Coca-Cola is Finally Expanding on a Big Purchase

Beverage giant acquired this company right before the pandemic to help it challenge a big player in the beverage business.

Along with a pub and a fish-and-chips shop, almost every small town in England has a Costa Coffee — as of 2022, there were 2,681 locations across the United Kingdom compared to Starbucks  (SBUX) – Get Starbucks Corporation Report‘s 1,025 stores. 

The London-based coffee chain is known for everything from its hot and cold drinks menu and cheese toasties to the annual award for the best books of the year. Globally, it is also the second-largest coffee chain after Starbucks with over 4,000 locations.

Since its launch in 1971, the brand has also tried to stay current with the times. Most recently, that took the form of robot baristas and drone-operated coffee deliveries. 

But despite its popularity in the United Kingdom, Costa Coffee has for years been nonexistent and thereby also nearly unheard of in the United States. That is, until it caught the eye of American beverage giant Coca-Cola  (KO) – Get Coca-Cola Company (The) Report

Where In The U.S. Can I Get Some Costa Coffee?

In 2019, Coca-Cola completed its purchase of Costa Coffee for $5.1 billion and promptly announced plans to bring the brand across the Atlantic Ocean — plans that were later derailed by the outset of the COVID-19 pandemic.

Three years after the acquisition and just over 50 years after its initial launch in the UK, Costa Coffee finally opened its first American location in Atlanta at the start of August.

The unofficial American debut also took place with a sparkling-new Costa Coffee vending machine that was shown off at the National Restaurant Association show last May in Chicago.

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Located in the CODA Building in Atlanta’s Midtown, the first American Costa Coffee has the signature layout, design and deep red colors of its British locations and is meant to serve as a test pilot of plans to expand in the U.S. and further across continental Europe.

Along with the stores themselves, Costa Coffee also plans to sell Americans various drip coffees from automatic machines as well as espressos and other coffee product for home delivery.

But What Does Coca-Cola Have To Do With It?

“Consumption of espresso-based beverages is on the rise at 26% and has surpassed pre-pandemic levels,” said Costa Coffee U.S. General Manager, citing statistics from the National Coffee Association for Beverage Daily. “[This makes] now the right time to launch an excellent, espresso-based coffee in the US.”

While Coca-Cola’s brands is almost inextricably linked with its namesake beverage, the beverage giant owns over 200 brands for everything from juice and kombucha to alcohol.

As coffee consumption soared in the double digits during the pandemic, Coca-Cola has also been on a serious mission to expand the number of coffee products available to buyers — in 2021, it acquired a 30% stake in Italian espresso company Casa Del Caffè Vergnano and launched a canned coffe-flavored cola that the company says “sips like a Coke and finishes like a coffee.”

And Coca-Cola isn’t the only one trying to take on Starbucks with their own coffee products. Rival Pepsi  (PEP) – Get PepsiCo Inc. Report had launched Pepsi Café in 2020 even if that cola-coffee hybrid has largely fizzled out without a strong buyer base.

“As a total beverage company, Coca-Cola has offered a variety of coffee solutions in the US over the years, including options from multiple brands and in various formats,” Warner said. “Costa Coffee’s US debut marks the first time we are bringing in a premium coffee offering with an established, global fanbase.”

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