The price of a small (illogically called the ‘Tall’) Starbucks Cappuccino is now £2.05. The Venti now costs £2.65 (2008 prices)
This year the price of Starbucks drinks have increased by more than the rate of inflation.
Costa Coffe and Cafe Nero have both kept their prices below £2, but, industry analysts argue that it is highly likely they will be tempted to increase the price of their drinks.
Unlike alcoholic drinks, coffee is not subject to excise duty. Therefore, how can coffee companies such as Starbucks justify such as high price?
The Price of a Cup of Coffee
- Milk 6%
- Coffee 2%
- Labour 18%
- Rent 13%
- Admin 26%
- Cup / sugar / lid e.t.c 4%
- V.A.T. 15%
- Profit 14%
It is interesting that the smallest part of the price is the actual coffee beans. Even if the price of coffee doubled, it would only have a negligible impact on the final price of coffee.
In recent months the wholesale price of milk has increased significantly. This is due to both growing demand (including demand from China) and a shortage of supply from the British milk industry. Therefore, this has contributed to higher costs.
Rent is a big factor, especially in city centres. Also one feature of coffee drinking is that there is quite a low volume. People may buy 1 coffee and sit for other an hour.
In my personal experience, I find Starbucks coffee a little disappointing. (though on a recent trip to US, I had a really great dry cappuccino – so quality does vary) Generally, in UK I prefer the taste and quality of Costa Coffee and Cafe Nero. I don’t object to paying £2 or even £3 for a cappuccino, but, I would like higher quality standards.
Buying Office Space
In this era of laptops, one of the main attractions of a coffee shop, is that it makes a break from working at home. Often I take a laptop, and write for an hour. As much as buying a coffee, I’m renting office space. I’m particularly fond of a nice Blackwells cafe (Cafe Nero) in the centre of Oxford. It’s a great cafe because it’s in a bookshop; there isn’t irritating music and there is a literary vibe which helps with writing.
To be honest, if the price of a cappuccino increased from £2.30 to £3.30, I’d probably still go there.In that context the price of a starbucks isn’t a rip off, if you’re getting a nice environment.
- By the Way your welcome to buy me a coffee ;)
- The Economics of the price of Coffee
- Starbucks – about
- Starbucks Coffee at Telegraph
About The Author
VAT is charged on Coffee if the shop is VAT registered. A cafe has to register for VAT if if has a turnover of more than 75K. So at Starbucks, Costa e.t.c. VAT is applied to coffee.
I am not even so sure whether they (Starbucks) pay VAT on all stuff…coz most beverages are Zero-rated for VAT…I know some hot ones incur some VAT but it depends on which…any clarification on this, editor???
starbucks trying to establish itself of being trendy and cool while ripping off the young people with it’s over-prised coffee. Now they are getting political with their commercials.I would tell young people that they are being ripped off by starbucks.
F-u starbucks you corporate pigs.
yessssss yesssssss
Check out the coffee at javabean coffee in gloucester road arcade, london – they roast their own beans – fresh, make a big deal that the perfect espresso is fresh aribica beans (whatever they are) and the extraction is always 25 seconds. I tell you what – there coffee is the best I’ve ever tasted – unbelievable
Anyone who pays £2.50 for a coffee gets what they deserve.
For goodness sake buy a flask and make your own.
Starbucks just pander to lazy people who say they haven’t time to make a flask of coffee but will spend hours on Facebook.
Get a flask and GET A LIFE