There’s no shortage of national days dedicated to something. These events don’t typically mean much to Wall Street. But, today is being designated as National Coffee Day and as result, coffee stocks are on watch. A lot of free coffees are being given away today and the publicly traded companies behind them are enjoying a day of being in the public focus, though not all are in the green.
What’s Happening with Coffee Stocks
Green is a color people commonly associate with Starbucks (NASDAQ:SBUX) and today, that’s appropriate. The multinational coffee giant’s stock is up 0.6% on the day as of this writing. The stock rose steadily throughout the morning and despite a decline this afternoon, it is currently up by over half a percent from where it fell.
It’s also been a good day for the new stock in town, Dutch Bros (NYSE:BROS), which is currently up over 2%. Dutch Bros recently began trading on September 15 and despite some declines last week is still up 21.5% since its debut. The company operates on a drive-through only basis, but so far that hasn’t stopped it from making a name for itself in an industry dominated by large, well established chains.
Today hasn’t been so good for all such competitors, though. Doughnut and coffeehouse chain Krispy Kreme (NASDAQ:DNUT) hasn’t enjoyed the same type of gains and is currently down 1.55% on the day. In addition to the free coffee promised today, Krispy Kreme reward members also received a free doughnut of their choice. As it seems, that deal may not have been sweet enough for Wall Street.
What it Means
Why are coffee stocks up today? For the most part, it’s probably hype. Coffee companies have received considerable attention on Google Trends, likely because people want to find out where they can get a free coffee.
This type of buzz isn’t generally enough to generate any significant gains. But when any sector begins trending on that level, its stocks are worth watching on the off chance that a digital investing circle such as r/WallStreetBets begins pushing either up or down.
One thing that’s worth noting, though, is that Dutch Bros may have an emerging asset. They’ve recently stated that nearly 25% of their sales have been from energy drinks — a market that their competitors have never explored in any serious capacity.
Why it Matters
Hidden assets like this can prove of vital importance to companies looking to establish themselves in competitive consumer markets. While Starbucks has a double shot espresso energy beverage, it doesn’t seem to have ever been a big seller for them.
Dutch Bro’s Blue Rebel, on the other hand, comes in a container that calls to mind the iconic 7-Eleven Slurpee; the likeness is helping the company tap into a demographic younger than the on-the-go worker crowd that accounts for most coffee purchases. Middle and high school students are more likely to avoid coffee, often opting for energy drinks. This drink, presented in this way, could easily catch their eye. It makes sense that this new product would be helping boost sales as much as it has.
Another element of note is the company’s drive-through only model. With this, Dutch Bros is well equipped to operate in a pandemic should another lockdown arise. Coffee stocks will rise and fall but this company is worth watching.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
