7 Best Coffee Stocks To Invest In For 2021
Put a little perk in your portfolio when you take advantage of the market’s hottest cups of java.
When it comes to investing, keying into the release of new products like Tesla vehicles or Apple’s iPhones can provide a jump in the growth of your portfolio. But a safer option is to choose solid investments in industries that have experienced sustained growth over decades.
The coffee industry is one such stable industry. Early in the pandemic, there was a boom in at-home brewing, and now growth within the coffee sector is concentrated in cafes.
Are Coffee Stocks Good Investments in 2021?
As the COVID-19 pandemic recedes, the return to public space has put a strain on already-taxed coffee supply chains. Still, modest but sustained growth puts the demand for coffee at a 1.9% increase in 2021. Check out these seven best coffee stocks that can help diversify your portfolio.
Investing directly in coffee suppliers can lead to durable growth since every corner of the coffee industry needs to source beans from suppliers.
1. The J.M. Smucker Company
To take advantage of investment opportunities in the coffee retail industry, investors can’t sleep on the J.M. Smucker Company, which distributes popular at-home coffee brands like Dunkin and Folgers. These staples make J.M. Smucker a standout in the at-home coffee industry, a $10 billion market.
With a year-to-date growth rate of about 3% as of September 24, 2021, J.M. Smucker is continuing its pandemic-era growth.
As the producers of much more than just coffee, Swiss powerhouse Nestle maintains an excellent position in the market for consumer goods investors. With almost 15% increases in 2021 on its Nespresso coffee line, Nestle shows steady growth in the coffee sector. Overall, Nestle’s stock shows over 3% growth year-to-date as of September 24, 2021, inspiring confidence among traders.
3. Farmer Brothers Co
With over a hundred years in the coffee business, Farmer Brothers Co is a good investment. Based out of Texas, Farmer Brothers Co is unique in that it roasts and distributes its own coffee. In fact, it is only one of six such companies based in the United States.
Concerns arose several years ago over a transition from a family-run structure to a board, but positive growth following the pandemic has investors hopeful that Farmer Brothers Co is back on track for excellent growth. In fact, year to date it has seen an over 95% increase in the value of its stock.
Coffee shops and cafes took a hit with mandatory closures in the 2020 pandemic. But with innovation that permitted quick pivots to online and pick-up ordering systems, some of these cafes came out of the uncertainty stronger than ever and as promising portfolio prospects.
You see them on every corner. Boasting a resilient, popular cafe and product line that is unlikely to go anywhere soon, Starbucks stocks have seen a 35% increase in the past year as of September 24, 2021. Build longevity into your portfolio with a strong anchor like Starbucks.
This Chinese coffee company has been making waves over the last few years. The cashier-less company hosts close to 4,000 stores, giving Starbucks a run for its money in mainland China.
Luckin coffee stock is an attractive option for investors, with year-to-date gains of nearly 77% as of September 24, 2021. Its price has been steadily on the rise, enduring only a minor saw-toothed dip in the face of the Evergrande debacle.
6. Restaurant Brands International Inc.
With a slow and steady 2021 growth factor of 5% as of September 24, 2021, Restaurant Brands International Inc. holds promise for investors looking to get in on the cafe stock action.
Smart leadership pulled Restaurant Brands International Inc.’s coffee shop, Tim Hortons — and fellow Restaurant Brands International Inc. franchises Burger King and Popeye’s — through the pandemic. Restaurant Brands International Inc. is now investing funds in Tim Hortons revitalization, which may herald substantial growth for the chain.
A coffee bean is nothing without the materials to make the perfect cup, which is why you should consider investing in one of these leading coffee tech companies.
7. Keurig Dr. Pepper
As a classic disruptor that changed the way people around the world brewed and consumed coffee, Keurig was once a stock standout, only to drop dramatically in 2018. However, with millions of people stuck brewing coffee at home in 2020, and the company acquiring Dr. Pepper, Keurig has made an 80% rebound.
A diversified product line that includes brewing machines and K-cups has ensured the health and stability of Keurig’s modest but steady rise. Leaning on this expansive product line and the desire for easy, at-home brewing options, Keurig is a good buy.
Wake Up and Smell the Coffee Profits
Adding coffee stocks to your portfolio is a great way to capitalize on a consumer good people love to buy again and again. Make sure to diversify across the coffee market, spreading your investment funds between suppliers, cafes and coffee technology in order to maximize your returns. Just as companies themselves often seek to integrate every aspect of the supply chain into their business model, so too can savvy investors profit from every stage of the coffee market.
When exploring coffee stocks, remember that many coffee companies like Keurig Dr. Pepper or Nestle have a wider market than simply coffee. Consider potential market fluctuations on their other products when projecting coffee performance, as any growth in the coffee sector may simply get eaten up by market contraction in another sector.
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- Reuters. 2020. "U.S. Coffee Drinkers Consume as Much at Home During Pandemic, Poll Shows."
- International Coffee Organization. 2021. "The Upward Trend in Coffee Prices Continued in June 2021 As Concerns About Supply From Major Origins Remained the Key Factor in the Market. "
- MarketWatch. 2021. "Starbucks Corp. Stock Falls Monday, Still Outperforms Market."
- Investor Place. 2021. "LKNCY Stock: Why Is Luckin Coffee Brewing Gains of 9% Today?"
- Pershing Square Holdings. 2021. "Investment Manager's Report."
- Forbes. 2021. "Here’s Why Keurig Dr Pepper Stock’s 80% Rally Is Not Surprising."