Costa Coffee

Apollo Global Management, the owner of Wagamama’s parent company The Restaurant Group, is reportedly among the potential bidders for coffee chain Costa.

The investment firm is understood to have held early-stage talks with advisers to The Coca-Cola Company, Sky News reported.

Sources reportedly said any initial bids would not be due for several weeks and that Apollo may not seek a formal offer for the coffee giant.

It was revealed over the weekend that Coca-Cola was mulling a sale of Costa, with investment bank Lazard thought to be reviewing options for the soft drinks giant.

Coca-Cola acquired Costa in a £3.9bn deal from Premier Inn owner Whitbread in 2018. However, one analyst suggested Costa may now be sold for just £2bn.

Last year, Coca-Cola reported a 3% decline in coffee sales, primarily due to the performance of Costa in the UK.

Although not a major part of the business, Costa Coffee’s non-food-to-go segment is also struggling. Sales of its ready-to-drink coffee products lost £4.7m on volumes down 23.2% following distribution losses last year [NIQ 52 w/e 28 December 2024].

During Coca-Cola’s second quarter earnings call last month, CEO James Quincey said Costa had “not quite delivered” and was “not where we wanted it to be from an investment hypothesis point of view”.

He added: “We’re in the mode of reflecting on what we’ve learned, thinking about how we might want to find new avenues to grow in the coffee category.”