Despite a recession, these are hot times in the stock market for the coffee business. Shares of Green Mountain Coffee (GMCR), which reported impressive earnings July 29, are up 169% in 2009. One small coffee wholesaler, Diedrich Coffee (DDRX), is up 6,650% this year.
Even beleaguered coffee chains are bouncing back from steep declines in previous years. Starbucks (SBUX) shares have risen 87% in 2009, while second-place rival Caribou (CBOU) has seen shares quadruple in value (up 311%).
It’s not that coffee drinkers haven’t cut back somewhat on their daily caffeine fix—at least outside the home. Last quarter, Starbucks’ same-store sales were 5% lower than the year before.
Changing the Business
But the coffee business has been surprisingly resilient in the face of the steep economic slowdown. At the same time, powerful trends—new technology, changing tastes, and new industry players—have made many coffee stocks powerful investments.
Green Mountain Coffee got investors’ attention with the success of its Keurig coffee brewers. Costing about $100 each, these brewers make single cups of coffee at home in about 30 seconds. “Every 10 or 15 years something comes around that changes the way people drink coffee,” says Scott Van Winkle, an analyst at Canaccord Adams. Easy to use and easy to clean up, “this is the new thing in coffee brewing,” he says, noting sales of the brewers were up 187% last quarter.
Hot times in the stock market for the coffee business
Even beleaguered coffee chains are bouncing back from steep declines in previous years. Starbucks (SBUX) shares have risen 87% in 2009, while second-place rival Caribou (CBOU) has seen shares quadruple in value (up 311%).
It’s not that coffee drinkers haven’t cut back somewhat on their daily caffeine fix—at least outside the home. Last quarter, Starbucks’ same-store sales were 5% lower than the year before.
Beleaguered coffee chains are bouncing back
Green Mountain Coffee got investors’ attention with the success of its Keurig coffee brewers. Costing about $100 each, these brewers make single cups of coffee at home in about 30 seconds. “Every 10 or 15 years something comes around that changes the way people drink coffee,” says Scott Van Winkle, an analyst at Canaccord Adams.