Is it good to invest money in the specialty coffee industry (e.g. Starbucks)?

I am having doubts on whether investing in such an industry would still be profitable since a lot of competition has emerged for the past years

I think you can still make money in the sector, but one must be very very selective as to what they are choosing.

Starbucks Corp. (SBUX) is the leader in the group and a brand name that many are loyal to. While alot of the details you added are in fact true, one must also consider that Starbucks stock price has been cut in half over the last two years so alot of the bad news is already priced into the stock

http://finance.yahoo.com/q/bc?s=SBUX&t=2...

They are also entering the China market for growth so that too must be considered a plus when looking at the risk to reward scenerio.

Earnings, growth and revenues year over year are looking to increase nicely for Starbucks according to Wall Street estimates

http://finance.yahoo.com/q/ae?s=SBUX

So I would say Starbucks would be a buy here and a good investment for the long term (three years or more).

On the other hand there are competitors such as Green Mountain Coffee roasters, Deidrich and Caribou coffee.

Green Mountain is a good company with good products and good coffee, but their share price appears over-valued at these valuations:

http://finance.yahoo.com/q/ae?s=gmcr

Caribou Coffee continues to lose money:

http://finance.yahoo.com/q/ae?s=CBOU

Diedrich Coffee Inc. (DDRX)

Is making only a very modest profit, but now has to deal with management changes as their CEO recently resigned.

http://finance.yahoo.com/q?s=DDRX

Doubtful. We are about to hit a recession. Do you think people will be looking to spend their last $5 on coffee or food for their family?

coffee shops are the best think to invest in these days in the right place though everyone loves a cup of tea and coffee and the prices they charge you make a fair amount. the city or near a tafe or even a shopping centre or near hairdressers.

With the fast food places launching their competing coffees, Starbucks is the last company I would invest in. Plus we are entering a recession, and demand will most likely be going down.

I think your money is better off elsewhere.

Your observation is correct. The industry is in turmoil. McDonalds threw a heavy wrench into the works when they started their premium coffee offerings at reasonable prices. Starbucks has offered lower priced coffees. Others are getting into the market also. Not a good time to invest in specialty coffee industry.