Coca-Cola

Ticker KO

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Market closed
% change
-0.55%
Price US dollars
45.61
Change
-0.25
As of 04:25 19 Oct 2018
Market cap. US dollars
193,975.80 million
As of 04:25 19 Oct 2018

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Coca-Cola buys Australian kombucha maker

Bottles of Coca Cola are displayed at a market on April 16, 2013 in San Francisco, California.
Getty Images

The Coca-Cola Company has purchased an Australian kombucha maker, further expanding its offerings beyond soda.

The company did not say how much it paid for Organic & Raw Trading Co., which makes the MOJO brand of kombucha, which is fermented, slightly alcoholic tea.

In its announcement, Coca-Cola said kombucha is the fastest growing beverage category in Australia.

For those of you wondering, some people believe kombucha is probiotic and therefore good for health - but there have not been enough scientific studies done to determine whether that is true or not.

Royal Mail leads FTSE risers

Royal Mail
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The FTSE 100 has extended falls and is now trading down 0.53% at 7,418.49.

Royal Mail is now leading the blue chip risers, up 2.4% at 469.5p while bottling group Coca-Cola HBC is the biggest faller, down 2.7% at £25.85.

William Hill is now up 5.7% at 262.7p after signing a partnership deal with Eldorado Resorts to expand its US operation.

The wider FTSE 250 is down 0.25% at 20,498.64.

In his own words

James Quincey chief executive of Coca Cola
Getty Images

If you want to hear Coca Cola's own justification for the £3.9bn deal to buy Costa, chief executive James Quincey he has set out his rationale in a video.

"It’s because coffee helps us get into hot beverages. Coffee is one of the fastest-growing beverage categories in the world, at 6%. It’s also a category with many different elements, from vending to coffee shops to roast-and-ground to instant to pods and capsules.

"In short, coffee is a big business with many formats. It’s also a remarkably fragmented business. No single company in the world has a strong foothold across all parts of coffee. And that includes Coca-Cola.

"We have great brands like our ready-to-drink Georgia coffee lineup in Japan, but Coca-Cola doesn’t have a broad, global portfolio in this growing category."

Coca-Cola is to buy the Costa coffee chain from owner Whitbread in a deal worth £3.9bn
Coca-Cola is to buy the Costa coffee chain from owner Whitbread in a deal worth £3.9bn.

Costa was 'exposed'

Costa
Costa

For Coca-Cola, buying Costa is an "ideal way into a frothy market that it’s maybe missed out on so far", according to Neil Wilson, an analyst at Markets.com with a more positive view of the deal.

And if you're looking for an explanation on why Costa would sell, have a look at the numbers, he says. Sales growth is "stalling".

"Costa is exposed to areas like the High Street where lower footfall translates into fewer cups of coffee being sold".

The company has also been struggling to attract hipsters.

"We continue to see Costa facing tougher competition from artisan coffee retailers who are taking market share".