Coffee is Making you Broke and Xmas isn’t Helping

Coffee drinking might be the most common habit people have. Have you ever thought about how much non-coffee drinkers save? This piece is going to look at monthly transactions and expenses for three different price levels of coffees: cheap, average and expensive. Every month, people are spending more on expensive coffee and less on average-priced coffee.

Even if you’re not a java junkie,  you probably just ended up inviting a friend for coffee.  But if you regularly guzzle it, have you ever made an estimate of your monthly expenses on java?

There can be huge variations between the “standard” amounts of coffee consumed by most people. That means how much we really spend on coffee each month remains a puzzle. In a study by Amerisleep (2018), 1,008 coffee drinkers were asked about their coffee drinking habits. 79 % of coffee drinkers stated they consume at least one cup on a daily basis, even though 12% of those daily drinkers believed that caffeine is “damaging to their bodies”. One of the most interesting insights from this study is that millennials spend more on coffee than any other age group.

There is no doubt that demand for coffee has always been solid. The International Coffee Organization estimated that 11.2 million bags of 60kg of coffee were distributed all over the world in August 2018, or 5% more than the previous month.

Some countries drink more cups of coffee per day than others. The Finns, for example, grind their way to the top of the ranking through an impressive 12kg per person per year, according to stats from the International Coffee Organization (ICO, 2018). In the same ranking, the Netherlands scores quite high with the average Dutch drinking 1.84 cups of coffee per day.

If millennials and the Dutch like coffee, it does not take a math wizard to conclude that the Dutch millennials love drinking coffee. But how much do students actually pay for coffee? The following data comes from the Netherlands’ biggest student city of Utrecht. It covers coffee consumption at small kiosks next to university campuses from October 2017 until September 2018.

Data and Insights

When it comes to good coffee, those who appreciate it are willing to pay a little bit extra and that makes price a pretty good measurement of quality. For that reason, looking at coffee by price brackets might be a more insightful picture.

We define cheap coffee as any coffee sold below one euro, average coffee as any priced between one and three euros, and expensive coffee as any sold above three euros.

Let’s start by looking at transactions. How many cups of coffee were consumed each month during the last year on the university campuses of Utrecht?

Figure 1: Coffee transactions in Utrecht by monthimage (18).png

On average, 4,000 cheap coffees were sold each month, followed by 10,000 average-priced coffees and 45,000 expensive coffees per month. On average, a total of 60,000 coffees are consumed each month with a spike in the months of October through December.

How about expenses? How much do non-coffee drinkers save? The figure below  shows that cheap coffee drinkers spend around €25 each month on coffee. The average coffee drinkers fork out €78 and the biggest coffee snobs splurge €110.

Figure 1: Coffee expenses in Utrecht each monthimage (19)

What is striking about the figure above is that monthly expenses on average-priced coffee have decreased by 25%, while those on expensive coffee have increased by almost 10%.

This can be seen from a drop in demand for average-priced coffee from January onwards while demand for premium coffee rises.

It could be the case that the price of average coffee went up during the last year and exceeded the threshold of three euros. Keeping in mind how difficult it is to switch to a different type of coffee, the sales boom of pricier coffee should not come as a surprise.

Download the full report: Coffee is Making you Broke and Xmas isn’t Helping

Amsterdam, Netherlands

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