Coffee is hot. And I'm not just talking about the beverage. I'm referring to the market.
Coffee is more than popular: it's everywhere. No other beverage is as revered or respected. It can be seen in offices, during commutes, and on kitchen counter tops worldwide.
After crude oil, coffee is the most sought commodity on Earth and is worth an astonishing $100 billion worldwide.
There are 500 billion cups of coffee consumed each year, and Coffee farms are the economic livelihood of over 25 million people.
Over half of Americans over the age of 18 drink coffee daily.
So as you can see, this is a robust industry that isn't going away anytime soon.
"But where is the growth?" you may ask.
The growth is in two places:
(1) New gourmet brands that capture a slice of this enormous market, and
(2) New means of delivering the product to the masses.
Let's explore these areas…
Coffee is now more like wine…. Thanks to Starbucks and the great surge in local coffee shops, people have discovered that different coffees taste, well, different. And that gourmet coffee is much better than the average mass produced tub purchased at the local supermarket.
Accordingly, the gourmet blends is where the industry is seeing growth. I like Marley Coffee (OTCPK:JAMN), now in over 6,000 stores, and have seen their stock double in recent months. Huge upside potential for this emerging player in market.
I also like Whole Foods (WFM). Whoa! That's not a coffee company! True, but as a certified organic grocer, they are selling a lot of the brands that are growing the fastest. The investment community is pretty bullish on Whole Foods, and I agree… and as Whole Foods grows, so does the gourmet coffee industry.
Finally, let's look at how coffee is delivered to the masses. It used to be at the grocery store. Then coffee shops took a big slice of that market share. Now, new automated coffee stores are taking a slice of the market.
I still love AVT (AVTC) - that fast rising company that can take just about anything and put it into an automated, self-service "kiosk" or micro store.
AVT is now on their 3rd generation Marley Coffee Automated Store, and they are not only unique, but they deliver an exceptional cup of coffee. These machines start each order by grinding the whole beans, then add filtered water, and can deliver 15 types of coffees, espressos, mochas, and cappuccinos that are actually better than what you would get at Starbucks.
These systems can go virtually anywhere - college campuses (AVT just signed a deal with the Neebo - the nation's leading campus bookstore operator), malls, airports, retail stores, factories, office buildings… really just about anywhere that there are people that like to drink coffee, which we've already established, is everywhere.
The stock is currently at down off their 52-week high and a value.
An analyst at T. Rowe Price wrote that the automated coffee market is a great area for investors right now. "Coffee is a particularly dynamic segment at the moment," the report said. "It's really been driven by innovation, and the key driver of that is what's gone on in the out-of-home market."
And, if you've been reading closely, you will note that the "out-of-home market" is what AVT is capitalizing on.
I think the coffee market is hot… and these companies will all brew nice profits well into the future.