Coffee is expensive. As it’s been dressed up and put to market.
Starbucks may be the party most responsible for setting the prices of coffee drinks at retail coffee shops around the globe, and they set those prices pretty high.
A tall (12-ounce) latte or cappuccino at Starbucks will set you back around $3.00 in the U.S., depending on location.
A tall brewed coffee will set you back around $2.05.
And the U.S. is one of the cheapest places in the world to buy a Starbucks!
Meanwhile, at U.S. supermarket chain Kroger, 29 ounces of their premium house blend costs just $4.99, and the grocer estimates those 29 ounces will make 225 cups. That’s just over $0.02 per cup.
With such a huge discrepancy in prices between store brands and coffee shops, you might be wondering just how much does coffee cost? Is Starbucks gouging you, or is Kroger selling at way too low a price?
The answer to both is “Yes.”
Green Coffee Price
The average price of coffee is somewhat difficult to calculate, because there are many select varieties with limited growing regions and unique harvesting techniques.
However, the two coffees with the highest distributions in the world are Arabica and Robusta, and these two coffees come in at just over and just under $1 per pound for harvested green coffee beans.
More specifically, their prices per pound in 2018, according to statista, were approximately:
With distribution totals factored in (nearly 14 billion pounds of Arabica versus just over 9 billion pounds of Robusta):
The price for standard green coffee beans in 2018 was approximately $1.09/pound.
So, Starbucks is Screwing Me, Right?
Yes, of course they are. Some of their prices are utterly mind-boggling. But the absurdity of their pricing has very little to do with the coffee itself. They do have overhead, like rent and employees, and, as a consumer, it’s the add-ons where they get ya.
Starbucks also isn’t just a retailer. They are a roaster, which means they have taken on the most expensive part of the coffee process – the roasting.
How much does it cost to roast coffee?
The Specialty Coffee Association estimates the average cost of a roasted pound of coffee (all production costs included) is $6.50. This does not, however, include the cost of workers.
How much does roasted coffee cost per cup?
If you’ve ever looked at the directions on a bag of coffee, regardless of brand or price, you probably know the recommended amount of coffee to water when brewing is:
- 2 tablespoons of coffee to 6 ounces of water
This is known as the Golden Ration, and is equivalent to roughly 1 gram of coffee to 17 grams of water.
Using this ratio, the cost per cup (8 ounces) from a $6.50 pound is approximately $0.17, or $0.25 for a Starbucks tall.
We’ve already discussed that Kroger’s 29 ounces of premium house blend comes in at only $0.02/cup ($0.04 for a 16-ounce cup). So, how do they do it?
It’s time to talk about Fair Trade and sustainability.
Fair Trade Coffee Price
80% of coffee farmers around the world live in poverty, and the per pound price of coffee beans is the main factor.
Fair trade arose as a means of combatting this unfair and unsustainable practice.
Fair trade isn’t solely about coffee. It targets all commodities that are largely produced in the developing world and exported to developed/wealthier countries.
The first thing a fair trade agreement does is set a price high enough for farmers to make living wages and create sustainable businesses.
For Arabica coffee, the fair trade price is $1.40/pound – $1.60/pound (premium) – $1.70/pound (organic). These prices were last set in 2011.
Fair Trade & Sustainability
Coffee farmers who live in poverty do not have the extra income to invest in their businesses. This makes it difficult for them to plan for the future, to improve their equipment, and to increase their yields.
Farmers may not have the savings or capabilities to weather sales slumps or natural disasters. (Climate change poses a particular threat to coffee farming.)
Basically, keeping coffee farmers in poverty puts the entire supply chain at risk. Fewer farmers means fewer beans means less coffee supply means more expensive coffee and shortages in the end.
Does That Mean Kroger is Selling Way Too Low?
Yes, but they certainly aren’t alone in that.
Every coffee roaster, grocery store, and restaurant that pays less than fair trade prices for their coffee so they can sell it cheaper is contributing to farmer poverty.
Kroger does have a fair trade line of products – simple truth – but the bulk of products (including coffee) sold in grocery stores and restaurants around the world is not fair trade.
In fact, it is estimated that fair trade coffee makes up less than 5% of all coffee sold.
So, the real answer to “What is the average cost of a pound of coffee?” is “Not as high as it should be.”