Just as rumors of a possible Starbucks partnership faded, Centurium Capital has turned its sights to Costa Coffee, the UK-originated coffee chain now owned by Coca-Cola.
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According to Bloomberg, several parties, including Centurium Capital, have valued Costa at roughly $1.23 billion, far below the $4.8 billion Coca-Cola paid in 2018. Earlier reports had suggested a potential sale price closer to $1.85 billion.
Sources familiar with the matter say Centurium Capital has not yet finalized its strategy. The investment firm could deploy its own funds directly or consider a joint bid with its portfolio company, Luckin Coffee. Neither Coca-Cola, Costa, Centurium Capital, nor Luckin has publicly commented on the ongoing speculation.
Centurium is not alone in eyeing Costa. Major private equity players, including KKR, Bain Capital, and TDR Capital, have engaged in various bidding discussions. Bain Capital was previously seen as the most aggressive contender, reportedly submitting an indicative offer of about $2.46 billion, while KKR, after withdrawing from the process in August, has recently rejoined the competition.
Coca-Cola has reportedly held initial contacts with prospective buyers and plans management presentations and roadshows to provide deeper insight into Costa’s business.
Founded in 1978, Costa entered China in 2006, marking nearly two decades in the market. The brand operates more than 4,000 stores across 30 countries and at one point held a larger UK market share than Starbucks.
China is Costa’s largest market outside the UK and one of only two regions directly managed by its headquarters. Costa initially expanded aggressively, often locating stores near Starbucks and opening outlets at a pace 2.5 times faster than the US coffee giant.
However, the domestic market has grown fiercely competitive, particularly with the rise of local chains like Luckin Coffee. This has forced coffee brands to adapt quickly in pricing, cost control, and marketing. Product iterations, aggressive pricing, rapid expansion of small stores, and penetration into lower-tier cities have challenged even Starbucks, leading to declining market shares.
Costa, positioned as a mid-to-high-end brand, has struggled to match the digital marketing and agility of competitors. News of store closures in China has been recurring since 2020. By the end of 2024, Costa had just 389 stores, concentrated in first-tier cities such as Beijing and Shanghai, while gradually retreating from cities like Nanchang and Qingdao. Three years ago, Costa aimed for over 1,000 stores by 2025; today, there are only slightly more than 340, with about 30 closures in the first half of the year alone, according to Zhaimen Restaurant Eye.
These struggles have also affected Coca-Cola. The beverage giant acquired Costa for $5.1 billion in 2018, seeking entry into the hot-beverage market, a segment in which it previously lacked a global brand. CEO James Quincey noted at the time that Costa’s coffee platform offered an immediate foothold in the category. Yet, the investment has underperformed. In July 2025, Quincey hinted at a potential sale, acknowledging that Costa had not met initial growth expectations.
Working with investment bank Lazard, Coca-Cola is evaluating the sale of Costa’s store business, estimated around $2.46 billion, with preliminary contacts already made with private equity firms. Whether the price ends up closer to $2.46 billion or the $1.23 billion cited by Centurium Capital, the deal would represent a significant loss for Coca-Cola, creating a rare opportunity for savvy investors.
Centurium Capital’s interest in Costa mirrors the ambitions of its own portfolio. As a major investor in Luckin Coffee, Centurium played a pivotal role in Luckin’s turnaround following the 2020 accounting scandal, leading its restructuring and eventual re-listing on the OTC market in 2023.
As of February 2025, Centurium owns 31.3% of Luckin’s shares with 53.6% of voting rights, translating to roughly $3.5 billion in value based on Luckin’s $11 billion market cap. CEO David Li, also chairman of Centurium, reclaimed the chairmanship of Luckin’s board in April.
A Costa acquisition would allow Centurium and its portfolio company Luckin to consolidate their positions in the Chinese market while pursuing overseas expansion. Luckin has already entered Southeast Asia, including Singapore, Thailand, and Malaysia, and launched into North America in June 2025. Pairing with Costa could accelerate entry into mainstream European and US markets.
Reports suggest Coca-Cola may retain control over Costa’s ready-to-drink coffee business, selling primarily the store operations. This segment has proven profitable and strategically aligned with Coca-Cola’s strengths in distribution and innovation, including products like light milk tea, coconut latte, and coconut oolong milk tea, backed by R&D from Coca-Cola Asia Pacific in Shanghai.
Costa’s potential sale, along with the previous Starbucks China divestiture, highlights an ongoing shift in the global coffee landscape. For new owners, the challenges are significant: navigating China’s competitive market, integrating with existing operations, and pursuing international growth. Yet, for investors like Centurium Capital, the opportunity to acquire Costa at a discounted valuation represents both a risk and a potential linchpin for building a transnational coffee empire.
As the bidding unfolds, the coffee capital war is far from over, with brands and private equity vying to capture market share, not only in China but globally. The next chapter for Costa could reshape the competitive dynamics of the coffee industry for years to come.
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