Investing in Coffee Stocks

Not many consumer products are truly timeless, but coffee passes the test. According to legend, a goat herder in Ethiopia discovered coffee more than 1,000 years ago after noticing the effects that the coffee plant had on his herd. Today, about 1 billion people around the globe drink coffee daily, making it the most popular beverage in the world.

Although Starbucks has long seemed ubiquitous, the café chain continues to grow. It's expanding in China, now its second-largest market, where it's adding around 500 stores a year, and it recently took on a joint venture partner, Boyu Capital, to help drive its store base in China from 8,000 to 20,000 over time.

Starbucks was among the first restaurant chains to recognize the potential of a mobile app. It was a pioneer in areas such as digital payments, a rewards program, and mobile order and pay, allowing customers to order remotely and then pick up their orders upon arrival.

In addition to its cafés, Starbucks has a thriving business selling bagged coffee, ready-to-drink beverages, and other such products in supermarkets and convenience stores. The company has partnered with Nestlé on the Global Coffee Alliance, tapping the global food conglomerate to produce many of its products and sell them in new territories.

Although Starbucks may seem like a mature company, it still has growth opportunities, as it continues to open new stores and find new ways to grow.

The business has struggled through 2024 due to new low-priced competition in China and complaints about slow service in the U.S. However, investors are hopeful that new CEO Brian Niccol, whom the company poached from Chipotle (CMG -2.55%), can turn the business around.

Niccol has focused on bringing a human touch back to the brand, with baristas handwriting names on cups and serving drinks in mugs for customers staying in the café. In the company's fourth-quarter 2025, it reported positive global comparable sales for the first time in seven years, a sign that the turnaround is making progress.

In addition to opening new stores in China and elsewhere, the company is leveraging its potential in digital and delivery to make its existing store base more efficient. Starbucks has been a monster stock over the course of its history, but it might have to reinvent itself again to outperform the market.

2. Keurig Dr Pepper

The formation of Keurig Dr Pepper (KDP) was the result of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple. It was engineered by JAB, the private German holding company that's become a coffee juggernaut. The coffee companies that JAB owns outright or has significant stakes in include Keurig Dr Pepper, Krispy Kreme (DNUT +0.11%), Caribou Coffee, Peet's Coffee, and Panera.

Since it's a private company, investors can't own shares in JAB. But coffee investors should be aware of the company's influence on the industry since it's taken a number of coffee businesses private in recent years. It also led Krispy Kreme's initial public offering (IPO) in July 2021. As of May 2025, JAB owned 4.4% of Keurig Dr Pepper.

As a diversified beverage company, KDP owns a wide variety of brands in coffee and soft drinks, including Snapple, Canada Dry, Green Mountain, Mott's, and its namesake brands -- but coffee is the star here. About 40 million U.S. households now have a Keurig brewing system.

The Keurig system benefits from the razor-and-blades business model: Consumers have to buy high-margin K-Cup pods if they want to continue to use their machines. The investment in Keurig also dissuades users from switching to a competitor.

Now, Keurig Dr Pepper is undergoing another change that will split the company into two following its acquisition of Dutch coffee giant JDE Peet for $18 billion. Following the closing of that deal, which is expected in the first half of 2026, the company will split into a pure-play coffee company and a pure-play beverage unit, effectively unwinding the merger that created Keurig Dr Pepper.

Coffee investors should keep an eye out for the split, as the new pure-play coffee stock will be one of the biggest in the world.

3. Nestlé

Nestlé, the world's biggest food business, is a diversified conglomerate with more than 2,000 brands across categories such as coffee, tea, bottled water, candy and sweets, soups, condiments, and pet food. Although a company this diversified can't be distilled into a single product, coffee is a major component of its business, and brands such as Nescafé, Nespresso, and Coffee Mate are known around the world.

For fiscal 2025, which ended April 30, 2025, the U.S. retail coffee segment made up 32% of Smucker's total sales, or $2.8 billion of its $8.7 billion in total revenue. It's now the company's biggest category after it sold several pet food brands, including Rachael Ray Nutrish and 9 Lives. The coffee segment's revenue rose modestly in fiscal 2025, up 4%.

