Java lovers are getting the cold shoulder, but they don't necessarily seem to mind. Chilled coffee-based concoctions are starting to invade the country's most popular fast-food joints.
(NYSE:BKC)rolled out its Mocha BK Joe Iced Coffee beverage last week.
(NYSE:MCD)has been serving icy blends for months, flavored with vanilla or hazelnut syrups at your request.
(NYSE:WEN)is experimenting with a coffee-flavored Frosty, just as the company is launching a breakfast menu.
Holy Frappuccino! Starbucks
This has to hurt Starbucks, right? Not exactly. Comps have continued to inch higher at Starbucks despite the introduction of premium brews at fast-food chains, convenience stores, and doughnut shops. Even Krispy Kreme
If anything, the cool beverages may be a bigger near-term threat -- and long-term opportunity -- to soft drink sales than conventional coffee cup orders. Overexposure is rarely a good thing, but hasn't the specialty coffee industry done that on its own already? Good luck finding a busy metropolitan block that doesn't already have a Starbucks, Caribou (Nasdaq: CBOU), or Peet's (Nasdaq: PEET) ready to pour you that $3 latte.
Maybe the extra competition will keep markups honest, contracting margins along the way. That would be a real stinker, but let's wait for erosion on that front before we bail on Starbucks and its java-specific peers. Until then, it should be "cool beans" in more ways than one.
For more on these premium priced percolators, check out:
- Fool on the Street: What's in Store for Starbucks?
- Caribou and You Know Who
- Peet's Keeps Percolating
Starbucks is a Stock Advisor recommendation. Krispy Kreme is a former pick of the growth stock newsletter service.
Longtime Fool contributor Rick Munarriz doesn't fancy himself a heavy coffee drinker, even in iced form. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.