That cup of coffee is likely to get pricier in the near future as one of the worst ever El Nino weather phenomenon tears across the globe, wreaking havoc on crop yields.
With coffee, cocoa and dairy yields expected to be impacted by the weather event, higher input costs could hit companies like Starbucks, Keurig Green Mountain, Dunkin' Brands Group and J.M. Smucker, Goldman Sachs said in a note Thursday.
The impact is likely to be delayed due to hedging and will vary across companies.
Starbucks is best positioned to weather the event as it has pricing power while Keurig Green Mountain faces risk from heightened competition in the single-serve coffee market, Goldman Sachs said.
"We believe unit economics at Starbucks should be protected by top-line momentum, incremental pricing power, and existing coffee hedges in place," wrote analysts.
The bank has a Buy call on Starbucks and Neutral call for the other three companies.
Coffee, alongside cocoa, are two commodities that are likely to see further price gains from the weather phenomenon.