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The soft drinks giant Coca-Cola is buying the Costa Coffee chain in a near-£4bn deal that underlines the scale of the global coffee revolution. The takeover will overnight turn Coca-Cola into the UK's biggest coffee shop player and give it a foothold in what is one of the world's fastest-growing drinks categories. The global coffee shop market alone is worth $165bn (£127bn). Alison Brittain, the chief executive of Costa Coffee's owner Whitbread, said the coffee chain had been approached by a number of potential buyers but Coke's desire to snap up the 4,000-store chain was a “dream deal” for investors. Whitbread, which also owns the Premier Inn hotel chain, bought Costa from its founders Sergio and Bruno Costa for £19m in 1995 when it had only 39 shops. Angus Grierson, the managing director of the advisory firm LGB Corporate Finance, said the lightning speed the deal was done – it was brokered in five weeks – reflected the urgency with which Coca-Cola wanted to reduce its reliance on sugary drinks. “The deal is an attempt to adapt quickly to changing tastes, notably the continuing rise in popularity of coffee, particularly among millennial consumers,” Grierson said. “Customers are choosing lower-sugar varieties of soft drinks more than they ever have, with sales of sugary drinks declining rapidly, down 11% in 2018, thanks in part to the introduction of the UK's first-ever sugar tax.” |