Coca-Cola expands into coffee as it acquires Costa Coffee chain for $5.1bn

The Coca-Cola Company (TCCC) said it has agreed to acquire British coffee chain Costa Coffee for $5.1bn expanding its reach into the global coffee market, where it has little presence. The acquisition also allows the soda giant to diversify away from its coke brand which has been experiencing declining sales as increasingly health-conscious consumers seek alternatives away from fizzy and sugary drinks.

“Hot beverages are one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand.

“Costa gives us access to this market through a strong coffee platform,” said James Quincey, president and chief executive of The Coca-Cola Company.

According to Euromonitor, an international market research firm, the global coffee industry is valued at $80bn and has been growing at an annual rate of more than 5%.

The deal puts Coca-Cola in direct competition with Swiss group Nestle SA, Starbucks and Germany’s JAB Holdings. Nestle recently acquired the rights to sell Starbucks products globally, while JAB Holdings owned by the Reimann family in Germany earlier this year struck a deal to combine its Keurig Green Mountain coffee business with US-based soft drinks company Dr Pepper Snapple.

Coca-Cola will use its distribution network to grow Costa’s expansion as it plays catch-up with coffee chain market leader Starbucks which has 29,000 stores in 77 markets.

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