Whitbread invests $46mn to take over joint Costa China venture from partner Yeuda

Whitbread, owner of the British chain Costa Coffee, is paying $46mn to buy the remaining 49% of its joint venture in southern China from partner Yeuda.

The joint venture currently operates 252 stores in southern China, and the acquisition is part of the firm’s plan to grow internationally, with a particular emphasis on the Chinese market where “coffee culture” is becoming more prominent.

The popular coffee chain recently experienced a slowdown in growth, with sales growing 1.1% in the first quarter up to 1st June 2017, as opposed to 2% the previous year.

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Whitbread, which also owns Premier Inn and Beefeater, has another Costa joint venture in China: a 50-50 partnership with Beijing Hualian Group (BHG), in the north of the country. It is expected, however, that this partnership will remain intact.

Alison Brittain, chief executive of Whitbread has stated that “today’s announcement marks a significant and exciting step in our ambitious growth plans for China.”

She added that while the firm has enjoyed “an excellent partnership with Yeuda over the past ten years together beginning to build the Costa brand in this key market,” the full acquisition will offer Whitbread “full strategic and funding flexibility to unlock Costa’s potential in China.”

According to analysts at Morgan Stanley, “Costa China has been honing its customer proposition… it is trying to focus on a somewhat different offer to Starbucks.” According to the financial services company, the elements Costa hopes to use to differentiate itself include handmade coffee, a British heritage and “trendy, modern, stylish” stores.