Coca-Cola is working with Lazard to review strategic options for Costa Coffee, including the possibility of a sale, a person familiar with the matter told Reuters. The group has held initial discussions with a small group of potential bidders, including private equity firms, with indicative offers expected in early autumn. A sale remains not guaranteed.
Coca-Cola acquired Costa Coffee in 2018 for more than $5 billion to bolster its position in the global coffee market, competing with Starbucks and Nestlé. Costa, which operates in about 50 countries, could add scale to the packaged foods and beverages portfolio as companies seek to weather price inflation and shifting consumer preferences toward healthier options.
In a recent earnings call, Coca-Cola Chief Executive James Quincey signaled that Costa’s performance has not met the company’s original investment thesis, hinting at potential changes to how Costa is run. The broader market context for such a move includes ongoing dealmaking in the sector as major players look to strengthen their coffee platforms and diversify revenue streams.
Health trends in the United States also loom large, with Coca-Cola signaling a shift toward healthier formulations, including a July decision to use real cane sugar in its U.S. products as part of a broader response to public health campaigns and consumer demand for simpler ingredient lists.
Beyond Costa, the global coffee market continues to evolve, with new developments in other regions underscoring growing appetite for premium, sustainably sourced beans. For example, Fiji has seen renewed investment in its coffee sector through ONA Coffee, which is expanding operations to support farmers and build local processing capacity. The project includes partnerships with dozens of farmers in Ra Province, a plan to plant up to one million high-quality seedlings across hundreds of acres for Arabica and Liberica varieties, and the development of processing facilities in Rakiraki and adjacent regions. Government officials have emphasized the aim of tying rural development to export growth, improving digital connectivity for farmers, and fostering a sustainable, community-driven coffee industry.
This broader environment suggests that the Costa Coffee review comes at a time of heightened interest in expanding premium coffee supply chains and scaling beverage brands to meet global demand. If a sale advances, bidders would weigh Costa’s brand strength, store network, and operational costs against Coca-Cola’s desire to sharpen its focus on core beverages and leverage Costa’s coffee platform for cross-brand opportunities.
What to watch next: whether a formal process emerges with narrowed bidders, how Costa’s leadership and employees are integrated or positioned in any deal, and how Coca-Cola’s strategic priorities for its coffee business evolve in light of these considerations. The outcome could influence competition among major beverage groups and shape the direction of premium coffee brands in the years ahead.
Summary: Coca-Cola is evaluating options for Costa Coffee with Lazard, including a potential sale, as initial bidder discussions proceed and indicative offers are anticipated in autumn. The move follows Costa’s 2018 acquisition and ongoing questions about the investment’s returns, set against a global coffee market that includes new expansion efforts like Fiji’s ONA Coffee, signaling continued interest in premium coffee platforms and rural development through supply-chain investments. A possible sale would reflect Coca-Cola’s strategic recalibration and could reshape competitive dynamics in the coffee and broader beverage sector.
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