Coca-Cola buy Costa coffee chain from Premier Inn owners WhitBread today, giving the global giant its first truly global coffee brand in the profitable coffee market.
This has allowed WhitBread to gain significant capital to reinvest into their core business but more importantly, Coca-Cola takes a strong step as a foodservice and hot coffee chain operator.
Coca-Cola’s strategy to diversify their streams of revenue and grow their influence in out of home channels is necessary to account for the continued importance of convenience and on-the-go lifestyles.
However, due to the drinks brands limited expertise in food, the impact they can bring to Costa’s food & snack offerings remains unclear.
Coca-Cola needs to keep diversifying
Could this be the gateway for Coca-Cola to acquire more foodservice companies? Potentially, especially if they succeed in taking Costa to true global heights.
Costa’s CEO in 2017 mentioned his hopes for the coffee chain to be famous for innovation. With Coca-Cola’s input and innovative flair, this might become a reality. And a big name backing the coffee chain might be what it needs to attract cautious consumers.
Coca-Cola needs to keep diversifying as growing health-consciousness continues to limit growth in the carbonates market. When surveyed in 2017, 33% of global consumers said that how a food product impacts their health and wellbeing always influences their choice.
The soft drinks market is still very profitable for Coca-Cola, generating billions in revenue each year.
However, the increasing scrutiny on sugary drinks means that Coca-Cola needs to keep renewing its product portfolio, as it’s done in the past with the acquisition of Innocent smoothies and even launch of the water brand Dasani to retain those health conscious consumers.
What is truly innovative about this acquisition is that Coca-Cola has not just acquired another drinks brand; rather it has also bought a global outlet operator, further diversifying their revenue models.