Coke CEO James Quincey Explains Rationale Behind Acquiring Costa

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The CEO of Coca-Cola, James Quincey, has discussed the rationale behind the company’s multi-billion-dollar acquisition of Costa Coffee.

Coke announced earlier today that it would pay £3.9 billion for the coffee chain, which is based in the UK but has operations across Europe, Asia-Pacific, the Middle East and Africa. In total, Costa operates nearly 4,000 retail locations.

As a Brit, Quincey will be familiar with the Costa offering; the company is the largest operator in the UK and is consistently voted among the country’s favourite, regularly outperforming larger rivals like Starbucks.

In a position statement on Coca-Cola’s website, Quincey wrote that the Costa acquisition was all part of Coca-Cola’s transformation into a “total beverage company”.

“Coffee helps us get into hot beverages,” Quincey said. “Coffee is one of the fastest-growing beverage categories in the world at 6%. It’s also a category with many different elements – from vending to coffee shops to roast-and-ground to instant to pods and capsules.

“In short, coffee is a big business with many formats. It’s also a remarkably fragmented business. No single company in the world has a strong foothold across all parts of coffee. And that includes Coca-Cola. We have great brands like our ready-to-drink Georgia coffee lineup in Japan, but Coca-Cola doesn’t have a broad, global portfolio in this growing category.

“Today, with the growth in coffee and hot beverages, it’s more important than ever that Coca-Cola make a serious and significant investment in the category, because it’s the right thing to do to serve our consumers with more of the drinks they want, which in turn helps our customers.”

The statement strongly suggests that Coca-Cola will expand Costa into markets where, previously, it had barely scratched the surface: the US, with all its existing competition, would be an immense challenge for Coca-Cola but would surely be its loftiest dream. So could Costa be coming to the US?

As well as being everywhere, Quincey sees the coffee chain as everything.

“I use the word ‘platform’ and not ‘brand’. A platform means Costa isn’t just one thing. Not just a brand. Not just a retail operation. Not just vending. Not just a coffee roaster,” he says.

“A platform is all of those things and more. Costa is a platform with a great supply chain in coffee, a world-class roastery, a strong retail presence and a vending system. Costa has strengths in many countries and in many key distribution channels of the coffee business.

“And yes, it’s a great brand. I know many people aren’t familiar with Costa, especially if they live in North and South America, where Costa isn’t part of the marketplace. But Costa has a deep heritage, especially in its home market of the UK, where it is the leading coffee company.”

Part of that rationale is that Costa is more than just a store. The company operates more than 8,000 Costa Express machines, serving Costa coffee in locations like forecourts and convenience stores. And Quincey hinted that retail might not be out of the question, either: Costa does have some retail-ready product lines, but it’s not best known for them.

Like others, I’ll be watching keenly to see if that changes as part of a company that has built its fortune in the beverage aisle – and, increasingly, along the whole length of it. Quincey committed to not changing the brand too much – he has promised to “let Costa be Costa” – so it’s unlikely that regular customers will see much change in store.

But, perhaps, we might yet see Coca-Cola and Costa Coffee side-by-side.

Source：Foodbev

Author：Alex Clere

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