Coffee Nation, which was purchased for £59.5m, currently operates 900 out of the 2000 units in the UK’s emerging self-serve coffee bar sector.
The acquisition of the vending brand will see Costa expand into the self-serve coffee sector with the launch of Costa Express.
Growth opportunity
Costa, which is a wholly-owned subsidiary of the hotel and restaurant group Whitbread, said is targeting 3000 bars across the UK over the next five years. The firm expects the move will quadruple its profit contribution.
“Customers increasingly want great tasting coffee on the go, which makes the self-serve coffee market very attractive,” said Andy Harrison, chief executive of Whitbread.
“This acquisition provides an exciting launch pad to develop 3000 Costa Express bars across the UK, providing an additional growth lever for the Costa brand and making Costa available to more customers in more locations.”
Locations and quality
Costa Express will target locations such as airport lounges, supermarkets, rail stations and universities. Units will start to appear within the coming months, the firm confirmed.
Coffee Nation’s self-serve coffee bars use fresh milk and freshly ground coffee. The firm believes its machine technology and monitoring systems put it at a competitive advantage, with existing customers including Tesco, Moto and Welcome Break.
Coffee for the new Costa Express brand will be provided by the Costa Roastery in London.
Coffee Nation, which was purchased from Milestone Capital and Investec Growth & Acquisition Finace, has an annual turnover of more than £20m.
Costa said it will also be continuing its “rapid growth” plans for its store network. The group currently has 1850 stores. Of these, 1200 are in the UK and 650 abroad.
Whitbread this morning reported a 6.7 per cent increase in like-for-like sales for the 50 weeks to 17 February 2011, which it says was driven by strong trading across its Costa Coffee and Premier Inn brands.