In this article, we will take a look at the issues plaguing the global coffee market as well as the 10 best coffee stocks to buy according to hedge funds.
The Global Coffee Market Continues to Struggle
According to a report by Mordor Intelligence, the global coffee market size is estimated at $132.13 billion in 2024 and is expected to grow to $166.39 billion by 2029, growing at a compound annual growth rate of 4.72% during the forecast period. Over the last 2 years, coffee prices have hit multi-year peaks. Reuters reports that global coffee prices have risen to their highest in nearly 50 years. This has been the result of poor weather in Brazil and Vietnam.
Brazil produces almost half the world’s high-end beans used primarily in roast and ground blends. The country has been the victim of one of its worst droughts on record this year. While rains did come in the month of October, they might have been too late. According to farmers and agronomists, the coffee trees are unable to recover for the 2025 crop. The next crop is not expected to be big. It is believed that coffee trees that have suffered from the dryness would be using energy to produce leaves, instead of fruits, after the rain. This means that there will be barely enough energy in the crops to develop fruits after flowering.
The other major coffee producer Vietnam produces roughly 40% of the robusta beans used to make instant coffee. The country was subjected to a severe drought earlier in 2024 which was followed by excess rains since October, with the current harvest following 3 years of supply deficits.
How’s the End Market Likely to Suffer?
The soaring coffee prices are casting their impact across the value chain as they hurt roasters and cafes and eventually the customers. Consumers are expected to see the price spike in 6 to 12 months since roasters tend to buy coffee months in advance. The Nescafe and Nespresso maker Nestlé has decided to raise prices and make bags smaller with beans getting expensive. Especially for the American coffee enthusiast, imported goods such as coffee beans are likely to witness markups if the new administration decides to impose tariffs on coffee-producing countries. Before the potential price hikes from tariffs hit, many Americans are already stockpiling various goods including coffee.
With that being said, let’s move to the 10 best coffee stocks to buy according to hedge funds.
Our Methodology:
In order to compile a list of the 10 best coffee stocks to buy according to hedge funds, we went through stock screeners, relevant ETFs, and media reports to make a list of coffee stocks. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best coffee stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund holders as of Q3.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Farmer Bros. Co. (NASDAQ:FARM)
Number of Hedge Fund Holders: 5
Farmer Bros. Co. (NASDAQ:FARM) is a coffee roaster, wholesaler, and service provider, specializing in regular and specialty coffee, and allied products, such as tea and food items in the US. The brand has remained dedicated to perfecting roasting techniques and sourcing practices to bring forward the finest coffee since 1912. The firm delivers traditional, premium, and specialty coffee products to businesses across America.
Farmer Bros has set the benchmark for quality coffee, tea, and culinary products for more than a century. The firm boasts one of the largest independent networks, serving approximately 30,000 establishments across 49 states. The large, established direct store delivery (DSD) network also allows for scaled rollout of new on-trend products and services.
Farmer Bros. Co. (NASDAQ:FARM) efficiently cleared the path for profitable growth through the sale of its direct ship business in June 2023 thereby creating a streamlined focus on its higher-margin business, direct store delivery. This strategic move eliminated lower gross margin business and improved roasting efficiency.
Lastly, the industry dynamics poise Farmer Bros. Co. (NASDAQ:FARM) for growth. The coffee market outlook is improving and the industry is expected to reach $83.24 billion in 2027, growing at a compound annual growth rate of 5.9%. Especially in America, coffee consumption is at a two-decade high, with 66% of Americans drinking coffee every day.
9. Westrock Coffee Company (NASDAQ:WEST)
Number of Hedge Fund Holders: 6
Westrock Coffee Company (NASDAQ:WEST) is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States. The firm provides coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to retail, food service and restaurant, convenience store and travel center, non-commercial, and hospitality industries around the world. The firm sources coffee and tea from 35 origin countries.
