Coca-Cola to buy Costa coffee for £3.9bn | Hacker News Reader

Coca-Cola to buy Costa coffee for £3.9bn

bbc.com

102 pointsAhmadM9196 comments

I'm concerned with the continual buyout of large established UK companies by US ones. It's happened a lot in the past ~10 years, most notably Cadbury's, and not only are there tax implications, but the standard of product seems to drop to the lowest acceptable while attempting to keep the same prices. There's also the issue with business ethics of the parent company, which tend to be rather different than the UK.

Fair point on Cadbury but to make Costa's coffee any worse is going to be a bit of a challenge.

Costa is still dramatically better than Dunkin Donuts, for example.

I’d be curious to see the data upon which you base this false assertion.

Of course it’s ultimately my opinion, but Dunkin Donuts has awful coffee and always has. Anyone with an appreciation for coffee would likely agree.

I think that anyone with appreciate for coffee would understand certain coffee has a time and a place, even coffee from big chain coffee places or restaurants.

DD is coffee for people who don't like coffee. Almost everyone gets some kind of heavy sugar and dairy mixed drink. Basically candy coffee.

I wouldn't expect Dunkin Donuts to be any better at coffee than McCafe.

Starbucks is far worse. Everything they sell tastes burned. Coca-Costa could just follow their example.

I'd say Costa is worse than Starbucks.

Nero being the best of the UK chain coffee places.

Costa's coffee is not brilliant, but it doesn't taste like someone cooked up the tar left at the bottom of the roaster.

It's not just US companies, although US companies are picking up more household names.

For the best part of the past decade, UK firms have largely underperformed compared to their US counterparts. The pound is depressed due to the way Brexit has gone to date and is likely to fall further still, making British companies undervalued on average.

A lot of British companies (like Whitbread, who own Costa) gain substantial revenues from abroad but are exposed to currency risks through the pound and anaemic economic growth at home.

I'm concerned with the continual buyout of large established companies by other large companies.

Not as weird a fit as it might seem. Coca-Cola's Ready To Drink coffee brand in Japan, Georgia Coffee, is incredibly profitable (accounts for around 12% of Coca-Cola's global profit, despite only really being sold in Japan.)

https://www.coca-colacompany.com/stories/georgia-coffee-is-t...

Strongly recommend the bizarre Twin Peaks ads they made with the cast in the 90s https://www.youtube.com/watch?v=3acm7j9k_1w

When I lived in the states a friend of mine always used to say: “Starbucks sells fat and sugar to people, so their mainly competing against McDonalds”

That made a lot of sense to me, and I could understand much better why they would introduce McCafes. Thus I think that this is probably a smart move although a bit late...

I think Costa does more normal teas and coffees rather than milkshakes or whatever you're referring to.

Costa were in the news for selling a coffee with more calories in it than a double cheeseburger.

But then McDonalds, I think, already sell more coffee than anyone else in the UK, so I guess they're converging from both directions.

I don't have sales figures but a lot of people I know who travel a lot say that, in the UK at least, the McDonalds is pretty good. It's certainly their favourite balance with price and quality, these are proper black coffee drinkers too, not the bucket of sugar & cream types.

some of my "just black coffee" friends tell me the same thing - mcdonalds coffee is a good combination of taste and value. they all prefer something else, but mcd ends up being the 'go to' because it's known, it's not bad, and doesn't cost too much (which, typing that out, is probably the same for many of their menu items - not 'best in class', but a decent enough product).

I'll vouch. It's cheap, black, and hot. All a proper coffee really needs to be. McDonalds is also focused on churn. Get up, say what you want, get out. None of the half-pump soy chai latte no whip cinnamon dust in the freezer for 1.5 seconds kind of wackiness. Just a blearily slurred "small coffee" will get you what you want.

Yeah...I think the McDonald's double expresso is great value for money.

McDonald's double espresso poured over a 99p sundae (plain, just ice cream) makes for a decent cut-price affogato.

My coffee drink of choice is a plain hot latte (good black coffee is also fine). McDonalds coffee is fine, but not as consistent as a Starbucks. With McDonalds you're a bit at the whim of the machine and if the person operating it has done all the right steps. McDonalds is also a $1 or more less expensive.

I always struggle with the doublethink that a "coffee" (that is, a black coffee) has nearly 0 calories. But a "coffee" (that is a drink that is really fat and sugar with some coffee added there) could have x calories where x is a stupidly large number...

yeah, even 'coffee' with milk is... the calories of milk. and I like a lot of milk in my coffee. or... I like a bit of coffee with my milk, to be more precise. so i've needed to watch how many I have. can't really deal with plain black coffee.

you should really have a go at persisting with black coffee - it's definitely acquired, but I really can't imagine coffee any other way.

