Like 54% of the public in the US, I have a coffee addiction, and we have been slowly brainwashed to spending more and more on our daily Java intake in the last 10 years. Take some of these facts:
- Starbucks earned more than $13bn last year.
- Exporting coffee alone is worth $20bn a year.
- Americans consume 400m cups of coffee a year.
I don’t know about you, but I consume my coffee in a bunch of places, from coffee shops like Starbucks, to restaurants after dinner and also at home. I started to wonder how much this addiction costs me.
In a conversation with friend Nick Brown last week, we discussed the folly of buying expensive Starbucks lattes at $4 a cup every day. Even if you drink just one of these you’re incurring a $1000 a year habit. And with 2% milk, it will cost you 190 calories a go.
Nick explained that he had gone the Nestlé Nespresso route, which costs just $0.60 a capsule, thereby saving a large amount of money. The thing is, I’m not so sure it does. Nestlé and others sell premium coffee machines – typically costing about $200 or more. So let’s do the math.
I have a similar machine that brews Keurig K-Cups. I like Green Mountain’s Nantucket blend coffee, which costs $16.49 for 24 capsules – that’s $0.69 a shot. There are ways of getting this down to about $0.55 a shot (print a 20% off coupon and go to Bed Bath and Beyond for example) but let’s face it, it’s a hassle. What’s more, I go through an average of 5 of these a day (some decaffeinated, you will be glad to hear). That’s a $1200 a year habit.
What’s interesting is that Nantucket Blend costs $9.49 for a 12oz bag of beans. It’s tricky to make comparisons here, but a typical single shot of espresso weighs about 7g, so a 12oz (340g) bag of coffee can make 48 shots of coffee. This weighs in at about $0.20 a shot. But to do this, I’d have to buy an espresso machine. I had a Gaggia Classic some time back and it’s rusting in a cupboard. Too much mess, too much hassle.
What are we supposed to do?
The worst thing is that even if you have one of these single-cup machines like Nespresso or K-cup, it won’t stop you from spending in Starbucks. It’s a social thing, and I find myself in a coffee shop with a colleague, friend or business associate several times a week – spending at least $10 a week on average, or $500 a year, in addition to what you spend at home.
The only other alternative is an expensive Super Automatic machine – costing $699 or more for something like the Jura ENA 4 from the Seattle Coffee Company (I’m not affiliated with them, but I think owner Gail’s jacked-up-on-caffeine YouTube video channel is hilarious social media marketing). That’s an awful lot of capital outlay to consider. Let’s compare the costs over a 3 year period (a machine like this should last about 3 years before it explodes).
|Starbucks||Nespresso/K-Cup||Super Automatic Espresso|
|Cost per cup||$1.45||$0.69||$0.20|
|Cost over 3 years for 3 cups a day||$4763||$2266||$657|
|Additional $10 weekly budget for coffee||N/A||$1500||$1500|
|Total annual cost over 3 years||$4763||$4016||$2857|
Shocked? I am – by two things. First, how much this addiction costs us. In the Starbucks case I took the cheapest coffee – if this was a $4 latte or cappuccino, this would have been much higher, and it is only for one person. In a family of two coffee addicts, it could be much worse.
Second, I’m shocked by the cost of the friendly Nespresso machine. You get into the espresso market at a lower cost, but the TCO is shocking.
The hidden cost of Nespresso
First, you don’t get as much coffee with Nespresso, so we’re not even comparing like-for-like. You actually only get 5 grams of ground coffee (28% less), so you (may) need 28% more, which brings the cost up to $4663 over 3 years (the same as going to Starbucks).
Second, $0.20 of the $0.60 is going to coffee, and the other $0.40 is going to make the plastic, and into Nestlé’s pocket. Since 42% of Nestlé is owned by the Swiss, most of the money is going out the country (yes, there is an irony that the Super Automatic machine I feature is also Swiss, I know).
Third, most of the Nespresso or K-Cup capsules go in landfill. Nestlé have sold 27 billion Nespresso capsules so far, which is a metric shitload of rubbish.
Fourth, the coffee is bad. I think Nespresso is better than K-Cup but even the best Keurig coffee is an unpleasant parody of a proper Italian coffee.
So if you were thinking to save money, like Nick, by buying a Nespresso machine, think again. If you think that spending $700+ on a coffee machine is ridiculous – do the maths based on your intake, because you may get a nasty shock.
And also take a look at the Coffee Review website, where you can search for local coffee roasters by location (just put it in the keywords). This means that if you purchase coffee from a local roaster at about $10-15 a pound, you will be feeding the local economy. That makes me feel good.
What’s more if you look at the International Coffee Organization cost of wholesale coffee, you will see that coffee has fallen in price over the last year to about $1.40 per pound, from highs of $2.73 in 2011. Did you see Starbucks drop its prices? Or Green Mountain K-Cups?
I didn’t think so.