Search

» » Here's why Coca-Cola is muscling into the coffee-shop business in a big way

Here's why Coca-Cola is muscling into the coffee-shop business in a big way

To get through this last workday before the long weekend, Coke’s management just ordered up a whole lotta coffee.

Those big shots in Atlanta KO, -0.84% plan to buy British coffee-shop chain Costa for $5.1 billion, taking it over from Whitbread WTB, +15.87% , a U.K. FTSE 100 component that has been jolted higher by the news.

What’s the deal with this deal?

Coke, “like a lot of its peers, is looking to diversify away from its core business of sugary drinks, an area that has been increasingly attracting government ire due to a rising global obesity problem,” says Michael Hewson, chief market analyst at CMC Markets UK, for our call of the day.

A growing number of U.S. cities, for example, have levied special taxes on sodas and other sugary beverages.

Hewson warns that the coffee business is “extremely competitive,” and he notes that the acquisition follows PepsiCo’s PEP, -0.08% move to branch out in a different way with the agreement earlier this month to buy home-carbonation company SodaStream SODA, +0.12% . (Campbell Soup’s CPB, -2.10% new strategic direction, meanwhile, is to get out of fresh food.)

See: Pepsi will buy SodaStream, in extended shift away from sugary drinks

Coke has jumped on the chance to “gain an attractive brand with a fast-growing global presence,” writes Neil Wilson, Markets.com’s chief market analyst.

The seller of Sprite and Powerade seems to think “this is the ideal way into a frothy market that it’s maybe missed out on so far,” Wilson adds.

Costa, a rival to Starbucks SBUX, -0.28% in the U.K., has more than 2,400 coffee shops in its home country, along with more than 1,400 retail outlets in other nations. It also sells coffee in grocery stores and gas stations.

Is this big trouble for Starbucks? Traders don’t seem to think so at the moment, as the Seattle company’s shares are down modestly in thin premarket trading.

Coke has ventured into coffee before, including acquiring a minority stake in once-hot Keurig Green Mountain. That company is now owned by an investor group led by JAB Holding Co.

Key market gauges

Futures for the Dow YMU8, -0.15% , S&P 500 ESU8, -0.15% and Nasdaq-100 NQU8, -0.09% are pulling back, after the Dow DJIA, -0.53% S&P SPX, -0.44%  and Nasdaq Composite COMP, -0.26% lost ground yesterday.

The three gauges are on track for weekly advances of 0.8% to 1.8% as of Thursday’s close, along with August gains of 2.3% to 5.5%, with one day left in the month.

European SXXP, -0.62% and Asian markets have largely been seas of red, and analysts are blaming news that President Donald Trump could push forward soon with tariffs against China. Gold GCZ8, +0.60% is higher, while oil CLV8, -0.68% and the dollar index DXY, +0.02% are lower. Bitcoin BTCUSD, +0.46% is trading around $6,900.

See the Market Snapshot column for the latest action.

Check out: Which markets are closed for Labor Day?

The chart
LULU FTW, again.

Lululemon’s stock LULU, -1.23% is stretching higher in premarket action following the retailer’s earnings beat late Thursday.

If the bullish moves hold, shares ought to notch a fresh all-time high today. They’ve more than doubled over the past 12 months, and bulls are loving it:

The buzz

Warren Buffett says Apple AAPL, +0.92% shouldn’t buy Tesla TSLA, -0.61%  .

“Bitcoin and other cryptocurrencies are useless,” says the latest issue of The Economist magazine. “For blockchains, the jury is still out.”

Trump news: The president has threatened to withdraw from the WTO and rejected the European Union’s recent offer to drop tariffs on American cars. Plus, he’s expected to sign an executive order today on potential retirement-savings changes.

Smith & Wesson parent America Outdoor Brands Corp. AOBC, -3.46% looks on track for a big up day after its earnings late yesterday, while Nutanix NTNX, -0.51% and Ulta Beauty ULTA, +1.11% appear headed in the other direction.

Shortly after the opening bell, watch for a reading on Chicagoland’s business conditions as well as a figure for consumer sentiment.

Check out: MarketWatch’s Economic Calendar

At least seven people were killed and dozens injured in a crash in New Mexico involving an LA-bound Greyhound bus and a big rig.

European Union boss Jean-Claude Juncker is promising to end that business of “fall back, spring forward” with clocks in EU countries: “The people want it, we’ll do it.”

The quote
Getty Images
People prepare a makeshift memorial on Thursday in Detroit.

“If there were ever a moment for us to talk and sit down and reflect about who we are, where we came from and where we’re going, this weekend should give us that moment.”—Texas Christian University assistant dean Ron Pitcock is quoted in an AP essay that says memorial services for Aretha Franklin and John McCain ought to inspire some national soul-searching.

The essay also says Franklin and McCain “exit the stage together in an American moment not unlike the period when each emerged. Fifty years after the cataclysmic year of 1968, today we are in a similar period of upheaval and polarization — a time when American society’s foundational pillars are being questioned and people of all political persuasions are deeply angry and uncertain about the nation’s path.”

Random reads

Good news for bears: Hunts for grizzlies blocked in Idaho and Wyoming.

It took 1 million Legos to make this life-size, drivable Bugatti car.

U.S. Open news: Brace for Williams vs. Williams, after an ump’s pep talk draws flak.

Will Tom Clancy fans see the new “Jack Ryan” series as a clear and present danger?

This striking photo shows a member of Trump’s entourage blocking a photographer’s camera.

The suspected killing of a man by two refugees in Germany sparks days of protests.

College football’s opening weekend kicked off last night:

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Or Follow MarketWatch on Twitter or Facebook.

And sign up here to get the Friday email highlighting 10 of the best MarketWatch articles of the week.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.

Let's block ads! (Why?)



Bagikan Berita Ini

0 Response to "Here's why Coca-Cola is muscling into the coffee-shop business in a big way"

Post a Comment

Subscribe to: Post Comments (Atom)
Powered by Blogger.