Coffee is the foundation of the firm as it exceeds expectations with a catalog of coffees. The firm serves leading brands with coffee solutions that drive customer satisfaction and business growth. Westrock’s decades of global experience in creating tailored beverage solutions, its insight-driven innovation, extensive production capacity, and global sourcing network are some of its notable strengths. Westrock Coffee thereby serves as a true beverage partner to its customers, delivering unparalleled expertise and innovation across the entire beverage value chain.
Back in June, Westrock Coffee Company (NASDAQ:WEST) launched the largest roast to ready-to-drink manufacturing facility in North America, located in Conway. The Conway facility, the largest integrated beverage facility of its kind, marked a major milestone for the firm as it uniquely positioned WEST as a leading force in beverage production across any channel and beverage format.
Although the macro environment has been recently challenging for the consumer, Westrock Coffee Company (NASDAQ:WEST) had a strong third quarter of 2024, with quarterly segment adjusted EBITDA for Beverage Solutions up 19% year-over-year. Simultaneously, the Sustainable Sourcing & Traceability segment was up 45% year-over-year for the quarter.
8. BRC Inc. (NYSE:BRCC)
Number of Hedge Fund Holders: 10
BRC Inc. (NYSE:BRCC), the Black Rifle Coffee Company, is a Veteran-founded, mission-driven premium beverage company as it was founded by Green Beret Evan Hafer in 2014. The company serves premium coffee to people who love America. Additionally, the company offers apparel, accessories, and gear such as mugs, cups, glasses, and tumblers.
BRC Inc. (NYSE:BRCC) has dominated the premium coffee space for nearly a decade and is one of the fastest-growing brands in the ready-to-drink coffee space. The firm is on track to have its coffee products in most major grocery chains by the end of 2025. The mission-driven premium coffee company is a strong disruptor that strives for an innovative brand strategy that is unique as compared to big names in the coffee industry. With a patriotic mission of supporting Veterans, active-duty military, and first responders, the coffee company secures a loyal consumer base which strengthens its business and drives successful growth in new markets.
BRC Inc. (NYSE:BRCC) is ready to enter into the energy product category with the launch of a new line of high-octane, ready-to-drink Black Rifle Energy beverages. While the firm has plans to launch Black Rifle Energy™ RTD in Q4, it believes it to be a major addition to its portfolio which tends to expand consumption opportunities and complements the firm’s coffee offerings.
7. Restaurant Brands International Inc. (NYSE:QSR)
Number of Hedge Fund Holders: 29
Restaurant Brands International, Inc. (NYSE:QSR) is one of the largest quick service restaurant companies globally. The company is the owner of the popular coffee chain Tim Hortons, and also owns Burger King, Popeyes, and Firehouse Subs.
Tim Hortons has been in operation since 1964 and has a network of over 5,800 restaurants across 15 markets. It is one of North America’s largest restaurant chains operating in the quick service segment. As emphasized by Josh Kobza, chief executive of Restaurant Brands International, Tims is the top value-for-money in Canada and one of the only major quick service restaurant brands in the market with positive traffic growth in year-to-date. He reiterated Tim’s dominance by saying:
“Tims’ No. 1 restaurant brand-love and No. 1 value positioning allow us to maintain our leading market share in coffee, baked goods and breakfast sandwiches and wraps”
The brand remains resilient with the increase in system-wide sales during the firm’s recent quarter, primarily driven by comparable sales of 2.3%, including Canada comparable sales of 2.7%. A positive sign for the brand is the population growth in Canada which implies more customers potentially for Tims. To benefit from the opportunity, the firm plans to open new locations, particularly in the western provinces.
6. The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 30
The J. M. Smucker Company (NYSE:SJM) is an American manufacturer of food and beverage products. The firm has a portfolio of leading brands across coffee, dog snacks, cat food, peanut butter, fruit spreads, frozen handheld, and sweet baked goods among others.
The firm leads the U.S. at-home retail coffee category with iconic and emerging brands such as Folgers, Dunkin’, and Café Bustelo. More Americans tend to start their day with a cup of coffee at home from a Smucker coffee brand than any other company. The firm offers products to meet consumers’ taste preferences, increasingly for darker, premium roasts, and convenience needs, including one-cup and ready-to-drink solutions.
