Costa Coffee deal is strategic play for a Coca-Cola move into hot drinks, says Kantar Worldpanel

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With Coca-Cola set to buy Costa Coffee for £3.9 billion, Whitbread looks to have secured a valuable deal for its shareholders. But Whitbread is not the only winner, according to Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

“This is a big deal for Coca-Cola and a strategic play to further expand beyond soft drinks and move into the hot drinks sector,” said McKevitt. “Coca-Cola doesn’t currently have any coffee outlets in its arsenal and this is an opportunity for the business to plug that gap and tap into this growing market. The out of home coffee market is not one to be underestimated: worth £6.3 billion a year in Great Britain and growing by 4.3%, our nation’s taste for coffee doesn’t look set to turn any time soon.

“By acquiring a favourite out of home coffee brand, Coca Cola is leap-frogging its way to having a substantial hot drinks offer and bolting on the UK’s favourite coffee brand. It also offers intriguing possibilities for the Costa name to appear in new formats, such as chilled variants, and reach a wider audience through Coca-Cola’s well-established distribution network,” McKevitt said.