The £3.9bn ($5bn) acquisition of Costa coffee from Whitbread is Coca-Cola’s main entry point into the coffee category: and Coca-Cola says RTD products will be the first step in its plants to ‘quickly leverage the total coffee platform’.
Coca-Cola completed its acquisition of UK-headquarted coffee chain Costa coffee in Q1 2019, ahead of schedule. It will now launch RTD Costa products in the second quarter.
From RTD drinks to vending machines
Costa is the world’s second largest coffee chain, with operations in more than 30 countries including China, Europe, Asia Pacific, the Middle East and Africa. The acquisition covers the Costa brand, nearly 4,000 retail outlets, a coffee vending operations, Costa’s roastery and for-home coffee formats.
Reporting its Q1 2019 results this week, Coca-Cola says it has completed a smooth transition of Costa and attention has now turned to developing the brand in the coming months and years.
“During the quarter, the company completed its acquisition of Costa Ltd., which gives Coca-Cola a significant entry point into hot beverages and a global platform in coffee," says the company. "In the second quarter, the company will begin to leverage Costa's scalable platform across formats and channels with the introduction of Costa ready-to-drink products.”
James Quincey, Coca-Cola CEO, says the launch of Costa RTD products over the coming months will likely be concentrated in the markets where Costa already has a significant presence. Broader plans for other products will be developed over the course of 2019.
“We see a great opportunity to bring Costa ready-to-drink to the marketplace,” he said.
“And then - as for how we foresee the rollout of the coffee platform, not just the ready-to-drink, but the vending and being a beverage partner with beans and machines - that we'll come back to later in the year as we have time to really solidify the expansion plans with the management of Costa.
“We closed the acquisition well ahead of schedule. The integration has gone well and is ahead of schedule, taking the business and the services out of Whitbread and connecting them to the Coke system. And we're currently working through the various stages of the synergy plans we see ahead.”
Coca-Cola’s emerging coffee portfolio already includes Georgia Coffee in Japan and some coffee drinks in the US with partners.
But the acquisition of Costa gives Coca-Cola a strong foothold into the global coffee category: which is growing at around 6% a year and is valued at around $0.5 trillion. In turn, this helps Coca-Cola on its mission to move beyond soda and into wider beverage categories.
It has pledged, however, that Costa will continue to operate in similar manner to it does today, in a ‘connected-but-not-integrated’ model.
Coca-Cola’s broader plans for Costa could include expansion into further European, Asian, African and Middle Eastern markets.