Why Starbucks Will Grow

Starbucks (SBUX) is going to be a larger company 3, 5, and 10 years from now. The main reason Starbucks will grow is because coffee and tea are both enormous markets, domestically and globally. Second, Starbucks has low penetration rates in terms of the number of locations it has, especially in the BRIC countries. Finally, Starbucks has nice potential for growth in packaged coffee, ready to make beverages, and the instant coffee markets, especially internationally.

Coffee is an incredibly large market, domestically and globally. According to coffee-statistics.com, in the United States 400 million cups of coffee are consumed daily, or 146 billion cups per year, making the United States the leading consumer of coffee in the world. According to the Buck County Coffee Company, there are 1.4 billion cups of coffee sipped per day, making it one of the most consumed beverages in the world. You may prefer McDonald’s (MCD), Dunkin Donuts, Peet’s Coffee & Tea (PEET), Panera Bread (PNRA), or an independent house’s coffee, but I believe the coffee market is so large that there is more than a reasonable chance that Starbucks will be able to continue to grow its revenues and profits in the coffee segment.