Daily Coffee Report 8/11/26
Daily coffee report
StoneX Coffee Team
- Coffee
JAB CEO Looks Back on Past 10 Years, Says Inflation Will Reach Levels Not Seen Since 1970s
By: Alexis Rubinstein, Managing Editor - Coffee Network
JAB CEO Looks Back on Past 10 Years, Says Inflation Will Reach Levels Not Seen Since 1970s
CoffeeNetwork (New York) – In a 10-year investment performance letter to its investors, CEO of JAB Holding, Olivier Goudet, noted that the company has returned 13% annually since 2011 including pay-outs and dividends to shareholders, falling short of their challenging internal target, across the cycles. Still, $1 invested by JAB holding at the end of 2011 is now worth $3.40.
The company’s Post-2011 Assets (Coffee & Beverages, Fast-Casual Restaurants, Indulgence, and Petcare) have significantly outperformed both the MSCI World Index and the 15% yardstick.
Coffee & Beverages
“We saw the opportunity to build a global investment platform in the Coffee & Beverages sector in 2012, created by the growth and premiumization of coffee in an unconsolidated industry,” the note said.
⇨ JDE Peet’s: The first cornerstone of our coffee and beverages platform, JDE Peet’s is now the world’s largest pure-play coffee company after more than 15 acquisitions and partnerships since 2012. To put things in perspective, JDE Peet’s sells 140 billion cups annually representing over 11% of the global coffee market. After a successful jumbo IPO at the peak of the pandemic, the business has shown very strong resilience and operational performance, culminating with record year in 2021, both on top and bottom line, and with nearly €1.4bn of free cash flow generated despite inflationary conditions and an out of home segment hurt by the pandemic crisis. Today the share price is suffering from an overhang and perceived illiquidity discount with a large price / value disconnect. In our view there is a lot of shareholder value for us to unlock in this company especially under the current strong leadership, both medium and long term. It also means there is a high margin of safety on JDE Peet’s, mitigating downside risk.
⇨ KDP: We believe Keurig Dr Pepper is the model of a modern beverage company and pioneer to our investment strategy. The combination of successful cold beverage brands and the Keurig coffee systems has left this business with unparalleled resilience and solid growth. Led by its exceptional, deep bench management team, the business has performed extremely well throughout the investment cycle, translating to substantial returns against a $17bn equity investment from JAB and its co-investors, which more than doubled in less than four years. Going forward, the long-term growth, superior free cash flow generation and shareholder value creation potential makes it a great investment opportunity in the attractive North American beverage sector.
The past ten years have been extraordinary for asset values with valuation multiples soaring. Supported by unprecedented long-term accommodative monetary policy and liquidity injections by central banks after the 2008 financial crisis (then accelerated during the pandemic crisis), most if not all investors were able to extract substantial returns (3-year S&P annual returns above 20%, nearly twice the 20-year average). Clearly, the last decade has produced many more winners than losers in the investment world.
“We believe we are now seeing a tectonic shift to a completely different macroeconomic and investment environment that most leaders and investors of today have not seen or experienced in their professional lives,” said Goudet.
He concluded:
“As we finalize our first 10-year investment letter, the Russian invasion of Ukraine has shocked the world, and ourselves, creating a major humanitarian crisis and further deteriorating the economic situation globally. From an investment perspective, we believe that this crisis will likely accentuate geopolitical instability and threats for a while. We expect the inflation trend to continue, reaching levels not seen since the 1970s, fueled by structurally rising energy and commodity prices, as well as labor cost increases. We believe our resilient growth investment strategy is well suited for periods like these, which unfortunately tend to be forgotten during long bullish markets. In the first two months of 2022 to end of February, the MSCI World Index has been very volatile and stands at -7.6% while our portfolio increased +2.3%, reflecting its overall high margin of safety. We believe investors should now brace for a difficult investment environment. JAB will continue on its trajectory; our investment model is built to last, both in good times and bad.”
- Coffee
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Perspective: Morning Commentary for August 11
August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.
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Daily Coffee Report 8/10/26
Daily coffee report
StoneX Coffee Team
- Coffee
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