Yes, I didn’t get into coffee till college and sugary stuff was my gateway, but I knew people enjoyed black coffee and made a concerted effort to develop a taste for it, and now I really can detect subtleties in single origin beans similar to what wine enthusiasts experience. Occasionally I have coffee with milk, especially if it’s bad coffee, but my taste buds thinks of that as something else entirely. Find a coffee shop with some helpful but OCD baristas who will take the time with you to give you good samples of pour over or French press or chemex, etc to see if they can win you over to “black” coffee. The benefits in the end outweigh any effort you might have to put in!

Yeah, a good pour-over is really something different to a burnt-bitter crap americano (which I will still drink...)

Black coffee is nice... when the actual coffee is nice. It doesn't take too long after the switch to realize the random kuerig selection offered at your office does not fit that category.

Starbucks in Australia (when they were around) was viewed as being a milkshake shop.

How did you get rid of them? :-)

Australians and Kiwis are to coffee what New Yorkers are to pizza: we didn't invent it, but we damn well perfected it.

So when Starbucks came with a poor product the only people who went were curious locals (who didn't return) and Asian students who liked the brand:

https://www.abc.net.au/news/2008-08-07/32188

My friend - concerned that her daughter could put up weight from spending too much time in Starbucks - remarked that Starbucks basicaly serve coffee deserts rather then coffee.

What does this have to do with Starbucks? Any place that serves coffee offers additives that increase calorie count. How is this brand any different? Black coffee is the same calorie count everywhere.

https://i.imgur.com/iRUP48j.png

2600 calories man ... that number really blows my mind!

That + a multivitamin = enough of everything for a day. Screw Soylent :P

Ironically good for an inadvertent diet.

(Omad = one meal a day)

McDonalds (brewed) coffee always wins the blind taste tests that Canadian newspapers put on between the big chains.

They sell calorie-free black coffee or tea, the same way McDonald's does.

Similarly, they also sell very-high-sugar cakes and drinks.

Before McCafes McDonalds had a stake in Pret iirc

Think you're right about Coca Cola re Starbucks, though perhaps they've stalled because their business has typically revolved around logistics / volume rather than brick and mortars...?

McDonalds really is a real estate company, the food is more or less a by-product of that nowadays.

I’m kind of surprised post-sales tax nexus Amazon hasn’t bought a coffee chain yet. Starbucks might be too big to do comfortably, but a combination of some higher end local brands (Intelligentsia, Philz, etc) aggregated into some overarching metabrand would be interesting. Let the cafes run everything as they have, with infinite capital available, and focus on providing additional value added services on premise (obviously lockers but maybe some next-gen amazon services).

Philz would almost make sense if they could put 1Gbps connectivity into AWS and specifically base the performance of the deal on AWS signups.

I suspect they might end up buying Starbucks

Starbucks would nicely fit with Whole Foods and Landmark Theaters, both already owned by Amazon and targeting American upper-middle class.

The Amazon bookstores have a coffee shop inside them

I had no idea that was a thing till now. I wish they'd open more up, looks like they only have a handful. I keep seeing book stores close in some locations and then instead of a new book store a clothing store opens up instead. I wish Amazon would open up more book stores, maybe where another one has failed it could be an opportunity to take said space and make really nice book stores.

I don't really want to see Amazon become more of a giant sadly, but I hate seeing book stores disappear.

There's already a fairly quiet family-owned company that's been aggregating coffee chains and coffee roasters.

https://en.wikipedia.org/wiki/JAB_Holding_Company

They've got Peets, Mighty Leaf, Intelligentsia, Stumptown, and Caribou. They also have the Espresso House chain in the Nordics, Krispy Kreme, Panera, and Einstein Bagels.

Keurig is also under their umbrella, as are a bunch of other coffee roasters, and other consumer products.

Of the big coffee shop chains in the UK, Costa is actually my preferred one. None of them do great coffee, but Costa has the smoothest flavour which is what I prefer. I also think their paninis and carrot cake beats out the other offerings.

Hopefully they will destroy it, the UK is overrun with these mediocre coffee shops.

Indeed, and Australia demonstrates that it doesn't have to be like that. In most similar verticals we are very similar to either the UK, the US or both. Take McDonalds: incredibly successful fast food shop in Australia. That American success story works here, as does KFC and Domino's.

