Dec 6, 2012

Why some coffee can be worth $7 a cup

coffee cup

I saw lots of headlines over the weekend that attempted to blast Starbucks for offering a cup of coffee that could cost as much as $7. Fortunately, I also saw plenty of commentators who seemed to have a little perspective about coffee and realized that this is not as big of a deal as some people were making it out to be. First of all, when it is common to pay from $2-5 already for a cup of specialty coffee, $7 is not that big of a jump. Secondly, if you are already into specialty coffees, you have probably either paid or seen that price at some other shops.

The specialty coffee market is like the market for wine and chocolate. Namely, as consumers become more educated about the products they’re buying and learn to tell the difference between a higher quality product (or simply a more unique one) and a lower quality product, they are going to start to see more value in the product at a higher price point. At one time, Hershey’s was synonymous with chocolate and that is all that was available to most consumers. Playing $20 or $40/pound for some frou-frou European chocolate wasn’t even an option on the table, and when they became more widely available, some consumers still shook their heads and wondered how could it be better than the inexpensive chocolate they were familiar with. Once consumers started to see the difference between the two in texture and flavor, many realized that the more expensive chocolate was more expensive for a reason.

The chocolate market is a great parallel for coffee, since some consumers will never care that their bar of chocolate came from a single plantation in Costa Rica that only produces tiny batches of beans every year. But some people will, and when you are a fan of unique chocolates or coffees, it is amazing to have those types of products available.

It goes without saying that price doesn’t necessarily mean that something will be better, or that you’ll like the taste of it personally (I’ve had plenty of lousy wines and also some rather unpleasant, but pricey, cups of coffee). But it is worth noting that not all coffee (or chocolate, or wine) is created equal and that sometimes justifies a higher price point.

Off my soapbox now…. and off to get a very good cup of coffee.


2 Comments

  • The issue isn’t coffee that is worth US$7/cup. (I sometimes pay HK$50-60/cup for quality coffee; I believe that’s about US$6.50-7.75.) The issue is that coffee sold at Starbucks is almost never, ever worth even US$1/cup, thus imaging a cup of coffee sold by Starbucks for US$7 is terribly insulting.

  • Alinear – Just out of curiosity, do you ever see the Clover machines or the reserve coffees at Hong Kong locations? (I’m assuming, since you mentioned Hong Kong)
    I definitely agree that not every coffee is going to be worth that price – and definitely not the “everyday” blends that are standard issue. Some of the reserve coffees – limited production/single plantation-type – have been very good and commanding higher prices with limited supplies. I’m curious as to whether these are showing up outside of the US and Canada

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