I can only speak for myself, but who doesn’t want a cup of Coffee, cup of Joe or cup of Java first thing in the morning! Call it what you like, but consumers have a Java addiction and that leads to driving to your favorite coffee brewing retail store on a daily basis. The coffee industry has changed the social environment over the past decade as we meet friends, associates or hold business meetings at coffee shops instead of restaurants or bars. I began researching how this change came about and discovered that Coffee has changed almost like the innovation of technology. We no longer drink just coffee, but we drink fancy coffee hot or cold, espresso or lattes and in their fancy cups too. The coffee menu at retail shops is more like ordering a sandwich, which variety do you want and how do you want it prepared.
The world’s largest coffee producer is Brazil. The coffee farmers in Brazil produce Arabica coffee from Arabica trees. Coffee crops are like other crops and depend on weather. A drier than normal season, shortfall of rain may harm production by hindering the desired amount of blossoming in the coffee crops. The blossoming of flowers on the crops will later become the cheeries that contain the beans.
The price of coffee is all based on supply and demand like all commodities. The current supply of coffee has grown, as many of the farmers had record crops last year and again so far this year. This has allowed the price of coffee to be lowered which then allows for more companies to move into this market. I have been favoring a specific company that specializes in coffee, Starbucks (SBUX). To be fair, you should know that I do not drink Starbucks coffee, but I do like the company as an investment.
Starbucks Corporation is a U.S. Large Cap stock with headquarters in Seattle, Washington. Starbucks is a premium and dominant player in specialty (fancy) coffee in the world. They have stand-alone shops which are growing, and the U.S. will open 3,000 new stores over next four years. Asia Pacific region is currently growing the fastest for coffee firms, of which Starbucks plans to increase their workforce to over 40,000. Wow! You can find a Starbucks in supermarkets that allow you to pay with new technology platforms such as Square. Square allows for credit card payments via your smart phone or iPad. I mentioned how Starbucks Corporation is worldwide, but did you know that coffee consumption is growing steadily in emerging markets such as China, India and Brazil? Yes, Starbucks is there too.
Specialty coffee drinks are growing, and the newest innovation from Starbucks is their new Starbucks Refreshers ™. This new drink was introduced last summer and uses a green coffee extract combined with real fruit juices for a ready to drink Refresher. The green extract is made from raw beans found inside a 100% unroasted Arabica coffee cheery. A natural occurring caffeine is in the beans when not roasted.
Starbucks has its competitors; Dunkin Donuts, McDonalds (good coffee when Paul Newman, Newman’s Own, is brewed) and now Burger King and Denny’s are joining the crowd. The key is being special and continuing to innovate to keep up with demand. I believe Starbucks does that well.
Have you had your coffee today?