- BRCC stock had a relatively ho-hum performance last week.
- Americans love their guns but is that enough to drive Black Rifle Coffee?
- Take a small sip of the stock if you must.
Given how the historically robust political dynamic has accelerated into a vituperative arena, it’s no surprise why Black Rifle Coffee Company (NYSE:BRCC) stock as a brand enjoys contrarian appeal. There’s a certain mystique about rooting for the Galactic Empire as opposed to the Rebel Alliance, to borrow some Star Wars lexicon. But is contrarianism alone enough for BRCC stock?
Though branding based on a certain ideology or political leaning can generate a massive loyal following, such a strategy also risks alienating other consumer groups. With an emotionally catalyzing name like BRCC stock, investors must aside their personal feelings and get down to brass tacks. Since its dramatic rise in the market, circumstances have not favored Black Rifle Coffee.
Over the past week, for instance, BRCC stock printed a rather ho-hum performance. Not that a week’s worth of data is emblematic of what might come next. However, it’s a reminder that some of the most-hyped investments — particularly those that arrived through a reverse merger with a special purpose acquisition company — are liable to go sour.
Here’s my take on BRCC stock, beginning with the most basic question everybody should be asking.
|Black Rifle Coffee Company
Just How Good is Black Rifle Coffee?
We can spend all day talking about the politics of BRCC stock. If you really wanted to kick the hornet’s nest, we can even discuss the prudence of celebrating a class of weapons system amid rising gun violence. But all the talk in the world won’t matter unless we answer the key question.
Is Black Rifle Coffee any good? Turns out, it very well might be the best cup of joe you’ve had.
Being a veteran-owned business, I turned to Military.com to provide perhaps slightly biased commentary to the positive for Black Rifle. Per contributor James Barber, “They’re not cutting corners anywhere. BRCC is a premium brand and they want to make sure you’re having a premium experience every step of the way.”
In my first go-around with BRCC stock, I mentioned that the underlying brand was priced more than premium labels such as Starbucks. Barber admits as such. However, he had a justification:
“Yeah, that’s more expensive than the Starbucks or Peets bags they sell at the grocery store, but it’s most definitely a better product. That price is in line with the bags available from your local high-end coffee roaster.”
Fair enough. But then, will consumers be willing to justify the premium, especially amid a trying economic environment?
The Issue with Ideological Loyalty
As the Washington Post reminded us back in October 2015, there are now more guns than people in the U.S. I’ll let you decide if that’s a good thing or not. However, such an ecosystem is very conducive for BRCC stock, at least indirectly.
If anything, the Black Rifle brand gives gun-owning consumers a chance to support the Second Amendment and perhaps other conservative-leaning causes, all without creating much of a scene. However, firearms themselves represent a controversial subject, which leads to a significant challenge for BRCC stock.
As the Pew Research Center pointed out, gun ownership is far more common among Republicans than Democrats. Also, it states that “Gun ownership is most common among men, whites.”
None of these findings are particularly shocking but here’s the deal: coffee has no demographic. We all love it. If there’s any tension within coffee, it’s between coffee lovers and those who snobbishly prefer their jasmine tea or whatever.
Therefore, with something so universally appealing, it’s always going to be a risk to associate something controversial like guns into the branding.
Don’t get me wrong — I’m not against firearms. I’m just saying there are enough people out there that are against them that could potentially impede BRCC’s potential footprint.
It May be Worth a Sip for Speculators
With all that said, your approach to BRCC stock will likely stem on your risk-reward profile. For those that don’t mind gambling, I can see why Black Rifle would be appealing. For instance, many Americans own not just one firearm but several. And those that own several tend to have a high income.
They might be willing to shell out for premium coffee, perhaps adding some swag in their digital shopping carts.
But on the other hand, soaring consumer inflation which was already a problem before the geopolitical flashpoint in eastern Europe is now getting quite ridiculous. Since coffee is basically coffee at the end of the day, consumers hurt by declining purchasing power will have zero problems becoming cheapskates.
And when Starbucks is the cheaper competitor? That’s an issue that prospective investors of BRCC stock will want to think very carefully about.
On the date of publication, Josh Enomoto 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.