Global investment firm KKR & Co. has re-entered talks to acquire Costa Coffee from The Coca-Cola Company, signalling renewed interest in one of the world’s most recognisable coffee brands. The move comes as Coca-Cola reconsiders its position in the café business amid a shifting beverage landscape.
Background
Costa Coffee, founded in London in 1971, has grown into a global coffeehouse brand with thousands of outlets across the UK, Europe, and Asia. Coca-Cola acquired Costa in 2019 for about £3.9 billion, marking its first major step into the hot-beverage segment.
However, operating physical cafés proved more complex than expected for Coca-Cola, whose strength lies in packaged beverages. Now, with consumer habits evolving and inflation affecting the retail café industry, the company is reportedly exploring strategic options for Costa Coffee.
The New Round of Talks
KKR, which had previously shown interest in Costa earlier this year, has returned to the negotiation table. The discussions are still in their early stages, with no official deal confirmed yet. Reports suggest that the transaction could value Costa Coffee at around £1.5 billion, significantly below the price Coca-Cola paid six years ago.
If the deal goes through, Coca-Cola is expected to retain the ready-to-drink (RTD) business — which includes bottled and canned coffee products — while selling off the café and retail operations.
Why the Deal Matters
For Coca-Cola, selling Costa Coffee could streamline its focus on high-margin beverage categories and eliminate the challenges of managing a large retail network. For KKR, acquiring Costa would open doors to a well-known global brand with established operations and strong brand equity.
Private equity firms like KKR see growth opportunities in the café market, particularly as coffee consumption continues to rise in emerging markets such as India and Southeast Asia. Revamping Costa’s store design, digital experience, and menu could bring fresh momentum under new ownership.
Challenges Ahead
Despite its strong brand, Costa faces several hurdles. The global café business is under pressure from high operating costs, labour shortages, and intense competition from brands like Starbucks, Tim Hortons, and independent cafés.
KKR would need to focus on efficiency, technology integration, and international expansion to rejuvenate the chain. Turning around a large retail-based business in a post-pandemic economy would require strategic discipline and long-term investment.
The Bigger Picture
This potential acquisition reflects a broader trend of private equity firms buying consumer brands that have strong recognition but need operational revival. If KKR successfully closes the deal, it would mark another major entry into the consumer retail segment — and could reshape Costa’s future globally.
What to Watch
- Whether KKR submits a binding offer.
- If Coca-Cola decides to sell the café division or retain partial control.
- The final sale value compared to the 2019 acquisition price.
- How Costa performs under potential new ownership.
Conclusion
KKR’s renewed interest in acquiring Costa Coffee from Coca-Cola highlights a shifting strategy in the beverage industry. Coca-Cola may step back from café operations, while KKR sees an opportunity to revive a globally respected coffee brand. If successful, the deal could reshape the future of Costa Coffee and signal a new chapter in the global coffee business.
