In 2019, the United Kingdom’s coffee industry was worth a whopping £2.1 billion. But unlike our American counterparts, who drink more coffee than tap water, the UK industry finds most of its money in instant coffee instead of brewed take-out coffee, like Starbucks. In fact, coffee is so popular and regularly consumed in the US that its retail and import industry topples the scales at 80 billion USD.
Still, despite this stark difference in numbers, coffee stocks are worth investing in, especially as the global coffee industry reached 465.9 billion USD in 2020. Here are the top-performing coffee stocks every investor should look into.
1. Costa Coffee (NYSE)
If you live in the UK, you know Costa Coffee. Launched in 1971 in London by the Costa brothers, the company grew known for its signature blend, “Mocha Italia.” By 1978, they were distributing Mocha Italia to some of the most well-known establishments in the city.
Following their success, Costa Coffee decided to open up their own coffee shop in 1981. They became the first coffee shop in London to serve espresso in porcelain cups. Between their signature blend and authentic take on serving espresso, Costa Coffee quickly rose the coffee industry ladder.
Why It Matters
Today, Costa Coffee is the top-performing coffee retailer in the UK with 2,681 storefronts, beating out both Greggs and Starbucks. The company also brought in £880.59 million in 2019, situating themselves as coffee leaders.
Costa Coffee is a Coca-Cola Company brand. To purchase Costa Coffee stock, you’ll need to invest in Coca-Cola through NYSE, stock symbol KO.
Because Coca-Cola owns so many brands, investing in it to get a piece of Costa Coffee is a safer bet than a single brand owner in the food and beverage sector. Though KO stock does fluctuate from time to time, it typically sees growth. Variations in stock have seen an increase of 29.16% in the past five years.
2. Starbucks (NASDAQ)
In 1971, the first Starbucks opened in the famous Pike Place Market in Seattle, Washington (US). The company is now a massive contender in the coffee industry. You can find them in airports, malls, university campuses — they are everywhere you go.
Besides strong coffee and unique blends, Starbucks emphasises ethical practices in how it treats its employees and supply chain. They are making efforts to reduce their carbon footprint, pay for employee’s college education, and take steps to better their surrounding communities.
Why It Matters
In 2020, Starbucks had a total of 1,025 stores in the UK, with only 288 company-owned stores (the rest are franchise run). Despite seeing a loss due to the pandemic, total revenue still hit high on the charts with £243 million.
Starbucks isn’t going anywhere for a long time, and even if you don’t see them everywhere you go in the UK, the global franchise makes up for it elsewhere (namely, the US). As of 2021, the company is worth 135.77 billion USD. If you’re looking to purchase Starbucks, you can find them on the NASDAQ under the stock symbol SBUX.
3. Nestle (NSRGY)
Nestle started in 1866 and 1867 as the Anglo-Swiss condensed milk factory and Henri Nestle’s baby food company. The two merged to form the Nestle Group in 1905. Now with over 400 factories in 197 countries, Nestle is a leader in the food and beverage industry with a strong foothold in the coffee industry as well.
Why It Matters
By far, the most popular instant coffee in Great Britain is Nescafe — a leading product in the Nestle lineup. In 2020, 13.7 million people purchased the product, with five million buying the Original blend. Though having dropped from seven million, this is still more than Nescafe’s competitor Kenco saw in annual sales that year.
Investors can purchase Nestle stocks through NSRGY under Nestle SA. Company growth is promising, as global sales increased by 1.5% in the first six months of 2021. Though its baking and frozen goods led the charge, its coffee sales were still a significant contributor. Nestle has a lot to fall back on, with a diverse range of products. It’s definitely a stock to look into, and its resilience during the pandemic showed investors just how well it performs under global pressure.
4. Caffe Nero (LSE)
Founder and CEO of Caffe Nero, Gerry Ford, never intended for Caffe Nero to become a massive corporation. He wanted to open up traditional Italian cafes around Europe, focusing on one customer and one cup of coffee at a time. But between the big dream and the big taste, Caffe Nero was bound to break through at some point. The company started gaining the attention of major reviewers in 2002 when it was rated for ”best coffee quality” in the Allegra Report — and it kept earning these rankings.
It is now the third-largest coffee retailer chain in the UK, with well over 700 stores in 11 different countries.
Why It Matters
Being one of the newer names in the UK coffee industry doesn’t hurt, especially when the market is saturated by Starbucks and instant coffee. We should pay special attention to Caffe Nero as its overall store performance and increasing popularity puts it in a position to move upwards with the global market and close the gap between other coffee-retail competitors.
Finally, a coffee stock you can trade domestically! You can find Caffe Nero in the London Stock Exchange under CFNA. Of all of Nero’s stores, 95% are company-owned. Of these company-owned stores, 98% are profitable. And in June 2021, as COVID-19 restrictions eased in London and around the world, Caffe Nero saw an incredible 82% increase in sales. If this continues, the company’s stock future looks bright.
Coffee is a strong industry to get involved with — even during a pandemic! Though we only listed the top-performing coffee stocks here, we suggest looking into public companies that sell coffee as part of a bigger lineup of products, similar to Nestle.