Summary
Stock: Greggs PLC (LON: GRG) common equity
Market cap: £2.2bn
Rating: Add
Price: £21.00
Target: £30.86
Setting the stage
Greggs PLC (LON: GRG, £2.2bn market cap) is a British bakery chain. It makes money by manufacturing and selling pastries, sandwiches and drinks from its shops, and by wholesaling pastries. The company operates 2,181 shops, all of which are in the United Kingdom.
The British were mainly tea drinkers before World War II but have been drinking more coffee since. American soldiers brought instant coffee with them during the war, and the locals took to it. Because of this, the British coffee market is distinctly different to the rest of Europe. Instead of fresh ground styles, instant coffee is still the primary way Brits get their fix. But, a taste for speciality styles is spreading, and coffee intake is now mainstream. It ties tea as the Brits' favourite drink, with 63% of adults saying they drink it regularly.
To meet increased demand, more coffee …