How Costa Coffee Became the UK's Biggest Coffee Franchise: A 50-Year Journey from Roastery to Empire

The Humble Origin: Two Brothers, One Blend, One Dream

In 1971, Italian brothers Sergio and Bruno Costa arrived in London with a burning desire to make great-tasting coffee part of everyday British life. Britain was, at the time, a nation of committed tea drinkers. Espresso was a niche pleasure enjoyed in a handful of Italian-style cafés scattered across London's back streets. The Costa brothers saw not an obstacle — they saw an opportunity.

The family had moved from Borgo Val di Taro in northern Italy to Britain in 1959, bringing with them a traditional coffee bean drum roaster. That machine became the seed of an empire.

Setting up a small roastery in Newport Street, they committed to crafting the finest quality coffee. It was here that the Costa brothers blind-tested 112 variations of coffee before they found one good enough to be their signature blend. They named it 'Mocha Italia' — and it remains their signature blend to this day.

The unique blend of Arabica and Robusta beans produces a smooth, balanced flavour that cuts through any espresso-based coffee, delivering a toasty, caramelly, and nutty character. The obsessive precision behind those 112 iterations was not mere perfectionism — it was a founding philosophy. Quality was non-negotiable from day one.

Costa Coffee was founded as a wholesale operation, initially supplying roasted coffee to caterers and specialist Italian coffee shops. For a decade, they built reputation quietly — in the trade, not on the high street.

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## From Wholesale to Retail: The First Store (1978–1995)

In 1978, the Costa brothers reached a pivotal point in their journey when they opened their first official coffee shop in Vauxhall Bridge Road, London. The success of their initial shop can be attributed to their unwavering commitment to quality — focusing on only the best beans and perfecting their unique roasting process.

As demand for their coffee grew, so too did their premises — moving to South London where the brothers transformed a huge plot of grassland into a brand-new roastery.

Through the 1980s and into the early 1990s, Costa expanded cautiously but steadily, building a loyal customer base across the capital. By the time the brand caught the eye of one of Britain's largest hospitality conglomerates, it had already demonstrated something rare: a coffee culture that British consumers would genuinely embrace.

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## The Whitbread Acquisition: The Inflection Point (1995)

In 1995, Whitbread acquired Costa Coffee for approximately £19 million when the chain operated just 39 UK stores. It was, in retrospect, one of the shrewdest acquisitions in British retail history.

Under Whitbread's ownership, Costa Coffee experienced unprecedented growth. With Whitbread's financial muscle, property relationships, and operational infrastructure, Costa stopped being a boutique roaster with café ambitions and became a national rollout machine.

Under Whitbread's leadership, the brand implemented innovative strategies and invested in new locations, leading to an increase in both domestic and international presence.

Whitbread introduced several innovations during this period, including the popular Costa Express self-service coffee machines, which allowed the brand to reach even more customers. These self-serve units — eventually deployed in service stations, supermarkets, hospitals, and airports — became a category-defining move, putting Costa into environments that no traditional barista-led chain could economically reach.

By the mid-2000s, Costa had surpassed Starbucks to become the UK's largest coffee chain by store count — a position it has held ever since.

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## The Coca-Cola Acquisition: A £3.9 Billion Bet on Coffee (2019)

The most consequential moment in Costa's corporate history came in January 2019. The Coca-Cola Company purchased Costa for £3.9 billion ($4.9 billion), with Costa then operating around 4,000 outlets across more than 40 countries and employing about 18,000 people.

The deal represented one of the most significant moves in Coca-Cola's history, allowing the company to enter the global coffee market — a massive and highly profitable segment of the beverage industry. Costa Coffee provided Coca-Cola with retail outlets, vending technology, and ready-to-drink coffee products, expanding the company's reach beyond supermarkets and restaurants.

The logic was clear: global coffee consumption was growing at a pace that rivalled carbonated soft drinks in several key markets. For Coca-Cola, Costa was not just a coffee shop business — it was an entry point into the entire out-of-home coffee ecosystem.

In November 2024, Coca-Cola announced that Costa Coffee would report to the company's Europe operating unit effective January 2025, as part of an effort to streamline and simplify the current structure. This restructuring signalled a shift toward deeper regional integration rather than treating Costa as a standalone global venture.

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## Where Costa Buys Its Coffee: The Sourcing Story

Costa's sourcing story is as intentional as its founding story. Costa sources beans from multiple countries including Vietnam, Kenya, and Uganda, alongside origins across Latin America and East Africa — the primary terroirs that give the Mocha Italia blend its distinctive character.

The coffee beans sourced in the UK are Rainforest Alliance Certified — meaning that for every cup of coffee delivered, Costa invests back into the coffee-growing communities that make their coffee possible.

