Coffee Stock Wars: Starbucks, McDonald's, Dunkin' & Upstarts

Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains and guest Madeleine Johnson dive into the world of coffee to see how the major publicly traded firms from Starbucks (SBUX - Free Report) to Dunkin’ have performed. The episode also addresses some upstarts and the broader coffee market to see which companies appear best suited for long-term success.

Starbucks, Dunkin’, and McDonald’s (MCD - Free Report) are the most well-known public coffee companies in the U.S. All three have also seen their stock prices surge in 2019, with SBUX as the standout winner so far. On top of that, the three U.S. giants have all focused on digital expansion and delivery in recent years as everyone from Walmart (WMT - Free Report) and Target (TGT - Free Report) to Chipotle (CMG - Free Report) expand their offerings in the Amazon (AMZN - Free Report) -obsessed retail age. The three chains all have deals with either Grubhub or UberEats (UBER), and DNKN’s Beyond Meat (BYND - Free Report) trial could be the start of a larger plant-based push.

The global coffee market is also in the midst of extremely low prices. In fact, the price of arabica, which is considered the premium variety of bean grown mainly in Brazil, fell 9% last month to $1 a pound. Back in May, arabica slipped to as low as $0.88 per pound. This was its cheapest price in over 10 years. The downturn in prices has helped larger coffee sellers, but hurt many famers, particularly in Central and South America.

Meanwhile, companies such as Nestlé S.A. (NSRGY - Free Report) and The J. M. Smucker Company (SJM - Free Report) have expanded their in-home coffee reach. On top of that, Coca-Cola (KO - Free Report) spent $5 billion to buy Costa Limited last summer in an effort to expand its growing non-soda portfolio. Investors should also pay attention to Chinese upstart Luckin Coffee Inc. (LK), which went public in May, along with many other smaller companies trying to grab their share of the global coffee market.

As a reminder, if you feel that we missed something, or if you have any topic suggestions, shoot us an email at podcast@zacks.com. Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave us a rating wherever you listen to your podcasts. Interested investors can also check out Madeleine Johnson’s Income Investor portfolio.

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