But when Starbucks arrived, it was a hilariously dismal flop because we already had sufficiently good coffee at all of our local non-chain cafes (and exceptionally good coffee at a non trivial subset of them).[1]

When Australians stop for a coffee on the way to work, a large number of us are going to a local cafe. We do have chains, but none of them command more than a very small share of the overall coffee market.[2]

Ironically, the number one coffee chain in Australia is almost certainly McCafe. And there's reason for that: the McCafe brand was an invention of McDonalds Australia to help their restaurants stay relevant in the Australian market. Because they emphasised quality from day one, the menu was native to Australian tastes, and the restaurants were already popular for their traditional fare, it has been a remarkable success. (McCafe in other countries is often little more than a brand on the cup; in Australia it's a third of the restaurant interior, with its own counter and menu. [3][4][5])

[1] https://www.youtube.com/watch?v=_FGUkxn5kZQ

[2] https://www.smartcompany.com.au/growth/aussies-flock-to-loca...

[3] http://blueskydesigngroup.com.au/project/mcdonalds/

[4] http://juicydesign.com.au/project/item/mcdonalds-playground-...

[5] https://www.moodiedavittreport.com/sydney-airport-opens-new-...

Am I seriously thinking about going to Australia just to visit a McDonald's now?

We have the best McDonald's in the world. I'm universally disappointed whenever I visit it in other countries.

I wouldn't go that far, but they are pretty good. Still can't believe there are places where you can get lamb at a mcdonalds.

If we had fewer coffee shops, it would simply mean we have fewer shops.

I don't know what your local town centre is like, but mine would be a ghost town if the chain coffee shops backed up and went home.

Hey Costa/coca cola. Please get us a regular size cappuccino glasses. We don't want coffee served in soup bowl out here in India.

Could this be a consequence of the UK's sugar tax and an attempt to diversify as the revenue from traditional Coca-Cola shrinks? I appreciate they have no/low sugar alternate products but they must still have taken a big hit from that legislation.

The Coca-Cola Company only owns 18% of Coca-Cola European Partners, and I'd expect it'd have smaller consequences of the amount of syrup CCEP buys (given some of the movement will be to Diet and Zero).

Costa has always felt to me an also ran between the coffee milkshake chain Starbucks and the slightly more serious Caffe Nero. I wonder what Coca Cola plans to do with it?

> Costa has always felt to me an also ran ...

But appears to be the largest coffee chain in Europe, in terms of branches and revenue, from what I could find.

Interesting move, and interesting infographic there about chains in Europe and US. Noted McCafe doesn't register in US stats, but maybe that's because McDonald's coffee (no small play) is really inside the restaurants and McCafe was the route in the EU for shop sizes etc

Do american coffee chains do things like cappuchino, latte, flat white, etc?

Or is it mostly black filter coffee?

Flat white is (or at least was) an Australian thing. Never seen it anywhere else (though I suppose it might be spreading). But, Starbucks has everything else (and then some).

I thought Flat White was a London thing. I know it originated from Australia, but its well known as being the overpriced banker/technology worker/lawyer/well paid person drink in London.

https://www.amazon.co.uk/Flat-White-Economy-Douglas-McWillia...

If you order a latte from a big chain, half the time you end up with a flat white anyway.

I was living in London only 3 or 4 years ago. I never saw it! Weird. But I'm a coffee nerd, so probably I never went to the kinds of cafes that serve it. I actually like a proper flat white -- coffee made with milk instead of water. Just never seen it outside of Australia.

You can't have looked very hard. So called "Third Wave" artisanal coffee shops hit London around 13 years ago, mostly started by Australian immigrants bringing with them the "Flat White". The flat white become such a hipster go to drink that by 2010 they were added to the Starbucks menu in London.

https://en.wikipedia.org/wiki/Flat_white

That's a bit harsh. I moved to London in 2013 and I remember I had to order flat white off-menu most of the time back then. Most places knew how to make it but just charged capuchino on the bill. Today it's everywhere.

I was not a Starbucks customer though.

http://www.flatwhitesoho.co.uk/

“Flat White opened its doors in 2005 because it was nigh impossible to get a flat white; the strong, delicious creamy coffee of our namesake. London lacked a strong independent café/coffee culture so we set out to be beacon & inspiration for other people who loved coffee, independent spirit and good old-fashioned hospitality. Flash forward and over ten years on London is thriving with many varied and different coffee offerings- a vibrant and exciting scene of excellence and commitment to excellence.”

