Costa Coffee Profit Boosts Focus on Coca-Cola and Coffee Shares

Costa Coffee's return to profit has investors focusing on Coca-Cola and coffee shares. The trend of younger consumers incorporating more coffee into their daily routines is driving growth in the sector. This is particularly evident in the US, where drive-thru coffee chains like Dutch Bros are thriving.

Dutch Bros generates $1.74 billion from company-operated shops and $141 million from franchising and other activities entirely within the United States. Its drive-thru model focuses on speed, convenience, and throughput improvement to cater to consumers' demands for off-premise beverage solutions.

Luckin Coffee, a China-based coffee chain, is also benefiting from the trend. It generates about CN¥55.9 billion in revenue through its online retail channel, primarily flowing through digital platforms. The company's rapid store expansion and growth in both high-tier and lower-tier Chinese cities are driving top-line revenue growth.

Coca-Cola's commitment to Costa Coffee is also noteworthy. The company generates $50.1 billion from non-alcoholic beverages worldwide, including coffee sales. Its zero-sugar variants have grown double-digits, indicating adaptation to health trends.