How Costa Coffee Lost the Matcha Generation
Lucy Williams is sipping an iced strawberry matcha at Blank Street Coffee in London after a family outing. For her, this isn’t just a drink—it’s an occasion.
“A strawberry matcha is a ‘coming out with your sister’ kind of thing, not an everyday coffee,” she says.
But if you’re craving one, don’t go to Costa—the UK’s largest coffee chain doesn’t sell matcha. Meanwhile, places like Blank Street have capitalized on the trend, gaining popularity among Gen Z and millennials with their colourful matcha creations and strong TikTok presence.
Now, Costa’s parent company, Coca-Cola, is reportedly considering selling the brand—possibly for less than half of the £4.9bn it paid in 2019. Analysts estimate it could go for around £2bn.
Matcha, TikTok, and the Rise of “Treat Culture”
Coffee and tea habits are shifting—especially among younger consumers. Many are trading in traditional lattes for vibrant, lower-caffeine matcha drinks that fit into a broader wellness trend.
Blank Street Coffee, founded in Brooklyn in 2020, has ridden this wave all the way to the UK. Since opening its first London store in 2022, it’s grown to over 40 UK locations and developed a cult following online. Influencers and celebrities, including Molly-Mae Hague and Sabrina Carpenter, have helped fuel the hype.
“We saw Blank Street on TikTok and had to come,” said Australian visitors Bree Taylor and Rebecca Trow.
Blank Street offers a wide matcha menu, reasonably priced under £5—drawing in Gen Z customers like Jordan Brookes, who admits he’s now “hooked” after trying matcha just two months ago.
Costa’s Stale Offering
Costa has struggled to keep up. While competitors like Starbucks, Pret, and Caffè Nero offer iced matcha lattes (with flavours like strawberry or vanilla), Costa still focuses on frappés and sugary fruit coolers—drinks that feel outdated in today’s clean-eating, health-conscious climate.
“Gen Z are looking for healthier alternatives,” says Danni Hewson from AJ Bell. “They’re into matcha and herbal brews, not sugary syrups.”
Couple Lauren Nicholson and Jordan Brookes say they now avoid big chains like Costa, opting instead for independent or newer, trend-savvy cafes.
Costa in Trouble
Despite a loyal customer base and over 4,000 stores across 50 countries, Costa is facing tough conditions. It posted £1.2bn in revenue in 2023, but still reported an operating loss of £14m, citing inflation, rising energy costs, and wage pressures.
Coca-Cola’s CEO, James Quincey, admitted on an investor call that Costa is “not where we wanted it to be,” and confirmed the company is exploring new ways to grow—or possibly exit—the coffee space altogether.
The beverage giant has hired investment bank Lazard to review options, including a potential sale, according to Reuters and Sky News.
A Crowded Coffee Market
The UK now has over 11,450 branded coffee shops, up from 9,800 five years ago. Independent cafes have also grown to 12,400, creating fierce competition in every price bracket.
Some customers, like Mimoza Emsa, have shifted to Pret for its convenience and subscription deals. Others turn to Greggs or McDonald’s for cheaper coffee or smaller chains for trendier drinks.
Retail analyst Clare Bailey says Costa is caught in the middle:
“It’s not cheap and quick like Greggs, nor is it a high-end treat. That middle ground is a tough place to be.”
Not All Hope Lost
Some, like Rafik Khezmadji, still enjoy Costa for its consistency and proximity to work.
“I come here to enjoy a moment to myself,” he says, sitting outside a Costa in London.
Fashion student Megan Penfold, 20, adds:
“It’s not the best, not the worst. I don’t really follow trends—I just like what I like.”
The Bottom Line
Costa, once a high street staple, is struggling to stay relevant in a market where trends—and expectations—are moving fast. Whether Coca-Cola sells or reinvents the brand, one thing is clear: the matcha generation is looking elsewhere.
