The potential is brewing for coffee shares and the iPath Dow Jones-UBS Coffee Subindex Total Return ETN (NYSEArca: JO). The coffee-futures ETN was up nearly 15% for the three months ended April 11.
The coffee ETN is on a run along with other commodities, especially after the floods in Australia have created a supply glitch. Adding to the demand is the rise of emerging economies such as India. Jane Shi for 2poin6billion reports that as India’s domestic taste for coffee rises, the path has been set for Starbucks (NYSE: SBUX) to segue.
As India’s tea drinking is rivaled by coffee, Starbucks has set a course for entry into a young market by partnering with India’s Tata Coffee – the largest coffee plantation in India and parent company of Eight O’Clock Coffee Co. Together the two conglomerates are sourcing premium coffee, with the idea of adding another 5,000 cafés within the next five years in addition to the existing 1,400.
Keep in mind that there are an anticipated 1,500 total outlets Starbucks expects to have in operation by the end of this year in China alone. PowerShares Dynamic Leisure and Entertainment (NYSEArca: PEJ) holds 5.5% in Starbucks. Likewise, PowerShares Dynamic Food and Beverage (NYSEArca: PBJ) gives 5.5% to SBUX.
Tisha Guerrero contributed to this article.