In MarketWatch’s new series “The Cost of Things,” our editors break down the hidden pricing structure behind everything from chewing gum to disinfectant wipes.
We’re paying a lot to perk up.
The number of Americans downing at least one cup of coffee a day is the highest it’s been in six years, according to 2018 data from the National Coffee Association — with nearly two in three Americans saying they drank at least one cup of coffee in the previous day.
And often, it’s not just any old cup of joe they’re sipping: Our taste for premium coffee has reached new heights. Last year saw the highest one-year jump in consumption of espresso-based beverages, with 24% of people reporting they’d sipped on it the past day, according to the NCA. Plus, servings of specialty coffee, like lattes, ordered at restaurants and other food-serving spots grew by 5%, while traditional and regular coffee consumption declined by 3%, according to Mintel. And total U.S. retail sales of refrigerated cold brew coffee grew a whopping 460% from 2015 to 2017 alone to reach an estimated $38.1 million this year, according to Mintel.
These specialty beverages, of course, cost more than just a standard cup, which averages about $2.70 outside the home, according to data from Statista. A latte will set you back nearly $4 on average — with some dropping upwards of $7 on the frothy beverage — while iced coffee fetches about $3, though some have reported dropping $6.
Some people drop even more dough to perk up. The world’s most expensive coffee, Kopi Luwak, can go for $80 a cup. Civets — which are catlike animals — eat the beans and then poop them out; those beans are used make the coffee.
Of course, most of us would never drop $80 on a cup of coffee, but we do spend a ton on it — a trend that’s unlikely to abate anytime soon. Sales at U.S. coffee shops top $23 billion a year now, having grown 41% from 2011. By 2021 research firm Mintel predicts they’ll hit $28.7 billion.
So what goes into the price of your coffee? Among the biggest costs are labor and real estate, but other factors include cups, stir sticks, sleeves and other materials; milk; rent; machinery; coffee waste; and of course coffee beans.
For their part, coffee bean prices fluctuate significantly. In the past 20 years, coffee prices have ranged from about 50 cents per 1 pound bag to about $3 for that same bag. That’s because coffee is impacted by a variety of unpredictable factors.
Currently, about 40% of coffee is grown in Brazil, 20% in Vietnam, followed by Colombia, Indonesia and Honduras. Any political instability in these and other coffee-growing countries can alter prices. Weather is another big factor; the 2014 drought in Brazil, for example, sent prices rising — and that even trickled down to consumers’ bills at Starbucks