Coca-Cola’s Costa Coffee Gamble Faces Uncertain Future
July 26 - 2025
Coffee Geography Magazine
When Coca-Cola acquired Costa Coffee in 2019 for $5.1 billion, it was seen as a bold move to diversify beyond sugary sodas and tap into the booming coffee market. But six years later, the investment’s future is in doubt as growth stalls and questions swirl about whether the beverage giant should keep the brand.
CEO James Quincey recently admitted on an earnings call that the company is rethinking its coffee strategy. "We're reflecting on what we've learned and considering new avenues to grow in coffee while continuing to run Costa successfully," he said. Despite the hefty price tag, the acquisition hasn’t delivered the expected returns. Costa’s revenue, which stood at £1.3 billion ($1.7 billion) in 2018, dipped to £1.22 billion in 2023—a sign of stagnation.
The challenges are particularly stark in the U.S., where Costa has struggled to compete in an oversaturated coffee market dominated by Starbucks and Dunkin’. Instead of opening retail stores, Coca-Cola has taken a business-to-business approach, deploying 250 Smart Café vending machines and launching ready-to-drink (RTD) iced coffee lines in stores like Walgreens and Amazon Fresh. But these efforts lack the scale of Coca-Cola’s usual product rollouts, leaving Costa as more of an experiment than a priority.
Globally, Costa operates over 4,000 stores and 14,000 self-serve machines across 50 countries, with a strong RTD presence in Europe and Asia. Yet, volatile coffee prices—driven by extreme weather and supply disruptions—have added pressure. Arabica coffee prices swung from $1.50 per pound in mid-2023 to record highs of $4.30 in early 2025, squeezing margins.
Coca-Cola’s recent decision to fold Costa into its Europe, Middle East, and Africa division—instead of keeping it as a standalone unit—suggests a sale isn’t imminent. But Quincey has shown he’s willing to cut losses, having axed underperforming brands like Odwalla and Zico in 2020.
For now, Costa’s fate hinges on whether Coca-Cola is ready to fully commit. With competitors like Starbucks and PepsiCo aggressively expanding in RTD coffee, Costa still has potential—but only if Coca-Cola gives it the resources and attention it needs to thrive. Otherwise, this costly bet may remain a cautionary tale of ambition outpacing execution.