Café Bustelo recently introduced the Café Bustelo Espresso Style Iced Coffee Beverages, the brand’s first-ever multi-serve product made to be enjoyed cold, thereby bringing the tradition of tits beloved espresso style coffee to the refrigerated aisle for the first time in its 96 years of history. This was after the brand noticed many of its coffee customers reaching more and more for iced coffee while wanting the iconic flavor of Café Bustelo’s espresso style roasts. Thus, accessibility to Café Bustelo’s coffee to consumers across the U.S. is currently being driven through geographic and format expansion.
The firm’s US Retail Coffee segment remained robust in the second quarter of its 2025 fiscal year. Net sales increased 3% as compared to the prior year period. Net price realization increased net sales by 3 percentage points, mainly driven by higher net pricing for mainstream roast and ground and instant coffee. The overall quarter witnessed organic net sales and earnings growth above the firm’s expectations with strength from the Café Bustelo, Uncrustables, Meow Mix, and Jif brands.
5. Dutch Bros Inc. (NYSE:BROS)
Number of Hedge Fund Holders: 37
Dutch Bros (NYSE:BROS) came into being in 1992 as a pushcart when the founders Dane and Travis Boersma decided to sell Expresso in downtown Grants Pass, Oregon. The company grew over the years with the first franchise opening in Oregon in 2000. Currently, Dutch Bros is a high-growth operator and franchisor of drive-thru shops that serve beverages. Dutch Bros has coffee classics, protein coffee, seasonal drinks, shakes, smoothies, and snacks among others to offer to its customers.
Although Dutch Bros doesn’t have a market share as compared to incumbents such as Starbucks, what deems Dutch Bros attractive is its exemplary growth story. The company expanded from a double-head espresso machine and a pushcart to 950 locations across 18 states. The firm is one of the fastest-growing brands in the quick service American beverage industry by location count.
Dutch Bros’ growth story, hand-crafted and high-quality beverages, and its unique drive-thru experience are complemented by its community-driven, people-first culture. Dutch Bros believes the firm to be more than the products it serves. The sense of community engagement boasted by the firm fosters loyalty among its customers.
The brand continues to resonate with customers as it recently witnessed the highest same shop transaction growth quarter in two years. With a 28% revenue increase and a 2.7% systemwide same shop sales growth, the firm closed the third quarter. The growth story continues for Dutch Bros with the opening of 38 new shops during the quarter.
4. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 38
Keurig Dr. Pepper Inc. (NASDAQ:KDP) is a leading beverage company in North America that has a portfolio of over 125 owned, licensed, and partner brands. The company offers ready-to-drink beverages catering to diverse tastes including carbonated soft drinks, tea, still or sparkling water, juice, and non-alcoholic mixers. In the ready-to-brew category, specialty coffee and other specialty beverages in K-Cup pods are offered.
Keurig boasts a leadership position in liquid refreshment beverages, including soft drinks, specialty coffee and tea, water, juice and juice drinks and mixers, and markets the top single serve coffee brewing system in the US and Canada. A consumer-centric innovation model is what has helped Keurig Dr. Pepper capture the market of 45 million North American coffee consumers who use Keurig brewers. The company is known for transforming the way consumers brew coffee through the introduction of the K-Cup pod single serve coffee system.
Driven by the strong US Refreshment Beverages segment and international momentum, Keurig closed a solid Q3. Net sales for the third quarter rose 2.3% to $3.9 billion. The firm looks forward to a strong finish to 2024 and a healthy 2025 based on an improvement in its volume/mix performance despite a muted operating environment and cost discipline throughout the organization.
In the US coffee segment, Keurig Dr. Pepper Inc. (NASDAQ:KDP) continued progress despite a soft recent quarter, positioning the firm for success when the category recovers. Other than having a healthy pod market share, KDP witnessed double-digit brewer unit growth which reflects stabilizing coffeemaker category trends and ongoing share gains.
3. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 60
The multinational fast food chain McDonald’s Corporation (NYSE:MCD) introduced the world’s first McCafé in Melbourne, Australia in 1993. McCafé coffees including lattes, cappuccinos, and mochas were added to the US national menu in 2009. It then rapidly expanded to include blended ice frappés and smoothies, triple-thick shakes as well as limited-time seasonal offerings.
