Why have coffee prices

Why have coffee prices dropped dramatically — 82% in 4 years — while lattes remain just as expensive? (Link via Atlanticblog)

  • Vietnam entered the coffee trade and Brazil upped production
  • Coffee production decisions lag behind price changes because the coffee tree is on a 2+ year cycle
  • While the number of specialty coffee shops has grown from about 450 in 1991 to more than 10,000 today, total coffee consumption in the U.S. has actually fallen slightly
  • Demand for coffee is relatively inelastic (a 10% price increase reduces consumption by about 2%)
  • Actual coffee is a very small component of the cost of a latte (roughly 10 cents on a $2 cup)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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