Coca-Cola Tries Again to Sell Costa — at Less Than Half Price, While US Rivals Ride Out the Bean Storm

The timing looks counter-intuitive on the surface. Costa Ltd posted an operating loss of £13.5 million on £1.2 billion of revenue in 2024, more than doubling the £5.8 million loss a year earlier, and took a £48.6 million impairment tied to its China business. By 2025, the chain had bounced back: revenue rose 5% to roughly £1.3 billion and operating profit reached £20 million, driven by iced drinks, matcha, and a renewed UK store push.

Lazard was retained to run the original 2025 process. Bain Capital opened with an offer near £2 billion ($2.7B) before being narrowed out, and TDR Capital was selected as preferred bidder in early December 2025 after a New York board meeting. Talks then collapsed on price within days. Semafor's report indicates Coca-Cola is now re-engaging the same pool of buyers with adjusted terms rather than starting fresh.

The valuation math is unforgiving. Paid at roughly 16x EBITDA in 2018, Costa was testing closer to 9–10x even on the 2025 £20M profit recovery. For PE, the asset is a turnaround story —2,500+ UK stores, 400 drive-thrus with40 more planned in 2026, plus the Costa Express self-service vending business (16,000+ 'Proud to Serve' placements globally) — not a growth story.

Costa is overwhelmingly a UK high-street asset; the US investable angle is the macro coffee cost cycle and what it is doing to the same input line at Keurig Dr Pepper and J.M. Smucker. Arabica futures have spent most of 2026 above the five-year average after peaking near $4.41/lb, and US retail ground-coffee prices hit $9.61/lb in March 2026, the highest on record.

J.M. Smucker's US Retail Coffee segment — anchored by Folgers, Dunkin' at-home, and Café Bustelo — saw full-year segment margin fall from 28.3% in FY2025 to 21.2% in FY2026, a 710 basis-point drop, on $3.3B of segment revenue. Pricing carried the top line (+23% net sales in Q3 FY2026), but green-coffee inflation and category elasticity left the P&L exposed. Keurig Dr Pepper has felt the same strain: Coffee segment operating income fell 36.1% in Q2 FY2026, with management attributing 22 percentage points to JDE Peet's integration costs and 17 points to ingredients and tariffs.

The strategic contrast is the real story. Coca-Cola is reducing direct exposure to physical coffee retail; Keurig Dr Pepper closed its $18 billion acquisition of JDE Peet's on April 1, 2026, and is in the process of separating into two US-listed companies — a global coffee champion and a North American refreshment-beverages player. The split is expected to land in 2027 with $400M of targeted cost synergies.

For Coca-Cola, the retained coffee play is concentrates and RTD, not stores — and it is gaining share there. Water, sports, coffee and tea grew 6% in Q2 FY2026, and the company gained value share in total nonalcoholic ready-to-drink beverages. The global RTD-coffee market is forecast at roughly $33.6B in 2026, on track for $49B by 2033.

Three things move if a deal closes. First, Coca-Cola books a sizable impairment — likely in the multi-billion-dollar range on a £3.9B vs ~£2B price gap — but crystallizes a strategic narrowing toward concentrates, RTD and licensing. Second, a PE-controlled Costa gets a longer rope to restructure UK store economics, refurbish sites, and monetize the Costa Express vending book without quarterly public-market scrutiny. Third, US coffee investors should treat Costa as a slow-moving competitive variable: Costa Express sits in 16,000+ global placements, mostly outside the US, and its competitive threat to Keurig Dr Pepper's away-from-home or J.M. Smucker's at-home franchises is indirect at best.

Coca-Cola is essentially admitting the 2018 Whitbread deal was a strategic mistake with a £1.7B+ paper loss — and choosing to clean the portfolio rather than keep funding a turnaround. For US investors, the more important signal is that Keurig Dr Pepper and J.M. Smucker are at peak coffee-cost pain: green-bean relief in late2026, paired with Keurig Dr Pepper's JDE Peet's integration, sets up a 2027 margin and multiple re-rating that is unrelated to whether Costa finds a buyer.