Coca-Cola's Costa Coffee deal struggles to deliver global growth

Traders Union
All News
Business & Wealth
Companies
Costa Coffee global growth struggles

Highlights

Coca-Cola's plan to expand Costa Coffee globally via its bottling and vending network falters, as Costa machines prove more costly and complex than traditional equipment.
Costa has failed to gain traction in the $23 billion U.S. ready-to-drink coffee segment, where PepsiCo and Starbucks' Frappuccino dominates.
Coca-Cola unsuccessfully attempted to sell Costa last year and, despite recent cost-cutting, states coffee remains key to its beverage strategy amid ongoing sale speculation.

Costa expansion plan falls short

As first reported by Moneyweb, Coca-Cola's strategy for Costa centred on using its global bottling and vending network to scale espresso machines and packaged coffee well beyond Costa's core markets. That plan has fallen short as Costa's vending machines prove costlier and more complex for bottlers to place than traditional cold beverage equipment.

The acquisition was a flagship move by former chief executive James Quincey to push into the global coffee and tea market. Instead of securing a meaningful share of the roughly $23 billion ready-to-drink coffee segment, Costa remains relatively unknown in the U.S., while Frappuccino, the PepsiCo and Starbucks joint venture, leads the category there.

Jason Cotta, a former managing director at Costa who left six months after the takeover, said there was an expectation Coca-Cola could combine its successful global vending footprint with Costa Express machine placements at scale. He said that assumption does not prove correct, underscoring one of the central operational missteps in the deal.

Sale speculation and market implications

Late last year, Coca-Cola unsuccessfully tries to sell Costa, according to the report, and some former employees now view recent cost-cutting and improving revenue trends as possible signs the group could revisit that option under chief executive Henrique Braun in the coming months. Coca-Cola says in a statement that it is not in the market to sell Costa and that coffee remains an important part of its total beverage strategy.

Chris Clowes, a former Costa operations manager who now works as a supply chain consultant, says the acquisition is financially small for Coca-Cola but highly visible, and he expects the company to be more cautious on future deals. For the wider beverage sector, Costa's performance shows that scale in soft drinks does not automatically translate into success in coffee, especially in the U.S. where consumer awareness, store execution and equipment economics remain critical.

Famous Brands’ interim earnings outlook was weighed down by cost pressures and a Botswana-related impairment, with the group guiding for a potential drop in basic earnings per share for the six months to 31 August 2026. Our earlier article noted that the company plans to reduce its exposure by selling down its stake in Botswana’s Retail Group as part of an asset-light strategy, while keeping a smaller interest and related licence income.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.