NEW YORK, NY -- (Marketwire) -- 07/17/12 -- After an impressive first quarter coffee stocks have begun to falter. The current economic slowdown has had a significant impact on coffee prices and demand. On the ICE Futures U.S. exchange coffee prices are down over 25 percent year-to-date. "Coffee was really hammered by a number of bearish factors," said Rabobank's senior commodity analyst, Keith Flury. The Paragon Report examines investing opportunities in the Coffee Industry and provides equity research on Starbucks Corporation (NASDAQ: SBUX) and Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR).
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There are currently 13 countries in Europe that are officially in a recession. Preliminary data from the International Coffee Organization showed that British coffee consumption decreased 6.7 percent in 2011, while demand in Spain and Italy fell 2.6 percent, and 1.6 percent.
"What [investors] didn't realize is that when you have multiyear-high prices, combined with dire economic growth, then consumers start to make choices," said Kona Haque, head of agricultural commodities research at Macquarie Bank Ltd.
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Starbucks recently broke ground on the first company-owned manufacturing facility in the world to produce soluble products. The company is scheduled to release third quarter fiscal 2012 financial results after the market close on Thursday, July 26, 2012, with a conference call and webcast to follow at 2:00 pm PT. Shares of Starbucks have fallen over 10 percent in the last three months.
Shares of Green Mountain Coffee Roasters have hit a new 52-week low as Stifel Nicolaus have recently slashed their full-year earnings estimates for the company by 20 percent. "A few pennies of reduced pricing has a meaningfully negative impact on earnings," said Mark Astrachan, an analyst at Stifel Nicolaus. According to Astrachan K-cups currently make up over 90 percent of Green Mountain's operating profit. The company has fallen nearly 60 percent in the last three months.
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