The Coca-Cola Company is once again exploring a potential sale of British coffeehouse chain Costa Coffee, according to reports from Semafor and Reuters.
The exploratory move comes less than a year after an earlier auction process was shelved when private equity bids fell below corporate valuation expectations. The beverage multinational acquired Costa in 2018 from hospitality group Whitbread in a $5.1 billion (£3.9 billion) transaction, positioning the asset as a foundational pillar to broaden its exposure to hot beverages and out-of-home retail coffee.
Sources familiar with the matter indicate that Coca-Cola is testing market appetite after at least one strategic suitor recently evaluated a transaction before stepping away over valuation and strategic integration concerns.
Preliminary Talks and Valuation Realities
The revival of divestment plans follows a stalled sales process in late 2025 and early 2026.
During previous negotiations, buyout groups including TDR Capital and Bain Capital’s special situations fund participated in late-stage bidding. However, initial private equity offers valued the chain at approximately £2 billion—roughly half of the purchase price Coca-Cola paid in 2018. The valuation gap prompted Coca-Cola leadership to pause formal proceedings in January.
Coca-Cola has not officially commented on the process, renewed interest from corporate advisers highlights ongoing strategic reassessments regarding capital allocation and asset returns across its global retail divisions.
Operating Performance and UK Footprint
Costa Coffee represents the largest branded coffeehouse chain in the United Kingdom, operating roughly 2,700 locations across the UK and Ireland alongside an international estate and thousands of automated Costa Express vending units.
The business has faced escalating operating cost pressures in recent years, including rising commercial business rates, statutory wage increases, and elevated coffee bean commodity costs:
Revenue Performance: Costa reported revenue of nearly £1.3 billion in 2025, marking an annual turnover increase of approximately 5%.
Profit Recovery: The business generated an operating profit of £20 million in 2025, rebounding after consecutive years of operating losses.
Workforce Scale: The chain employs approximately 20,000 personnel across its managed and franchised retail networks.
Despite recovering to modest operating profitability, the brand has contended with intense competitive pressure on the British high street, where value food-to-go operators such as Greggs and expanding drive-thru formats have captured morning coffee and breakfast traffic.
The Coca-Cola System
When Coca-Cola completed the acquisition of Costa in 2018, corporate leadership intended to transform the chain into a global multi-platform coffee brand, spanning retail cafes, ready-to-drink (RTD) canned coffees, automated kiosks, and wholesale bean supply.
While Coca-Cola successfully integrated Costa-branded canned ready-to-drink coffees into its commercial bottling distribution networks, managing a direct brick-and-mortar hospitality estate presented structural challenges distinct from the group’s core beverage concentrate and licensing operations.
In recent fiscal presentations, Coca-Cola executive leadership has prioritised asset-light distribution models, concentrating resources on core beverage categories, system refranchising, and high-margin functional beverages.
Next Steps in Potential Divestiture
It remains unconfirmed whether Coca-Cola will launch a formal auction process or what baseline valuation the conglomerate will seek for the business.
Market observers anticipate that prospective buyers could encompass international private equity funds specialising in retail turnarounds, as well as multinational franchise operators seeking immediate scale across European and Middle Eastern commercial coffee networks.
