Coffee Wars In Recession: Starbucks Vs. The J. M. Smucker

Brett Ashcroft Green
7.93K Followers

Summary

  • Starbucks' non-franchise model may be limiting its value, but the company is hesitant to change due to potential harm to the brand.
  • J.M. Smucker Company's Folgers coffee brand is a strong competitor and substitute, accounting for 31% of the company's sales and 43% of their profit.
  • The potential recession and student loan repayments may impact consumer choices between Starbucks and more affordable coffee options like Folgers.

Woman drinking coffee from large disposable cup at take away counter of cafe

Klaus Vedfelt

I always wanted to like Starbucks

Starbucks Corporation (NASDAQ:SBUX) is a stock that I always wanted to like. The Franchise model which would seem to be such an obvious value unlocking was never pursued. Unlike McDonald's Corporation (

This article was written by

7.93K Followers
I'm a full time value investor and writer who enjoys using classical value ratios to pick my portfolio. My previous working background is in private credit and CRE mezzanine financing for a family office. I'm also a fluent Mandarin speaker in both business and court settings, previously serving as a court interpreter. I have spent a good chunk of my adult working life in China and Asia. I have worked with top CRE developers in the past including The Witkoff Group , Kushner Companies, Durst Organization and Fortress Investment Group.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of MCD, SJM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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