And to add some more context. A New Zealander I know wrote a London coffee map app around 2010 to teach himself iOS app development. He curated the list of coffee shops he added to the map (they had to serve a proper flat white) and at time of release he’d added over 150 coffee shops.

In 2007 and then again in 2009 the world barista champions hailed from London.

All this should give you an idea of how quickly the London artisan coffee scene exploded in the late “noughties”.

So if you’re claiming to be a coffee nerd who couldn’t find a flat white in London in 2014, I’m going to say you didn’t look very hard.

Note: Not one chain ever featured on that app. I only mentioned Starbucks above to illustrate how ubiquitous the Flat White was at that time (2010) that Starbucks felt they had to add it to their menu to stay relevant/competitive.

Sorry, I should have mentioned I'm not OP you replied to.

I moved to London in early 2013, and it definitely wasn't that popular. I had my own group of coffee buddies but I was the only one drinking it. Even today only 1 in 10 coffee drinkers have it [0].

Note that I did drink flat white all the time back then, it just didn't always appear on the menu. You just had to ask nicely and most people would make you one (or try anyway).

Note that Starbucks and Costa do not make flat white IMO, even if they sell a drink called that.

That said, today is way different and flat whites are everywhere.

[0] https://www.independent.co.uk/life-style/flat-white-coffee-c...

OP here. Yeah, I arrived in 2012 and left in 2014. I also roast my own coffee, so I don't drink in cafes very often. When I wanted good espresso (no way I can afford a decent set up), there were a couple of good shops near where I worked, but they were very small and they served black espresso only :-) I am surprised, but then I should have realised that I was never hooked into mainstream coffee culture in London (which is not nearly as nerdy as I am).

Flat whites are everywhere in the UK, even the crappy Pumpkin shops at train stations will make you one.

You can buy flat white in every coffee in Prague.

Flat whites are everywhere these days.

It's everywhere now. Costa have recently launched flat blacks and flat mochas too.

No, it doesn't have to make sense...

US coffee chains have a bewildering range of coffee based drinks, almost to the point where ordering a plain black filter coffee will get you weird looks.

It amazes me how difficult it is (relative to the drink complexity) to order a regular black coffee at a Starbucks or Dunkin Donuts.

Depending on where you are, a "regular" black coffee could also be an espresso. A drink which was made by adding water to it and removing the crema (the horror!) from it is the standard in some places. So, it's best to disambiguate it and I suppose that's why they force you to do that. To be honest, I never go to starbucks. So, I don't know if that is the case - I'm speculating from no real data.

Australia was so annoying on that front. On the whole amazing coffee, but no one served filter or french press coffee, After two weeks I was dying for a nice large cup of black coffee.

What? I do it all the time. I say "I would like a large black coffee", and then I get a large black coffee.

This isn't true in the slightest.

> Do american coffee chains do things like cappuchino, latte, flat white, etc?

Starbucks is an American coffee chain :-)

The big US chains are very similar to the big European chains. If anything the big US coffee chains, especially Starbucks, arguably originated the model that the big European chains are following almost as a template. The late-20th-century European chains like Baresso, Costa, Nero, etc. do like to play up an "Italian" influence (hence the vaguely Italian names), but in practice their management strategy was pretty much to clone Starbucks. You can see this in part because their menu range and naming tends to follow the US style rather than the Italian style (e.g. Costa's "macchiato" and "iced cappuccino" are American imports).

I posted this 2 hours earlier than this submission, same link same title; https://news.ycombinator.com/item?id=17883826

Am I the only one that is noticing a lot of BBC articles reaching HN frontpage that have nothing to do with tech?

HN is for more than tech.

It goes in cycles. If there's a good article from a new or irregular (for HN) site, you'll see a lot more articles from thast site show up on the frontpage.

Also no Agree on our tracking to read the article on BBC News, this popups makes me most of the time not read the article.

Paul Graham says it's for "anything that gratifies one's intellectual curiosity."

https://news.ycombinator.com/newsguidelines.html

Also "If they'd cover it on TV news, it's probably off-topic."

It's a business article. HN is also about commerce.

Indeed, consider this submission history for example

https://news.ycombinator.com/submitted?id=MiriamWeiner

As noted, it is not against the guidelines though. Personally, I just flag them.

Would it make sense to implement some company size cap that prevents them from buying any more business? CocaCola is big enough...

Coca Cola...does it sell that colored water with sugar? https://en.wikipedia.org/wiki/List_of_Coca-Cola_brands Gotta love them as a company, if people start buying pet rocks, they'll invest in them. Always moving with the times

Be careful man, you could cut yourself on that edge.

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