Costa Coffee was the first UK coffee shop to achieve 100% Rainforest Alliance Certified™ bean sourcing in 2010. This was not a marketing flourish — it was a structural commitment that required renegotiating supplier relationships across multiple origin countries.

Every Rainforest Alliance Certified farm is required to meet strict guidelines for better farming methods and working conditions, as well as better care for nature — ensuring that the coffee served in all Costa drinks has been produced responsibly and sustainably.

Beyond bean sourcing, Costa has developed and implemented policies for human rights in the supply chain, working with suppliers and sustainable practice experts to carry out procurement practices in the most sustainable and responsible way possible.

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## Market Dominance: The Numbers Tell the Story

The scale of Costa's UK presence is formidable:

- Costa leads the UK coffee market with 2,663 outlets, securing a dominant 38.3% share by outlet count as of mid-2025.

- The broader UK branded coffee shop market reached 10,199 outlets with £5.3 billion in sales, achieving 9.2% sales growth over the last 12 months.

- 10% of Costa's devoted patrons account for more than 50% of visits.

- Globally, Costa operates over 4,000 stores and 14,000 self-serve machines across 50 countries.

- Around 40% of Costa Coffee's UK stores are franchised, with the largest franchise operator, Scoffs Group, managing around 114 outlets. With a required investment of around £800,000, Costa keeps the barrier to entry high to attract tried and tested franchisees.

The franchise architecture is a deliberate strategy — high capital thresholds maintain brand quality, while the franchise model allows rapid geographic expansion without full corporate overhead.

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## The Competitive Landscape: Leadership Under Pressure

Costa's dominance is real, but it is not without threat. Overall outlet growth has been led by Greggs and Starbucks, which opened 73% of the 353 net new stores added to the UK market in the most recent 12-month period.

Rising green coffee prices — hitting 50-year highs in 2024 — and inflation have eroded margins, forcing Costa to implement cost-cutting measures. The brand posted a loss of £9.6 million in 2023.

Meanwhile, the shift to remote work has reduced foot traffic in city-centre locations where Costa's traditional model thrives.

Premium independents are also encroaching on the quality narrative. Premium chains such as WatchHouse (+38% turnover growth), Black Sheep Coffee (+28%), and Blank Street (+27%) reported strong double-digit growth, confirming consumers' willingness to spend more for perceived quality.

Costa's slow adoption of cold and ready-to-drink formats, alongside a 23.2% RTD volume decline in 2024, highlights a growing misalignment with evolving consumer trends.

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## Global Growth Plans: What Comes Next

Coca-Cola has projected that Costa Coffee will expand into 10 to 15 new markets by 2026, addressing global retail demand as part of the company's broader portfolio diversification strategy.

Arabica coffee prices swung from $1.50 per pound in mid-2023 to record highs of $4.30 in early 2025, squeezing margins — meaning any expansion must be achieved with ruthless commercial discipline.

Coca-Cola has affirmed its commitment to an "asset-light agenda" — suggesting that the future shape of Costa may lean more heavily on licensing, franchising, and self-serve machine deployment than on company-owned store openings.

The RTD (ready-to-drink) channel remains the most promising frontier. Costa's canned and bottled coffee products, distributed through Coca-Cola's global distribution network, give the brand access to supermarket shelves in markets where a physical café presence would take years to establish.

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## The Legacy: From 39 Stores to a National Institution

The arc of Costa Coffee is, at its core, a story about conviction. Two immigrant brothers from Italy arrived in Britain with a roasting drum and a belief that people deserved better coffee. They refined a blend 112 times. They built slowly, then scaled explosively. They were acquired twice — first for £19 million, then for £3.9 billion — a valuation increase that speaks to what disciplined brand-building compounds into over time.

Since its founding by two Italian brothers in London in 1971, Costa Coffee has expanded its operations in the UK to include nearly 2,700 units as of early 2025, making it the UK's coffee chain with the largest number of stores — generating over one billion British pounds in UK revenue.

The challenges ahead are real: a shifting high street, premiumisation pressure from specialty independents, volatile green coffee prices, and the strategic ambiguity of Coca-Cola's ownership. But the fundamentals that made Costa dominant — scale, franchise depth, self-serve penetration, and a certified sustainable supply chain — remain formidable advantages in any scenario.

What Sergio and Bruno Costa started with a roasting drum in Newport Street became a £3.9 billion global coffee platform. That is what happens when you refuse to serve a bad cup.

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*RIC Brands works at the intersection of Africa agribusiness, trade, and hospitality — connecting the origins that power the world's coffee supply chains to the markets that consume them.*

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**Africa Brew Brief | RIC Brands** — RIC Brands' intelligence platform tracking African agribusiness, coffee trade, and origin stories. Follow the brief: https://share.google/vnz8ZqMf6ujiKPr4j | wilbert@ricbrands.com