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MILAN – Coca-Cola is holding last-ditch talks with private equity firm TDR Capital in an attempt to salvage Costa Coffee, according to an article published last week by the Financial Times. The Atlanta-based multinational’s intention to sell the British chain it acquired in 2018 emerged last summer following its disappointing results, especially after Covid.
Financial figures for 2023 (the latest year available) show that Costa Coffee reported a loss of £13.8 million ($18.5 million), with revenues of £1.2 billion ($1.6 billion), compared to £1.3 billion in 2018.
This is not exactly the trajectory of growth Coca-Cola had expected, although when evaluating these figures, we must take into account the repercussions of the pandemic, inflation and rising costs
These below-expectation results prompted The Coca-Cola Company CEO James Quincey – who will step down next March, leaving his place to current COO Henrique Braun – to admit in a recent call, that “Our investment in Costa is not where we wanted it to be from an investment hypothesis point of view,” and that the company was rethinking its coffee strategy.
The list of contenders, which initially included Bain Capital, Centurium Capital (majority shareholder of Luckin Coffee), Apollo and KKR, has now been narrowed down to TDR Capital, a leading European private equity firm that owns, among other things, British retail giant Asda and the EG Group chain of petrol stations and mini-markets.
Coca-Cola chose TDR as preferred bidder for Costa last week, following a board meeting in New York, according to the FT, who cited sources with knowledge of the situation.
However, negotiations with TDR – conducted with bankers at Lazard – are reportedly stalling over the price, according to one of the sources. In fact, Coca-Cola has given itself until this week to decide.
And it cannot be ruled out that the deal will not go through
TDR would like to acquire Costa’s UK and international business, with the sole exception of its operations in China, according to the sources. Coca-Cola aims to sell the asset for around £2 billion, a sum that is still well below the £3.9 billion (16.4x Costa’s EBITDA at the time) paid in 2018.
The parties are now negotiating the possible retention of a minority stake in Costa by Coca-Cola, which could be adjusted in favour of the latter to get the deal through.
In Atlanta, lips remain tightly sealed. Coca-Cola, as already mentioned, will decide whether or not to sell Costa Coffee within the week.
Gerry Ford (Caffè Nero) pessimistic about prices
Prices of coffee and other beverages in British coffee shops are unlikely to fall in the foreseeable future: at most, they will increase more slowly.
This is according to Gerry Ford, the American founder and managing director of Caffè Nero, another major UK coffee shop chain with a thousand outlets in a dozen countries. According to Ford, raw material costs are “exorbitant right now” and while green coffee is slowly falling in price, this is not the case for many other cost items.
“By and large, if costs come down, then [coffee shops] just won’t increase the prices for a longer length of time,” he said in an interview with The Telegraph.
Figures from Lumina Intelligence show that average prices in UK chains have risen by an average of around 80 pence (approximately $1.07) between 2022 and 2025.
During this period, the price of hot coffee rose by 17%, Americano coffee by 15% and latte by 21%.
At Caffè Nero, an average cappuccino or latte costs £4 ($5.36), a flat white £4.10 ($5.49), a chai latte £4.55 ($6.09) and an average Americano £3.45 ($4.55).
