Costa Coffee on the Edge of Sale: Losses in the UK, Growth in Asia
Dubai – August 31, 2025 (Qahwa World) – Six years after acquiring Costa Coffee for £3.9 billion, Coca-Cola is now reviewing its strategic options for the chain in cooperation with investment bank Lazard. The review may result in a sale for around £2 billion, implying a near-£1.9 billion loss. Early talks with investors, including private equity firms, are underway, with indicative offers expected in autumn 2025.
The move reflects Coca-Cola’s disappointment with Costa’s performance and raises broader questions about its ambitions in the global coffee sector.
In the United Kingdom, Costa’s core market, results have fallen short of expectations. Revenues in 2023 stood at £1.22 billion, lower than the £1.3 billion recorded in 2018, while profits turned into a pre-tax loss of £9.6 million. The decline has been attributed to inflationary pressures, record-high coffee prices at the end of 2024, reduced urban footfall, and increased competition from specialist coffee chains and independent cafés. Despite these challenges, Costa still maintains a strong footprint with more than 2,800 stores in the UK and Ireland, plus over 14,000 Costa Express machines, the most profitable part of its business.
In India, Costa tells a different story. For fiscal year 2025, revenues jumped 30.7% to ₹198.5 crore, while profits rose 28.4% to ₹149.7 crore. Store count expanded from 179 to 220, with plans to add 40–50 new outlets annually in high-traffic locations such as airports and malls. Margins, however, faced slight pressure: the gross margin slipped from 76.8% to 75.4%, and average daily sales per store fell from ₹33,000 to ₹27,000. Still, India is now one of Costa’s top ten global markets, with ambitions to rank among the top five within five years.
In China, Costa has shifted strategy away from rapid store expansion toward operational quality, local product innovation, and stronger presence in convenience channels and self-service. With around 400 stores, Costa faces brand awareness challenges and high staff turnover but continues to see potential in localized offerings such as coconut-flavored coffee and milk tea variations.
In Central Europe, the chain has undergone restructuring. Lagardère Travel Retail now operates 115 stores in Poland and 10 in Latvia, following closures of underperforming outlets. In the United Arab Emirates, Costa has expanded to more than 150 stores, with a strong presence in airports, shopping centers, and fuel stations.
Meanwhile, Coca-Cola’s own financials remain robust. In Q2 2025, net income rose to $3.81 billion, compared with $2.41 billion in the same period last year, supported by pricing strength and cost discipline. Looking ahead, the company projects revenues of $55.1 billion and earnings of $14.8 billion by 2028, reflecting annual revenue growth of 5.4%. Analysts believe any divestment of Costa would be strategic rather than financial, as Coca-Cola continues to focus on higher-growth, higher-margin categories such as sugar-free soft drinks and value-added dairy.
Costa Coffee Market Comparison
| Market | Store Count | Revenue (Latest Fiscal Year) | Financial Status |
|---|---|---|---|
| UK & Ireland | ≈ 2,800 stores + 14,200 Express machines | £1.22 billion (2023) | £9.6 million pre-tax loss |
| India | 220 stores | ₹198.5 crore (2025) | +30% revenue, +28% profit growth |
| China | ≈ 400 stores | Not disclosed | Repositioning toward convenience & self-service |
| Poland | 115 stores | Not disclosed | Restructured under local operator |
| Latvia | 10 stores | Not disclosed | Managed by Lagardère Travel Retail |
| UAE | 150+ stores | Not disclosed | Strong presence in airports & malls |
