As of 2020, 62% of Americans drink coffee as a part of their daily routine, with the average consumption equalling an impressive three cups. This equates to “400 million cups of coffee per day making the United States the leading consumer of coffee in the world.” Clearly, this beverage is a fan favorite, but with so many options to choose from, why is coffee so expensive?
The impressive daily demand for this staple household product is what fuels the coffee industry. Caffeine addicts can’t seem to stray away from their daily fix of Joe. This keeps the demand high and drives up the price.
The cost is also dependent on the growing conditions of the beans and the fees for importing the product into the country. Moreover, the type of coffee also plays a role in the price. Lastly, coffee does bring some extremely appealing health benefits that also play a role in the more expensive bill.
Top Five Coffee Price Factors
Type Of Coffee
There are over 100 types of coffee species grown across the globe. However, most of the world’s coffee is found is an area called “The Bean Belt”. This small area wraps around the central parts of the globe and is situated over the tropics — in between the Tropics of Cancer and the Tropics of Capricorn.
The most popular types of coffee are Arabica and Robusta. “The former is more expensive, selling for 2.93 U.S. dollars per kilogram in 2018. […] Robusta, named because it can grow at a wider range of altitudes and temperatures, sold for 1.87 U.S. dollars in 2018.”
These are relatively reasonable prices due to the large supply that is produced globally. Remember that this is not the price at the grocery store or your favorite cafes though. It is the wholesale cost of the beans. Additionally, when you add in the production costs, packaging, advertising, and other manufacturing fees, an average ground coffee comes out to about $8.50 per pound.
This equates to about 25 cents per eight-ounce pour when made at home. Unfortunately, though, this makes the price of your small cup of Dunkin Donuts or Tim Hortons coffee seem exceptionally expensive at $1.75 — a 600% increase!
Luxury Products
However, depending on your preferred roast and flavor, prices can go up to $1,100 per kilogram. This equates to about $500 per pound. What is so special about this exorbitantly priced Kopi Luwak coffee? The beans have a VERY unique flavor and story behind them — One that may make you want to look elsewhere for your caffeine fix.
“The steep cost is a direct result from the drawn-out process of the cultivation of Kopi Luwak beans, unlike other coffee beans. This bean is defined by its processing. First, a civet [(a small mammal)] will actually cherry pick the beans and once consumed, the beans pass through the intestines and ferment.
Due to the presence of digestive enzymes in the civet digestive tract, proteins inherent to the bean are broken down.” Enthusiasts claim that this process helps to add to the distinct flavor profile. Care for a sip?
Weather Conditions
If that region has a bad yield that year, prices will increase to accommodate the loss. This is because the growers still have to pay for the cost of maintaining the farm and the price of labor to harvest the beans. Temperatures, precipitation and pests all play a factor as well.
According to researchers at the National Oceanic and Atmospheric Administration, “optimal coffee-growing conditions include cool to warm tropical climates, rich soils, and few pests or diseases.” Optimal growth requires a slim temperature margin. For example, the Arabica coffee bean needs temperatures to remain between 64°–70° Fahrenheit.
“Above those moderate temperatures, fruit development and ripening accelerate. (If you didn’t know, coffee “beans” are actually the pit, or seed, of the plant’s fruit.) Faster ripening might not sound bad, but it actually degrades coffee bean quality.
Continuous exposure to temperatures up to and just over 86°F (30°C) can severely damage coffee plants, stunting growth, yellowing leaves, even spawning stem tumors.” Additionally, hotter temperatures and extreme rainfall amounts lead to a higher prevalence of pests.
Unfortunately, these are not factors that farmers can control. This leads to expensive coffee costs across the globe. It is important to remember that weather drives all agriculture. Unless the conditions are just right, it will come at a cost to both the farmers and the consumers.
Lastly, just like olives, harvesting by hand will always bring a better quality product. However, this increases the labor costs, making your coffee more expensive.
Country And Company Costs
Import Fees
America is not only the leading consumer of coffee, but it is also the top importer of this caffeinated bean. Why? Hawaii and California are the only two states that have the appropriate growing conditions to make this coveted commodity.