However, as is the case for the other companies on this list, coffee is a high-margin business for Smucker, generating an operating profit margin of 28% in 2025. That makes coffee the company's most profitable segment both by margin and volume. In fiscal 2024, coffee made up 37% of its operating profits.

With a collection of well-known brands and leadership in the U.S., coffee should continue to drive strong profits for Smucker.

5. Dutch Bros

After its September 2021 IPO, drive-thru-focused coffee chain Dutch Bros may be the latest to grab the mantle of the "next Starbucks." The Oregon-based coffee slinger is growing quickly, and it's easy to see why it has attracted so much attention from investors.

Employing a drive-thru model, Dutch Bros had more than 1,000 locations as of March 2025, and it's spreading across the country, operating in 18 states in mid-2025. This rapid growth and white-space opportunity make a bull case for the stock, as Dutch Bros sees room in the market for 4,000 locations.

The company's drive-thru model helps differentiate it from coffee chains like Starbucks, and its high average unit volumes indicate strong demand. Dutch Bros finished 2024 with average sales of $2.02 million at its stores, better than most fast-food restaurants.

Dutch Bros is now profitable on a generally accepted accounting principles (GAAP) basis, and its profitability should improve as the company gains more brand awareness and expands. For a coffee stock, Dutch Bros is expensive, but the underlying business looks promising, and the stock should reward investors if the company can reach its goal of opening 4,000 stores.

6. Black Rifle Coffee Company

Black Rifle, which went public through a special purpose acquisition company (SPAC) merger in February 2022, puts a unique spin on a commodity product by branding for a specific customer subset -- conservative Americans and veterans in particular. The company's mission is "to serve premium coffee and content to active military, veterans, first responders, and those who love America."

That distinct branding and its direct-to-consumer origins and marketing have helped the company quickly build brand awareness and sales. In 2024, its growth hit a wall. Revenue fell 1% to $391.5 million as earlier tailwinds from the COVID-19 pandemic that supported online sales of its coffee and branded merchandise unwound. However, its profitability improved, and its wholesale business grew.

Unlike the typical coffee company, Black Rifle also defines itself as a media company, and it's a lifestyle brand as much as a coffee brand. The company puts out a magazine and is active in political and cultural issues with its blog and on social media.

With a brand that also functions as an identity, a key component of its strategy is selling branded merchandise, such as apparel and equipment, that helps build awareness and gives its customers a way to signal their affinity for the brand.

Black Rifle has begun opening its own stores, which it calls "outposts," and had 36 locations at the end of 2024. However, most of its revenue now comes through the wholesale channel since it also sells ready-to-drink and bagged coffee through retailers such as 7-11, Publix, and Walmart (NYSE:WMT).

The company is also expanding beyond coffee with a new line of ready-to-drink Black Rifle Energy drinks. While Black Rifle's business model is still evolving, its unique brand has a loyal following, which can be a valuable asset in a competitive industry such as coffee.

7. Luckin Coffee

Luckin Coffee may be best known for an accounting scandal that sunk an earlier iteration of the company, leading to its delisting from the Nasdaq in 2019 and its bankruptcy. However, the company emerged from bankruptcy, restructured, and has built a viable and growing business under new ownership.

The core concept is essentially the same as the original. Luckin, which is based in China, is undercutting Starbucks, which pioneered the coffee market in China. In fact, Luckin is now larger than Starbucks in China both in terms of store count and China-based revenue.

It has challenged Starbucks by blanketing China with stores and beating it substantially on price. It also appeals to a younger, price-conscious demographic looking for a daily dose of caffeine rather than the third place Starbucks is known for being.

As of November 2025, the company had a market capitalization of $11 billion and was seeing growth driven by both new stores and double-digit same-store sales growth. Luckin has even begun expanding outside of China and now has two stores in New York City.

The Chinese coffee chain has been one of the most surprising comeback stories in the market. Despite its earlier troubles, its formula now seems to be working.

8. Restaurant Brands International

Restaurant Brands International is a diversified restaurant operator with franchises like Burger King, Popeyes, Firehouse Subs, and Tim Horton's under its umbrella. Tim Horton's is the biggest source of profit of those four chains, so it makes sense to consider the company if you're interested in coffee stocks. Through the first half of 2025, Tim Horton's contributed $803 million in adjusted operating income out of a total $1.91 billion.