America's 7 Best Coffee Brands

What is the relationship between America's favorite coffee and investing? Here's what you need to know.

Mar 18, 2014 at 6:30PM

Entrepreneur Marc Rougier put it best when he said, "Brands are the irrational power of our supposedly free and rational world."

Our devotion to the products we surround ourselves with on a daily basis doesn't always make sense, but as investors we can incorporate this relationship into winning investment strategies. We can embrace the irrational and consider the business impact of customers clinging to a brand when everything else -- including reason -- goes by the wayside.

With that in mind, today we're examining the country's top brands for ground coffee, looking for the strongest players among industry heavyweights like Starbucks (NASDAQ:SBUX), J.M. Smucker (NYSE:SJM)Dunkin' Brands (NASDAQ:DNKN), Keurig Green Mountain (NASDAQ:GMCR), and others.

Coffee

Pour it on
We begin by considering data from the 2014 Harris Poll EquiTrend rankings. This is a consumer-based poll that measures brand equity, connection, and buzz. Harris polls 40,000 Americans on aspects such as familiarity, quality, purchase consideration, and a brand's ability to generate conversation online, offline, and across the various social media platforms. The poll's ground coffee rankings are as follows:

Rank

Brand

Producer

1

Dunkin' Donuts

J.M. Smucker

2

Green Mountain Coffee

Keurig Green Mountain

3

Folgers

J.M. Smucker

4

Seattle's Best

Starbucks

5

Maxwell House

Mondelez

6

Caribou

Joh. A. Benckiser

7

McCafe

McDonald's

Source: 2014 Harris Poll EquiTrend Rankings.

There are a few surprises on this list. First, though Dunkin' Brands is in charge of the Dunkin' Donuts brand, J.M. Smucker is actually the company responsible for the ground coffee you pick up at the grocery store. In this particular niche of the coffee market, Dunkin' does the branding work, and J.M. Smucker reaps the reward.

Whether or not that tag-team is enough to fend off Keurig Green Mountain and its popular K-cup brewing system remains to be seen. It finished second in this poll a year ago as well, cementing itself as a top brand in the industry.

The other intriguing aspect of this list is the fact that Starbucks is not on it, apart from its production of Seattle's Best. Though the company's stores may be extremely popular with consumers all over the world, its ground coffee ranked below average in the poll, and thus was not included here. Investors should make a note that brand strength in one niche is not necessarily transferrable to the next. Starbucks finished with a below-average rating last year as well, and it will be interesting to see if it can do anything to improve its position going forward. 

The real takeaway here might be the simple fact that despite the third-wave coffee movement and the rise of locally roasted beans, Americans are still attached to low-end grounds like Folgers and Maxwell House. And really, with two of the top three brands, Folgers parent J.M. Smucker looks like a champ here.

Drink it up
Sometimes polls like this one seem like nothing short of popularity contests. They are, but that's exactly why they are valuable to investors. According to a 2012 study, consumer-based brand polls exactly like this one are a better indicator of brand equity than financially derived brand rankings.

The study, put together by researchers at Georgetown University, shows that not only does your brand matter, but it correlates with success in the financial markets. The researchers tested their hypothesis using data from the financial crisis and determined that not only is brand equity important, but stronger brand equity correlates to better stock performance, lower volatility, and lower beta.

It's all the more reason to keep brand in mind as we build our portfolios.

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Aimee Duffy owns shares of Starbucks. The Motley Fool recommends Keurig Green Mountain, McDonald's, and Starbucks. The Motley Fool owns shares of McDonald's and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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