These are two companies that have two different growth trajectories. For additional information on our reportable segments, see Note 4: Reportable Segments. International and Away From Home represents sales outside of the U.S. retail market segments in total comprised 87 percent of 2022 consolidated net sales and represent a major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America. In addition to our flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee, Ethos, Starbucks Reserve and Princi. We also sell a variety of coffee and tea products and license our trademarks through other channels, such as licensed stores as well as grocery and foodservice through our Global Coffee Alliance with Nestlé S.A. Formed in 1985, Starbucks Corporation’s common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “SBUX.” We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of high-quality food items through company-operated stores. Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 83 markets. The price of a Starbucks latte may need to come down to meet demand. The price of a can of Folgers is already palatable. Smucker's margins to grow while Starbucks may recede. Smucker sells Folgers and other coffee brands which are an inferior good and a direct substitute for Starbucks' products. Smucker is a hedge against coffee prices in general. Having the PB&J and dog food businesses that come along with J. However, I see this as a hedge against coffee consumption and prices period. Smucker is not 100% in coffee, so the commodities mix spread across the various businesses is quite different. has a lower cost of goods sold and a higher gross profit margin. Starbucks:Īs an observation of cost controls, we can see that J. In light of prices of everyday consumer staples being more sticky than the underlying commodities themselves, let's see how the cost of goods sold situation is working out for both of them. Both are experiencing pinches in their profit margins due to inflation, however, once inflation subsides, a tough economic situation can remain. The greater thesis of this comparison is not to pit a little guy against a pure coffee play juggernaut, the point is to observe which direction the coffee market is going as belts tighten. Smucker Company has been increasing revenue at a much lower clip, its net income has remained better intact from a standard deviation consideration. Regardless of what investors assume is coming down the pipe, Starbucks invariably has the more attractive market reputation and obvious coffee play. Starbucks wins round one, the momentum wars. Let's square these two coffee centric companies off. At least until your student loans are paid off. Will they be able to afford that triple macchiato soy double whipped latte? Or will they stock the shelves with Grandma and Grandpa's red can of yore? You know, the best part of waking up might be Folgers in your cup. Youngsters will have to start repaying those student loans they forgot about. The narrative in the pipeline is there's a recession on the loose in the future. Smucker brand, but also one that accounts for 31% of the company's sales and 43% of its profit. The owner of the Folgers coffee brand, this product sits on the shelves of many an American household. On the flip side of the coffee coin, we have The J. So if they never want to go that route, do I want to be involved? The argument that the Franchise model would be injurious to the Starbucks brand may be valid. Unlike McDonald's Corporation ( MCD ), this seems to be part of the reason the top line never dropped to the bottom in the same way. The Franchise model which would seem to be such an obvious value unlocking was never pursued. Starbucks Corporation ( NASDAQ: SBUX ) is a stock that I always wanted to like.
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