Grayling beat off competition from 3 Monkeys and Cohn & Wolfe to become Costa Coffee's first retained PR agency.
The £900m-a-year UK coffee market is dominated by Starbucks, Costa Coffee and Caffe Nero. The most recent Mintel data found that in 2007 Starbucks commanded 24 per cent of the market, closely followed by Costa Coffee with 23 per cent, then Caffe Nero with 13 per cent.
However, Starbucks released disappointing results earlier this year and Costa Coffee now claims to be the largest UK coffee chain.
As part of its brief, Grayling is specifically charged with helping highlight the work of Costa's registered charity, the Costa Foundation.
The charity was set up in 2006 and builds facilities, including schools and water wells, in coffee-growing communities in Latin America and Africa.
Grayling will also promote the brand's partnership with the Rainforest Alliance and its local CSR work.
The Grayling team will be led by director Tanya Joseph, who will report to Costa Coffee PR manager Nevina Holland.
'Costa has a genuine desire to source more ethically, to give something back to its coffee growing communities and to reduce negative impact on the environment,' said Holland.
Earlier this year Costa announced plans to convert its entire coffee supply to sustainably grown beans sourced from Rainforest Alliance Certified farms by 2010.
Costa Coffee's green offensive follows a similar move by Starbucks, which last year hired Fishburn Hedges.