The Idea of Coffee as a “Luxury”

An exploration of the ideal that specialty coffee is (and can be) a truly affordable luxury, but that can be pushed too far by unfair comparisons and unscrupulous marketing ploys. Originally written by Mark Prince, Feb 2021 for CoffeeGeek.com

---

Let’s put something in perspective:

Even at $25/lb, coffee is still cheaper, brewed cup for poured cup, than a can of coke.

A lot of people don’t see coffee this way. Older folks (like my Dad’s age) still think of coffee as something for US$0.25 a cup. With bottomless refills! People my age think of coffee as something for a buck retail by the 12oz cup or US$9.95 a pound at the grocery store “for the good stuff”.

Truth is, everything’s costing more these days, and the last time I bought a 12oz (350ml) can of (diet) coke at the corner store, it was US$1.50. The bigger 500ml plastic bottles were US$2.25. But in my home, with coffee costing US$20 a lb, a nice full cup (8oz, 240ml) costs me 83¢ in coffee bean cost.

Here’s the math, but let’s switch to metric here. A pound of coffee is 454g. My own usual ratio of coffee is using 7g per 100ml of water, but considering grinder waste, let’s call it 9g per 100ml. At that ratio, you can brew 5.04 litres of coffee per “pound” using non-espresso methods.

In the world of coffee, a “cup” is 4 or 5oz of coffee brewed (or 120–150ml). Don’t ask me why. But let’s go with the standard US cup of 8fl.oz (240ml) as our own standard for the rest of this article. A pound of coffee will give you almost exactly 21 cups of 240ml brews of coffee.

When Coffee Stops Being an Affordable Luxury

Now an expanded side note: I think that coffee is an affordable luxury, but I think it stops becoming “affordable” once it costs more per ounce (brewed) than a premium soda costs, per ounce, poured. And then there’s the comparisons to other beverages we buy.

A lot of baristas with the biggest online megaphones (and other coffee evangelists) talk about how cheap coffee is compared to artisan cocktails or great wines. To me these comparisons are not only unfair, but really are a cheat and filled with naivete. The reason is simple: taxes. Alcohol has many layers of taxation involved in their consumer retail cost that coffee does not have.

When I see roaster / retailers comparing their $9 siphon brewed cup of coffee to a US$15+ super premium crafted cocktail and claim coffee is cheap, I cringe. A US$15 cocktail at top bars are the result of a) a well trained, well paid bartender, b) lots of product waste (aka, expensive alcohol) from the bartenders chucking less than perfect drinks and from training, c) the cost of running said bar (which is higher than the cost of running a cafe) d) the cost of all the taxes involved e) the cost of the ingredients. Coffee via siphon is labour intensive, but it does not have the same operation costs or taxation costs (or waste costs) that cocktails do.

I think this comparison is much more fair: Premium sodas. Compare the price of a cup of coffee in a cafe to a bottle of soda or Tonic Water!

This is a much more fair comparison and one consumers can agree with eventually and accept. This is why I think US$4 to US$5 is the maximum price you can charge for a cup of coffee (espresso based or not) before you lose any kind of cache regarding “affordable luxury”.

And don’t forget, that US$5 coffee drink becomes US$7 or more once you factor in sales taxes and tip. People tend to tip a bit more on labour intensive drinks vs opening the cap on a soda bottle. Regardless, US$7 is a lot of money to many people, even in this day and age.

In the home, I think the comparison should be the same — coffee still can remain an affordable luxury — at least until it surpasses the price of a premium soda. I can buy a four pack of Boylans or Fentimans’ sodas for around US$7, making it about US$1.75 per bottle; more expensive* than the brewed ounce cost (vs poured ounce from the soda) of coffee from a US$25/lb bag of coffee. But once that coffee costs over US$25/lb, it starts to lose the cache of being called “an affordable luxury”, and just moves on to being a luxury.

Getting More from Consumers While Providing Less

Another thing on my mind: many roasters and retailers have been migrating from 16oz (1lb) bags to 12oz bags in recent years, to the point where it’s getting hard to find a roaster actually selling full 1lb bags to consumers. And even more recently, roasters are migrating to 10oz and even 8oz bags as their “standard” bag sizes; but for now, I’ll concentrate on the migration from 16oz to 12oz bags.

Along with that weight drop in a roasters’ “standard bag”, roasters and cafes would drop the price per bag as much as 15–20% or so (I was tracking prices for a while there as this trend exploded a few years ago) but the problem here is, prices had dropped 15–20%, per bag, but the weight dropped 25%. It is an unfortunate fact that a few less scrupulous roaster/retailers have kept the prices similar to their previous 16oz bag pricing — so the consumer was paying only pennies less for a 12oz bag of coffee from the same source that used to sell 16oz bags.

It’s pretty obvious that this move to 12oz sizing is as much to disguise the increasing price in true specialty coffee as it is to give consumers a cheaper option for smaller amounts of coffee to take home. And some roasters took the opportunity to bump up their profit margin a bit. Perhaps so later on they could have better sales, who knows.

The problem is, once you calculate by the cup or by the ounce brewed, there is no savings — there are price increases.

Lastly, think about this: a US$25/12oz bag of coffee is a US$33.33/lb bag of coffee. In my mind, that’s a full on luxury level right there. And I haven’t even started to explore the newer trend of dropping down to 10oz bag sizes, and even smaller.

Machine, and Time Costs

Roasters, retailers and coffee evangelists of course want to point out to you that the cost of a cup of coffee in the cafe also factors in labour, equipment cost, overhead, rent, and many other factors.

Yet these same folks often fail to take into account the investment in time and equipment the consumer has to make to finish off the process of turning that bean into a drink. Here’s where that * several paragraphs back comes into play.

In reality, for some that $1.19/cup, $25/lb coffee actually costs the consumer maybe another $0.75 in labour, electricity, and amortized equipment costs to make the beverage. Buying a bottle of Fentimans’ soda doesn’t incur those additional costs, except perhaps your refrigerator operating cost for that soda, which is literally fractions of a penny, and non consequential.

So, at the end of the day, the coffee brewed from a $25/lb coffee bag costs a consumer, in the home, about $2 to make. A bit more expensive than a premium soda bought in a six pack, but still cheaper than that same premium soda if you bought it individually.

To me, that’s still in the realm of affordable luxury. but it also near the upper the limit of that term. $20/lb is a lot more affordable, and of course, $15/lb is downright cheap. But be wary of coffees costing $20 or $22 per 12oz. Those aren’t “affordable luxuries” any longer. They are just “luxuries”, and may well be worth it, but let’s keep it real. And please stop comparing cup of coffee prices to cocktails and other liquor.