In fact, 90% of the United States coffee supply comes from other countries, with expenditures reaching $5.84 billion dollars in 2019. Columbia and Brazil are the two main sources for coffee imports as of last year.
Import duties, shipping, insurance, and the overall cost of the item are all dependent on the specific country that is delivering the coffee beans. This affects countries like Korea and Japan as well as the United States.
Labor And Business Costs
Moreover, places like Australia and Denmark pay much higher hourly rates to their workers. This requires a higher revenue stream in order to effectively provide these wages.
Conversely, Ireland and the UK’s costs for coffee are high due to the VAT charges (taxes on specific goods, like imports). Lastly, no matter what country you reside in, coffee shops are a business. This means paying the rent and utilities as well as purchasing supplies.
Baristas also require training in order to make those sweet macchiatos and foamy cappuccinos. These overhead costs add up. Thus, coffeehouses are always going to charge you more than just the cost of the coffee. This is one of the main drivers for expensive coffee prices in places like Singapore and the United States.
Caffeine Addiction
According to the Journal of Psychology & Psychotherapy, “Caffeine is the most widely used psychotropic drug in the world”, with the coffee bean being one of the top sources for this stimulant. Research done by the National Institute on Drug Abuse notes that “with continued use [of any drug], a person’s ability to exert self-control can become seriously impaired; this impairment in self-control is the hallmark of addiction.
Brain imaging studies of people with addiction show physical changes in areas of the brain that are critical to judgment, decision making, learning and memory, and behavior control.” While the coffee bean is a legal stimulant, it is clearly something that people feel is necessary in their regular diet. Simply put, addiction drives sales.
“Controlled double-blind laboratory studies show that subjects will choose caffeine over placebo in double-blind choice procedures, as well as perform work or forfeit money in exchange of caffeine.” More importantly, those chain coffee shops know this fact and take advantage of customers needing their fix. This is why you see a Starbucks on every corner.
Their net revenue in 2020 was an astounding 19.16 billion dollars. While most Americans brew their cup of Joe at home for less than 75 cents a cup, the compulsion and need to have this beverage everyday makes Americans spend, despite the expensive price tag that comes with their venti coffee.
Health Benefits
While our first thought always seems to go to the addictive substance that is in this steamy and creamy beverage, it is also brimming with amazing health benefits. Doctors at John Hopkins note that coffee will not only help to prevent type 2 diabetes, Parkinson’s and Alzheimers, but it will also improve your heart health.
Additionally, drinking plain coffee aids in weight loss. It also contains tons of B vitamins! This can help to enhance your workouts and overall performance by increasing the amounts of epinephrine in your bloodstream. Furthermore, coffee has been proven to lower a woman’s chance of depression by 20% when 4 cups are consumed daily!
Storage & Coffee Alternatives
The cost of expensive coffee can sometimes be hard to swallow. This is why investing in a coffee maker or Keruig is an ideal option. Moreover, buying in bulk or signing up for coffee club subscriptions can help to lower your costs. It can also help you to cut back on your Starbucks runs.
Additionally, when looking for cheaper options, consider buying store brand. What matters most is your coffee bean preference. Therefore, look at the high-end options you prefer and find generic products that feature the same ingredients. However, if you only drink coffee for the caffeine fix, consider buying tea instead.
Green and Black tea have high amounts of this stimulant at a fraction of the cost. Lastly, you can freeze coffee for up to nine months. However, it is best to use an airtight or vacuum-sealed storage container to maintain optimal quality and taste.
Final Thoughts
It is the best part of waking up! Robust and flavorful, coffee is the beverage of choice that most people love to start their mornings with each day. Coffee prices are always going to rise and fall. This will depend on the popularity of the bean and the overall yield of that year’s crop.
Just like all other agricultural products, there will be good and bad harvests. Therefore, when you see a good deal at the supermarket on your favorite blend of beans, grab enough to last you a few months! Just brew it!
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We are a team of passionate moms and homemakers. Among us are certified nutritionists, chefs, certified food handlers, accountants, financial gurus, and other professionals. Our joint goal is to educate homemakers. Check out the about us page for more information about our team’s credentials.