Coca-Cola will not only face stiff competition from Starbucks, but also Swiss drink company Nestle, completed a a $7 billion licensing deal for Starbucks’ retail business. Coca-Cola’s purchase of Costa highlights the beverage company’s shift from carbonated drinks and focus more on health-conscious consumers.
Shares of Costa’s parent company Whitbread were up as much as 19% following the buyout news.
“Coca-Cola are one of the few companies in the world that could justify the valuation,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown. “Its global reach should turbo-charge growth in the years to come, and hot drinks are one of the few areas of the wider beverages sector where the soft drinks giant doesnt have a killer brand. Costa will get lots of care and attention.”
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