Costa Is Back in Profit. So Why Is Coca-Cola Trying to Sell It?

Key Points

· Costa returned to operating profit in 2025 £20.4 million, against a £13.5 million loss the year before, on revenue up 5% to £1.29 billion.

· Coca-Cola is reportedly exploring a sale again, after an earlier attempt failed when bids landed around £2 billion roughly half the $5.1 billion it paid in 2018.

· Recovery and strategic fit are two different questions. A business can get healthier and still not belong in its owner's portfolio.

· Coca-Cola's engine is concentrate, bottlers and brand IP. Costa's engine is leases, baristas, fresh food and daily retail execution.

· The original synergy thesis scaling Costa globally through Coca-Cola's bottler network  never fully materialized.

· For founders, the lesson is uncomfortable: profitability keeps you alive, but strategic fit keeps you owned.

Quick Summary

Costa Coffee has genuinely stabilized. Revenue is up, costs are under control, and the business is back in operating profit after two loss-making years. Yet Coca-Cola is reportedly shopping it again. Those two facts only look contradictory if you assume a profitable business is automatically a keeper. Coca-Cola's core strength is selling concentrate through bottlers and monetizing brands at enormous scale not running more than 2,700 cafés. The original plan to use the bottler network to take Costa global never really took hold, and the strategy quietly narrowed to running the existing estate. Now Coca-Cola faces a classic owner's dilemma: sell at a painful discount, or keep funding a business that may never fit. The piece closes with the questions every coffee founder should ask about whether their business fits their owner's strategy not just whether it makes money.

Costa Coffee made money again in 2025. Coca-Cola, its owner since 2018, is reportedly trying to sell it again. On the surface, that looks like a contradiction. It isn't.

A business can get healthier and still be a bad fit for the company that owns it. Those are two separate questions, and blurring them is why this story confuses people.

Coca-Cola bought Costa in 2018 for $5.1 billion, betting it could ride the coffee wave beyond soft drinks. By 2026, reports said the company was exploring a sale, after an earlier attempt collapsed because bids came in well below expectations.

The recovery is real just not dramatic

Costa's 2025 numbers show genuine progress. Revenue climbed 5% to £1.29 billion. The company swung from a £13.5 million operating loss in 2024 to a £20.4 million operating profit in 2025.

That is not a stunning turnaround. But it is meaningful. Costa stopped shrinking, got costs under control and returned to operating profitability after two loss-making years. Most of the growth came from the UK, where it runs more than 2,700 shops.

For a café business, that is the difference between bleeding cash and standing still. Costa is standing still which, after two years of losses, counts as progress.

Profitability is not the same as fit

Here is where the two questions split.

Coca-Cola's engine is not cafés. It is brands, concentrate, bottlers and distribution. The company sells syrup to bottling partners, who handle the physical work of getting drinks into millions of outlets. Coca-Cola's genius is monetizing intellectual property and scale not managing leases, baristas, food waste and the Saturday morning queue.

Costa is the opposite kind of business. It needs real estate, staff training, local execution, food operations and daily retail management. Every café is a small operating company. That is a fundamentally heavier business than selling concentrate.

Put simply: Coca-Cola can grow by signing a bottling deal. Costa grows by finding the right corner, negotiating a lease, hiring a manager, training baristas and hoping the morning rush shows up.

Costa may be a good coffee business. That does not make it a good Coca-Cola business.

The original bet didn't pay off the way Coca-Cola hoped

When Coca-Cola bought Costa, the logic was easy to follow. Coffee was growing, premiumization was real, and the morning occasion was a gap soft drinks could not fill. Coca-Cola wanted to be a "total beverage company," and Costa was the entry ticket.

The plan, reportedly, was to use Coca-Cola's bottler network to take Costa global. That never fully happened. The strategy shifted toward running the existing estate rather than a worldwide rollout through bottlers.

The gap is easy to see at ground level. Bottlers are built to move cases of packaged drinks into retail. They are not set up to hire baristas, manage fresh food or handle daily customer service. The synergy sounded elegant in a boardroom and got messy at the store level.

So a sale would not be a rejection of Costa's recovery. It would be an admission that the synergy story the reason Coca-Cola paid $5.1 billion did not hold up.

The valuation trap

Coca-Cola's earlier attempt to sell reportedly failed because offers came in around £2 billion, roughly half what it paid in 2018.

That is the real bind. Sell now and you lock in a multibillion-dollar loss. Wait and you keep funding a business that may never fit your long-term model.

Costa's return to profit improves the pitch. But one good year does not close a gap that size. Buyers will dig into store-level economics, lease obligations, franchise quality, brand strength and the competitive reality of Starbucks, Luckin, Cotti and thousands of independent cafés. A single operating profit line will not answer those questions.

What this means for coffee founders

The lesson is not that Costa failed. It is that a viable business can still be divested and that is not a contradiction.

Founders often assume profitability settles the ownership question. It does not. An owner can sell a profitable business if it no longer fits the strategy, eats too much management attention or offers better returns elsewhere.

The practical questions are:

· Does this business fit the owner's long-term strategy or just this year's spreadsheet?

· Does it generate returns that justify the capital tied up in it?

· Can it grow without constant operational intervention?

· Is it valuable standalone, or only as part of a larger group?

· Would a new owner see a clear path to scale or better margins?

If the honest answer is "no" or "not really," profitability will not save the business from being sold. It will only improve the price.

Bottom Line

Costa's recovery shows that operational discipline works: better revenue, tighter costs, better execution. Coca-Cola's reported interest in selling shows that ownership strategy runs on different logic. A parent company has to decide whether a business belongs in its future at all not just whether it is currently making money.

A café can be healthy and still be for sale. That is not failure. Sometimes it is simply the moment an owner realizes the business has a better future with someone else.

Sources

1. Reuters — Coca-Cola scraps Costa Coffee sale, FT reports

2. Semafor / US News — Coca-Cola looks to sell Costa Coffee

3. Propel — Costa Ltd results coverage

4. India Today — Why Coca-Cola's big Costa Coffee gamble hasn't paid off

5. Outlook Business — How Coca-Cola's Costa Coffee acquisition lost its way

6. Yahoo Finance UK — What is Coca-Cola rethinking in its coffee business?

7. Yahoo Finance UK — How Coca-Cola got burned with a $5 billion bet on Costa Coffee