McDonald’s Corporation (NYSE:MCD) has a dominant coffee business as the chain sells almost 8 million cups a day. In 2023, the firm announced that it is piloting a new cafe concept, CosMc’s, which would be selling indulgent, highly customizable caffeinated beverages with some food. With the sales of specialty coffee at quick-service restaurants rising and coffee shops being a growing category in the US, MCD’s move made sense as it could sell customizable coffee drinks without slowing down kitchens and service times.
Recent news from the firm’s coffee business is that it has temporarily stopped selling espresso drinks at some US locations as a result of the espresso machine making its fancy McCafé drinks temporarily disabled due to a safety issue. While the fastfood chain told CNN that iced and hot brewed coffee have not been affected and remain available for sale, customers of espresso-based drinks including macchiatos and Americanos suffer while the firm determines the scope of the issue.
2. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
The Coca-Cola Company (NYSE:KO) is a major beverage company with 2.2 billion servings of its drinks being enjoyed in more than 200 countries and territories each day. The firm’s beverage portfolio has expanded to over 200 brands and thousands of beverages across the globe, from soft drinks and waters to teas and coffees.
The Coca-Cola Company (NYSE:KO) has a major presence in the global coffee market as it acquired Costa, which marked an acquisition that gave the firm a strong, global coffee platform with a footprint in over 30 countries and much potential for future growth. While hot beverages were one of the few segments of the total beverage landscape where Coca-Cola did not have a global brand, as reiterated by the CEO Coca-Cola President and CEO James Quincey, Costa gave the firm access to this market with a strong coffee platform.
Costa Coffee has more than 50 years of experience in crafting the finest quality coffee. While its story began back in 1971, Costa Coffee has transformed over the years into a global brand, with over 4,000 stores in 32 different countries. With an exposure so broad and a brand name so widely recognized as in Costa’s case, The Coca-Cola Company (NYSE:KO) is an important coffee stock in the global coffee arena.
1. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 76
Starbucks Corporation (NASDAQ:SBUX) is a renowned American multinational chain of coffee houses. The coffee giant started off from a single store in Seattle’s Pike Place Market in 1971 and currently serves as the premier roaster and retailer of specialty coffee globally. With coverage in more than 80 markets, Starbucks offers a wide range of products including coffee, handcrafted beverages, fresh food, and consumer products.
Starbucks Corporation (NASDAQ:SBUX) is a dominant player in the global coffee market and the market share leader in the United States. Starbucks stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,941 and 7,596 stores in the U.S. and China respectively, at the end of Q4. The company has unlocked an extensive brand reputation for itself by effortlessly delivering a personalized experience in 40,199 stores globally.
Starbucks Corporation (NASDAQ:SBUX) is currently fighting its battle against challenged customer behavior. The firm saw declining global comparable store sales and consolidated net revenues as it closed its fourth quarter of fiscal year 2024. The overall fiscal year marked a lower-than-expected performance, driven by the pronounced traffic decline, a cautious consumer environment, and the firm’s accelerated investments in an expanded range of product offerings and more frequent in-app promotions not improving customer behaviors, in addition to China’s competitive as well as soft macro environment that impacted consumer spending in China.
To cater to the aforementioned issues, the management is developing a solid plan to revive growth for the brand. Reiterating Starbucks’ strength and the new plan, Brian Niccol, chairman and chief executive officer stated
“Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that’s exactly what we are doing with our ‘Back to Starbucks’ plan. I’ve spent my first several weeks in stores engaging with and listening to feedback from our partners and customers. It’s clear that Starbucks is a much-loved brand. We need to focus on what has always set us apart — a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas”.
Regardless of the current challenges, Starbucks Corporation (NASDAQ:SBUX) has a lot to offer in terms of global and resilient brand equity, robust store network, and endless growth opportunities as one of the largest coffee houses globally.
While we acknowledge the potential of SBUX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than SBUX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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