MORGAN STANLEY: These niche coffee chains could be the next Starbucks

Graham RapierOct 5, 2017, 16:17 IST

Starbucks baristas prepare drinks during a preview of its new Reserve Roastery and Tasting Room in Seattle, Washington December 4, 2014. REUTERS/Jason Redmond

Morgan Stanley on Wednesday said that Starbucks' stranglehold on the high-end coffee market is here to stay, despite some big names getting into the business.

"Given the increasing importance of super premium chains to the category, investors--both public and private--are paying closer attention," analyst John Glass said in a note.

"Many of the high profile artisanal 'Third Wave' coffee brands have yet to develop significant footprints relative to Starbucks, and most highlighted here are highly concentrated in the Northeast or the West Coast."

While they might not make a dent in Starbucks' business just yet, Morgan Stanley is still keeping tabs on them. Nestle, after all, paid $500 million for a majority stake in Blue Bottle Coffee, even though the chain only has 40 locations.

Here are some of the smaller coffee brands Morgan Stanley thinks could be making headlines soon:

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MORGAN STANLEY: These niche coffee chains could be the next Starbucks