Coca‑Cola Considers Sale of Costa as Experts Say Chain Has Lost Its Spark

Coca‑Cola is examining options for Costa Coffee as the once‑dominant British chain faces mounting pressure from specialty cafés and rival operators, according to reports and industry experts.

Company insiders and branding experts told the Daily Mail and sector publications that Costa has become perceived as predictable and indistinct, a shift they say has eroded emotional ties with customers even as the broader UK coffee market evolves. Coca‑Cola’s chief executive, James Quincey, has said the business has “not quite delivered” and is “not where they wanted it to be from an investment hypothesis point of view,” reports said.

Financial results show mixed signals. Costa reported £1.22 billion in revenue for 2023 — up about 9% on the prior year but below the £1.3 billion recorded in 2018, the year Coca‑Cola acquired the chain. Over the past seven years the chain has returned more than £250 million in dividends to Coca‑Cola, yet parent‑company accounts and industry commentators point to a pre‑tax loss of £9.6 million for Costa in 2023 amid rising operating costs and weak food‑to‑go sales.

The Grocer has attributed part of Costa’s underperformance to a roughly 3% decline in coffee sales in the UK, and market watchers highlight several structural and competitive factors behind the slump. Branding specialists say Costa’s standardized design, menu and atmosphere — once advantages that delivered consistency across hundreds of high‑street outlets — now make the brand feel ‘bland’ and interchangeable with other national chains.

“Costa’s problem isn’t that Brits suddenly stopped drinking coffee. Far from it. It’s that the experience has become indistinguishable,” said creative strategist Calvin Innes of JvM NERD. “There’s no character left. Copy‑and‑paste décor, predictable menu, and the sense you could be anywhere. That uniformity was once a strength, but now makes Costa feel more like the ‘McDonald’s of coffee’ than a place people genuinely want to belong to.”

Other consultants pointed to a consumer shift toward smaller, craft‑led coffee operators that emphasise provenance, bespoke roasting and distinct in‑store experiences. Dominic Goldman, founder and CCO of You’re The Goods, said Costa allowed its brand to “fray” while competitors “elevated and upskilled.” He added that consumers now expect cleaner textures, better beans and spaces that feel intentionally designed.

“Being everywhere makes Costa convenient, but convenience alone doesn’t create an emotional connection,” said Julia Payne, founder of Fractional CMO. “Modern consumers want brands that feel relevant to their lives – personal, connected, community‑led and distinctive.” Several experts recommended caution for any buyer: the chain would require significant investment to rework its store experience, product quality and positioning to recapture lapsed customers.

Economic pressures are compounding strategic challenges. Industry figures noted coffee‑bean prices at multi‑decade highs and continued cost‑of‑living pressures that have cut discretionary spending on out‑of‑home coffee. Shifts in working patterns, with more people working from home and commuting less, have lowered footfall in the urban locations that historically drove Costa’s sales.

At the same time, many independent and smaller chains have expanded, attracting investor capital and consumer interest. Analysts pointed to several fast‑growing specialty brands and bakery‑cafés that are capitalising on demand for artisanal provenance and curated experiences. Examples cited by commentators include KNOOPS, Watchhouse, Black Sheep Coffee, Gail’s, Ole & Steen and niche operators that combine bakery and specialty coffee.

Some corporate rivals are posting stronger results. Pret A Manger reported a 10% rise in sales in the first half of 2024 and higher underlying profits for 2023, while Café Nero reported increased sales for the six months to November 2024. Starbucks, however, has faced its own difficulties in the UK, reporting a pre‑tax loss for its 2024 financial year amid a challenging sales backdrop.

Market observers say the Costa story underscores a wider industry lesson: scale and ubiquity no longer guarantee loyalty. “When I think of Costa Coffee from a brand perspective, the words that come to my mind are those of a bland, sterile, and dare I say ‘cheap’ coffee experience,” said Paul MacKenzie‑Cummins, owner of reputation firm Clearly PR. “Customers have simply been turned off by the omnipresence of Costa Coffee.”

Specialty coffee advocates argue that the category has moved from niche to mainstream, supported by investment, crowdfunding and changing consumer expectations. Jon Townsend, director of The Institute of Coffee, said speciality outlets have gained capital to invest in sites and negotiate better supply terms, allowing them to scale in affluent or business districts where customers will pay premium prices.

If Coca‑Cola decides to divest, analysts say potential buyers would need to address both operational and brand‑positioning issues. “Whoever buys Costa must fix the recipe and then invest properly in the brand, so a cup on a meeting table signals pride, not apology,” Goldman said.

Coca‑Cola has not publicly confirmed a sale. The company has previously described Costa as central to its strategy in the out‑of‑home coffee market, and any decision to sell would mark a significant shift in that approach. Observers say the outcome will be closely watched by investors, competitors and the growing community of specialty coffee operators as the UK high‑street café market continues to fragment between scale and craft offerings.