Costa Coffee

August 2018 – deal announced in which Coca-Cola acquired Costa Coffee for $5.1 billion. Deal closed in
January.

Costa is based in London and has 4,000 stores in 31 countries (all in the Eastern Hemisphere). It has its
own roaster and sells its coffee retail, as well as through coffee shops.

Assume Coca-Cola seeks to move Costa into the Western Hemisphere, beginning with Brazil, which has a
rich tradition for coffee drinking.

Starbucks in Brazil

Entered in 2006. Now operates 113 stores in 17 cities.

Owned 51% by Cafeo Sereias do Brasil, a Brazilian company established to bring Starbucks to Brazil; and
49% by Starbucks. Offers local cuisine – “pao de queijo” which are balls of bread with cheese in dough,
muffins with cheese and tomato; and a strong, extra roasted Brazilian blend of coffee.

March 2018 – entered into licensing agreement with SouthRock, a leading multi-brand restaurant
operator specializing in airport eateries, to develop and operate Starbucks stores throughout Brazil.
With the ownership transition in Brazil, all Starbucks retail operations in Latin America and the
Caribbean will become wholly licensed.

September 2018 – Starbucks’ Brazilian coffee plantation was raided and found to have workers that
qualified as slave labor.

Ricardo Rico, general manager and vice president for Starbucks licensed store operations, Latin America
– “Much of Starbucks success in Latin America and the Caribbean has been due to our knowledge of
when to rely on local and regional trusted licensing partners to grow the business. For us, the right mix
of ownership models – company owned, licensed or joint venture – has allowed us to remain focused on
our biggest opportunities as we further accelerate growth across the globe, while always striving for the
iconic Starbucks customer and partner experience. We are ready for this next phase of growth in Brazil
and are proud to welcome SouthRock to our strong network of licensing partners in Latin America.”

Assignment

1. Do a two-paragraph demographic and Hofstede cultural analysis on Brazil. Describe the

potential customer base.
2. Do a two-paragraph ease of doing business, trade, and economic freedom analysis on Brazil.
3. In two paragraphs, explain what entry strategy you would recommend to Coca-Cola for Costa
into Brazil (exporting; licensing/franchising; joint venture; or direct investment/acquisition).
Why?
4. In two paragraphs, select a target market, and then pick two of the 4 P’s and describe a strategy
you would use for Costa in Brazil. Why? Would you adopt an international, multi-national, or
transnational approach? Why?
5. In two paragraphs, describe how you would counteract Starbucks in Brazil, leveraging both
Costa and Coca-Cola’s resources (hint: what is Coca-Cola’s current presence in Brazil).

Make sure you do outside research and cite your sources.