Core Insights - Coca-Cola is evaluating the sale of Costa Coffee, with initial discussions already taking place with private equity firms, indicating a significant shift in the global coffee market [1][8][12] - Costa Coffee, originally acquired by Coca-Cola for £3.9 billion (approximately ¥34.7 billion) in 2018, is now being marked for sale at £2 billion (approximately ¥19.4 billion), reflecting a drastic reduction in value [1][9][10] - The competitive landscape in the coffee industry has intensified, with Starbucks and other fast-food chains like McDonald's and Tim Hortons posing significant challenges to Costa's market position [11][12] Company Overview - Costa Coffee was founded in London in 1971 by brothers Bruno and Sergio Costa, who aimed to provide high-quality Italian-style coffee [2][4] - The brand expanded rapidly after being acquired by Whitbread in 1995, which provided the necessary capital and support for growth [4][6] - As of the end of 2023, Costa operates over 2,700 stores in the UK and Ireland, with an additional 1,300 locations globally, generating revenues of £1.22 billion (approximately ¥12.8 billion) [6] Market Dynamics - The coffee market has seen a decline in Costa's performance, with revenues dropping from £1.3 billion in 2018 to current levels, attributed to economic pressures and increased competition [10][11] - The sale of Costa is part of Coca-Cola's strategy to focus on its core beverage business, as the coffee segment has not met initial growth expectations [11][12] - The competitive environment in China, a key market for Costa, has become increasingly challenging, with local brands gaining significant market share [12][14] Investment Opportunities - The potential sale of Costa Coffee and Starbucks China has attracted interest from various private equity firms, indicating a ripe opportunity for investment in the coffee sector [13][15] - Starbucks China, despite facing declining market share from 34% in 2019 to an expected 14% in 2024, is still valued at approximately $10 billion, showcasing the high stakes in the coffee market [14][15] - The ongoing shifts in the coffee industry reflect broader economic trends, with companies adapting to competitive pressures and seeking strategic divestitures [19][20]

Core Viewpoint - Coca-Cola is planning to sell Costa Coffee, with a significant price drop from its original acquisition cost, indicating a shift in strategy amid increasing competition in the coffee market [2][14][17]. Group 1: Company Developments - Coca-Cola is collaborating with Lazard to evaluate the sale of Costa Coffee, having already engaged in preliminary talks with private equity firms [2][13]. - Costa Coffee was acquired by Coca-Cola for £3.9 billion (approximately ¥34.7 billion) in 2018, but the current sale price is expected to be around £2 billion (approximately ¥19.4 billion), reflecting a 50% decrease [2][14]. - As of the end of 2023, Costa Coffee generated revenues of £1.22 billion (approximately ¥12.8 billion) and operates over 4,000 stores globally [11]. Group 2: Market Context - The coffee market has become increasingly competitive, with major players like Starbucks, McDonald's (McCafé), and Tim Hortons aggressively expanding their coffee offerings [17]. - Starbucks China is also in talks for a potential sale, with its market share dropping from 34% in 2019 to an estimated 14% in 2024, despite a valuation increase from $5-6 billion to potentially $10 billion [21][22]. - The global coffee market is undergoing significant changes, with multiple brands, including Costa and Peet's Coffee, facing strategic shifts and potential acquisitions [26][29]. Group 3: Strategic Implications - Coca-Cola's decision to divest Costa Coffee is seen as a move to focus on its core beverage business and reduce reliance on lower-margin products [17][27]. - The ongoing changes in the coffee industry reflect broader economic trends, with companies adapting to competitive pressures by shifting from "heavy asset" to "light asset" strategies [27][29]. - The current environment presents opportunities for investors looking to acquire undervalued assets in the coffee sector [28].