financials
Costa Coffee's India revenue from operations surged 30.76% to ₹198.5 crore in FY25, and its profit rose 28.4% to ₹149.7 crore. The growth was driven by store expansion, as the number of outlets increased from 179 to 220 in FY25, according to the latest annual report of Devynai International Ltd (DIL).
Its revenue from operations was ₹151.8 crore, and profit stood at 116.6 crore for the financial year ended March 31, 2024.
Costa Coffee's gross margin declined marginally to 75.4% from 76.8% in FY24, primarily because of inflation in coffee beans and other input materials.
"The brand contribution margin came down from 17% to 16.1%, with average daily sales (ADS) per store declining from ₹33,000 to ₹27,000, translating into a reduction of same store aales growth (SSSG) from 8.7% to 4.1% during this period," said DIL.
Costa Coffee is operated in India through its franchise partner DIL, a leading QSR (Quick Service Restaurant) chain operator.
Earlier this year, in April, Costa Coffee's Global CEO Philippe Schaillee, who was on a visit here, told PTI that India is going to be among the top five global markets for the British coffee chain brand.
