Costa Coffee to split from Whitbread
Whitbread has confirmed that it plans to split off Costa Coffee, the UK’s biggest coffee chain, to create a separately listed business.
The UK-based company, which owns hotel chain Premier Inn, restaurant chain Beefeater a well as Costa Coffee, said that it would demerge from the coffee chain within two years.
Activist investors Elliott Advisors and Sachem Head together control 10% of the FTSE 100 firm’s shares.
In separating the brand, Whitbread says it will allow shareholders to invest in “two distinct, focused and market-leading businesses.”
The hospitality company also said that the split would give "greater operational focus and afford investors greater clarity on profit and cash generation."
- Whitbread appoints former ITV boss Adam Crozier as chairman
- Costa named 'most ethical brand' at the Allegra Coffee Synopsium
- Whitbread launches Cookhouse and Pub restaurant chain
Chairman Adam Crozier said: “The board fundamentally believes this is the best course of action to optimise value for shareholders over the longer term and will ensure both Premier Inn and Costa are positioned well to thrive as independent companies."
The announcement came as Whitbread announced its annual results, reporting a 6.4% rise in pre-tax profits to £548mn.
The company said that these results were boosted thanks to strong international sales at Costa and a surge in London hotel bookings.
Alison Brittain, chief executive of Whitbread, said that the separation of the company had been in discussion “for years.”
She said: “Given the significant strategic progress that has been made and the momentum in the delivery of the plan, the board is confident that both Premier Inn and Costa will soon be businesses of sufficient strength, scale and capability to enable them to thrive as independent companies.”
Costa Coffee is the biggest coffee chain in the UK with more than 2,400 coffee shops and it also has an additional 1,400 outlets in 31 overseas markets.
Coca-Cola sales soar as the world remerges
Now that the hospitality world is opening up again, Coca-Cola has risen in the second quarter, as the non-alcoholic beverage of choice for those dining out.
Coca-Cola, casually known just as Coke, is a beverage which needs no introduction. Its signature shade of red identifies the product - sold in every country in the world, except for Cuba and North Korea. The company was founded in 1886 and remains headquartered in Georgia, USA, where the beverage has a revenue of $37b.
Coca-Cola’s revenue rises
Coke shares rose 2.3% on Wednesday morning in New York and the stock was up 1.8% this year.
The beverage giant believes that this is sure proof that consumers who were confined to their homes for months reduced their consumption of Coca-Cola while at home.
But now consumers are allowed to return to a level of normality, they are celebrating with their favourite chilled beverage - especially those who caught Coronavirus and suffered the loss of taste and smell.
Coca-Cola’s enduring popularity
The staff at Coca-Cola are thrilled, but not surprised, to discover that consumer tastes have not changed over the pandemic.
“Our results in the second quarter show how our business is rebounding faster than the overall economic recovery”, said James Quincey, Coca-Cola’s Chief Executive Officer. The company in particular cited a rebound in “away-from-home channels” as pandemic restrictions eased, sending sales above 2019 levels.
Coca-Cola also noted the unit case volume grew, covering:
- 17% in North America
- 21% in the Europe, Middle East and Africa region