Coca-Cola buys coffee chain Costa for $5.1 bn

London : Coca-Cola yesterday said it had agreed to buy international coffee chain Costa from its UK owner Whitbread, in a deal that gives the beverages behemoth its first global coffee brand. “Hot beverages is 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,” Coca-Cola chief executive James Quincey said in a joint statement.

The deal for £3.9 billion ($5.1 billion, 4.3 billion euros) comes as consumer demand for conventional carbonated drinks shrinks in the US and other markets owing to health and obesity concerns. Earlier in August, Coca-Cola’s arch-rival PepsiCo struck a deal to buy Israeli company SodaStream for $3.2 billion -- in a pitch to consumers concerned about mounting waste from soda cans and plastics in landfills worldwide. SodaStream makes machines that carbonate home tap water. Coca-Cola’s purchase adds to its Georgia coffee brand in Japan and the US group’s coffee products in other countries.

“Costa also provides Coca-Cola with strong expertise across the coffee supply chain, including sourcing, vending and distribution,” the soft drinks giant added. Coca-Cola hopes to close the deal in the first half of next year, subject to shareholder and regulatory approvals. The announcement comes three days after Nespresso maker Nestle said it sealed a deal to market the products of US coffee giant Starbucks around the world, outside of its cafes. Following pressure from activist shareholders, Whitbread revealed in April that it would spin off Costa, leaving it to concentrate on its hotel chain Premier Inn. Whitbread was forced to act after US group Elliott became its biggest shareholder with a six percent stake.