Coca-Cola Faces Potential Billion-Dollar Write-Down on Costa Coffee Investment

Coca-Cola’s ambitious 2018 acquisition of British coffee chain Costa Coffee for $5 billion appears to be heading toward a costly conclusion. The beverage giant, which purchased the coffeehouse chain as a strategic move to capture market share in the lucrative coffee sector, is now reportedly considering a sale that could result in substantial financial losses.

Strategic Review Underway

According to recent reports, Coca-Cola has engaged investment bank Lazard to evaluate strategic alternatives for Costa Coffee, including a potential divestiture to private equity firms or other interested parties. This development follows CEO James Quincey’s July admission that the Costa investment had failed to deliver anticipated returns.

Market analysts estimate that Costa Coffee’s current valuation may have fallen to approximately half of its original purchase price. Such a valuation would translate to a roughly $2.5 billion loss for Coca-Cola, representing a significant setback to the company’s diversification strategy beyond its traditional soft drink portfolio.

Should investors sell immediately? Or is it worth buying Coca-Cola?

Market Response and Unrelated Speculation

Financial markets showed limited reaction to the potential divestiture news. Stock performance received some support from unconfirmed reports—previously circulated by former President Trump—suggesting Coca-Cola might transition to cane sugar in its U.S. products. The company has not verified these claims.

The original acquisition was intended to strengthen Coca-Cola’s competitive position against rivals like Starbucks while establishing a foothold in the hot beverage market. A sale at a substantial loss would mark a notable strategic reversal, potentially signaling a renewed focus on the company’s core beverage business.

Timeline and Broader Context

Initial bids for Costa Coffee are expected to emerge this autumn. Investors will be monitoring developments closely, particularly as recent quarterly results revealed underlying challenges. Despite implementing price increases, Coca-Cola reported a 1% decline in global sales volume. The company’s upcoming October earnings release is anticipated to provide further insight into its strategic direction regarding the coffee chain and broader business priorities.