Costa Coffee will return most of the proceeds from the Coca-Cola to shareholders. Costa has close to 4,000 retail outlets worldwide and is described by Coca-Cola in its statement as having "highly trained baristas" and "state-of-the-art roastery".
London-based Costa serves its drinks in more than 30 countries in Asia, the Middle East, Africa and Europe but does not have a presence in the United States.
The two companies said on Friday that Coke, one of the biggest soft drinks groups in the world, would buy Costa's nearly 4,000 outlets across markets such as Britain, Europe and China after Whitbread's board unanimously backed the deal.
Costa, owned by Whitbread, is the UK's largest coffee chain.
Coca-Cola's big bet on coffee retail makes the beverage giant an immediate competitor to the likes of Starbucks, particularly in Costa's home market of the U.K. Costa operates almost 4,000 coffee shops throughout the world, and it previous year unveiled a $47 million production roasting headquarters filled with massive Probat systems. The transaction gives Coca-Cola instant heft in a business from which it was all but absent, with 3,800 stores in 32 countries and a foothold in China.
It acquired Costa Coffee for £19 million in 1995. Coke's current RTD coffee portfolio in the USA includes products from premium Italian roaster illy, cold brew coffee from Gold Peak, and a line of bottled iced coffees and frappes produced under partnership with the McDonald's McCafe brand.
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The move is Coca-Cola's latest diversification as health-conscious consumers, at least in America, move away from traditional soda. JAB Holdings, an investment holding company, has been buying up businesses and brands associated with Peet's, Caribou, Stumptown and Krispy Kreme Doughnuts.
Quincey touted the benefits of having a retail platform with Costa because it supports the brand and creates growth in so-called "immediate consumption" outlets that are stationed anywhere from supermarkets to airports.
Earlier in August, for example, Pepsi paid R47 billion to buy SodaStream, which allows consumers to make their own carbonated beverages at home.
Analysts cited industry rivals, including Intercontinental Hotels Group, Marriott and Accor, as potential suitors, while some suggested that Premier Inn's £5.4 billion of assets could interest property investors such as Blackstone Group.
While there are key areas that Costa can learn from Coke on building a global brand, there are also ways Coke can learn from Costa.
Nestle and Starbucks agreed to a $7.2 billion global coffee alliance. There are serious questions about whether the great British public can get any more caffeinated than it already is.