Coffee isn’t just a beverage; it’s also a commodity.
Due to a combination of tight supplies and high demand, commodity coffee reached an all-time high price of $3.49 per pound in December 2024.
It’s backed off those highs a touch since then but it, like cocoa, was one of the top-performing commodities in 2024.
For investors, there’s no simple way to make a play on the price of the commodity directly, but you can invest in coffee company stocks to add exposure to the growing demand.
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Investing in Coffee Stocks
There are a few different ways to approach an investment in coffee. Because it’s a globally popular beverage, you have the option of both international and domestic stocks. You can look at it as a retail investment, as might be the case with coffee shops, or as a consumer staple that you can buy at the grocery store. And there are also larger brands that include coffee as part of their overall business.
For example, if you want to invest in Folgers coffee (or the version of Dunkin’ coffee sold in stores), you’ll need to make an investment in the consumer staples giant JM Smucker Co (SJM). Or if you’d like to put your money into Maxwell House, that requires an investment in Kraft Heinz Co (KHC).
An investment in Coca-Cola (KO) gives you exposure to the global beverage industry through ready-to-drink coffees and teas. Additionally, Coca-Cola acquired Costa for ~$5 billion in 2019, which gave it even greater exposure to coffee. Costa is a London-based coffee chain that has operations in more than 30 countries.
And don’t forget there is coffee equipment, as well. Keurig coffee makers, for instance, are ultimately produced by Keurig Dr Pepper (KDP) and have surged in popularity in recent years since they allow consumers to sample their favorite coffee shop beverages in the form of single-serve K-Cup pods.
The Best Coffee Stocks for Conservative and Adventurous Investors
When most people today think of caffeine, they think of Starbucks (SBUX). With top-line sales in the tens of billions, Starbucks is the world’s largest coffee retail chain with over 40,000 stores globally and a presence in virtually every city of size in the U.S.
Starbucks’ new management is confident it has the financial strength to make investments for the long term while navigating short-term challenges. And it’s worth noting that the company has steadily raised its dividends, while SBUX stock has tended to outperform the S&P during past bull markets.
As for the stock, it rallied strongly in August on news of new management but remains in turnaround mode. Plus, there’s a good possibility that you already own some stock in Starbucks through a 401k or an index ETF.
Newer on the scene is Dutch Bros (BROS), which came public towards the end of 2021. The company predominantly operates its drive-thru coffee shops in the western U.S. but is rapidly opening new locations and has expanded as far east as Tennessee. The company has been steadily outpacing analyst expectations, most recently when it reported a 37% earnings beat in early November.
Key to the story is the company’s aggressive growth strategy. Dutch Bros is aiming to open a total of 150 stores or so in this full fiscal year. As for the stock, it was initially priced at 23 when it began trading on September 15, 2021, and closed the day over 36. It traded as high as 76 in November 2021 before it was dragged down with growth stocks in the subsequent bear market. The stock set an all-time low at 22 in late September of 2023 and has returned more than 150% since.
As always, you should do your homework and ensure an investment fits your portfolio before you jump in. Popularity and profitability don’t always go hand in hand.
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*This post is periodically updated to reflect market conditions.