The Rich History Of Your Overpriced Latte

On a recent fall morning, I spent $6.15 on a vanilla soy latte. It’s a staggering number, especially when you consider that there was nothing particularly special about this latte. It did not contain premium ingredients, nor did it hail from a trendy coffee shop. It was not artfully crafted by a stylish barista with an enviable Instagram following. It was from Starbucks. It was just a latte, with some vanilla flavoring and soy milk. And I spent $6.15 on it. This is a lot of money to spend on a coffee beverage and yet, some do it regularly. Alongside $20 salads and $10 pre-packaged sandwiches, coffee drinks that inexplicably hover in the $7 range have become commonplace. You might even be drinking one right now.
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Lattes are, according to data shared with Refinery29 by the app Square, the most popular coffee drink in the US. Last year alone, we drank more than 67 million of them, at an average price of $4.16. Coffee companies may want you to think this number signifies what it actually costs to make one, but there’s a lot more to it. “The price of coffee [beans] has not changed in 30 years,” says Erin Meister, coffee professional, and the author of New York City Coffee: A Caffeinated History. “There have been fluctuations, like at one point in the 2000s, it hit $3 a pound for green coffee and then, you know, a couple of weeks ago it dipped below a dollar a pound. But it's really been relatively stable.”
That’s because the cost of a latte — much like that of a cocktail or a meal at a restaurant — is about more than just the sum of its ingredients. While add-ons like flavored syrups and non-dairy milks tend to jack up the cost of a drink because they’re expensive, as a customer, what you’re really paying for are things like rent, utilities, employee wages, and insurance for the business. Hence why coffee, like so many other things, tends to cost more in big cities and swanky suburbs.
And it’s not just Starbucks. You can easily find yourself paying $5+ for lattes with add-ons at places like Panera Bread, Pret-a-Manger, Peet’s, or Caribou Coffee. Earlier this year, for example, Starbucks quietly raised its prices at over 8,000 of its US locations by anywhere from 10 to 20 cents per drink. The coffee behemoth cited inflation as the primary reason for the hike. While it made headlines — and the rounds on Twitter — the company’s profits have still surged in the third quarter of 2018.
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According to the U.S. Bureau of Labor Statistics, prices for coffee were 26.95% higher in 2018 versus 2000, which means a $5.39 difference in value. As the Official Data Foundation notes, this means that between 2000 and 2018, coffee experienced an average inflation of 1.33 percent per year. The overall inflation rate during this same period was 2.11 percent, meaning coffee has actually been affected less by inflation than other goods. “If prices for lattes and coffee beverage have changed dramatically, then there is probably some other explanation besides the rising price of coffee,” says a spokesperson for ODF.
“You might not even realize what you’re paying,” says Kara Nielsen, vice president of trends and marketing at food and beverage marketing firm CCD Innovation, who says it’s possible that thanks to innovations like Apple Pay, in-app ordering systems, and credit cards an often masks costs. “There have been articles written about how, when you’re paying in cash, things seem more expensive,” she explains. “I think part of it is an invisibility of the cost.”
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In its most basic form, coffee mixed with milk has been a thing in both European and Asian cuisine as far back as the 17th century, and the term ‘caffe latte’ was, according to the Oxford English Dictionary, first used in English in 1867 by the writer William Dean Howells. It is widely thought to have first been introduced to the United States in 1957 by Lino Meiorin, a Italian emigrant and the proprietor of Caffe Mediterraneum, a popular bohemian hangout in Berkeley.
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"Americans were not used to the strong flavor of Italian espresso, so Lino would keep saying, 'more latte'," Craig Becker, who owned the cafe before its closure, told the Daily Californian in 2009. "Finally, he decided to put a latte, a bigger drink, on the menu." According to the menu site Zomato, before Caffe Med closed in 2016, it was charging $3.75 for one of its lattes.
While the drink made its stateside debut in California, it gained widespread popularity thanks to coffee culture in Seattle in the late 1980s and early 1990s. Meister credits David Schomer, co-founder of Espresso Vivace, for popularizing the latte (and also latte art) among coffee cognoscenti in the Pacific Northwest. But, of course, it was Starbucks, founded in Seattle in 1971, that is chiefly responsible for popularizing lattes and other “fancy” coffee drinks around the country. By the end of the ‘90s, lattes were an integral part of the pop cultural lexicon. The Friends gang sipped them at Central Perk. In Austin Powers: The Spy Who Shagged Me, a simultaneous parody of both ‘60s and ‘90s culture, the character Dr. Evil hides his “evil lair” inside the Starbucks tower and gets foam on his face while sipping a latte sans plastic lid. A 2004 article by CNN Money bemoans the company’s decision to raise their prices for the first time in four years, noting that they’re banking on “loyal customers already willing to pay more than $3 for a tall latte will stick around.”
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Bryant Simon, a professor of history and director of the American Studies program at Temple University, began doing research for his 2009 book Everything but the Coffee: Learning about America from Starbucks in the early aughts. He spent time in Starbucks locations across the country, hoping to gain insight into just what it was that had become so relevant about this place and the milky, flavored concoctions it sold.
“It was basically an affordable status symbol,” he says. “You’d walk down the street with a cup of coffee from Starbucks in 1998 or so and people thought you were discerning and sophisticated and had money and maybe even a BMW parked out back.”
While Starbucks and its imitators even at the outset charged more than most Americans had ever paid for a cup of coffee, people were willing to get on board because, well, it looked cool and it seemed like everyone else was. “I think that there's also something about the solidarity of participating in something, even when maybe it doesn’t meet your expectations,” Meister says. “You know, how many people pay $100 for a gym membership and then just phone it in?.”
By 2005 or so, as celebrity tabloid culture reached a fever pitch, we were bombarded by paparazzi pictures of stars drinking an enormous cups of coffee, usually from Starbucks. But once the economic recession hit in 2008, the days of thoughtlessly plunking down what was then about $3.55 for an oversized coffee drink came to a screeching halt as consumers cut back. In 2009, Starbucks closed more than 300 stores, citing direct impact from the recession, which was also felt by other chains and by the owners of independent coffee shops and stands.
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Starbucks did several things to win back customers, including selling prepaid gift cards at a twenty percent discount at Costco. They introduced breakfast meals and grab-and-go lunch options, and perhaps most successfully, deployed limited-edition and seasonal drinks — things like Unicorn Frappuccinos and Peppermint Mochas and, famously, the Pumpkin Spice Latte, which dropped in 2003. Simon also credits the comeback to a kind of inadvertent rebranding on the part of Starbucks: While it’s no longer seen as particularly sophisticated, it has other sources of appeal. It’s familiar, it’s comfortable, it’s default. It’s a safe space of sorts. Just like a classic vanilla latte.
Since you’re going to be parting with a decent chunk of change regardless, it’s worth remembering that you have options. After all, if you’re willing to pay $6 for Starbucks, why not set aside a few dollars more for coffee that supports a local business, or at the very least has more enticing ingredients?
“One of the things that consumers can do is [recognize that] money is of kind of political and you're sort of voting with your dollar to a certain extent,” Meister says. “Do you have a bad experience somewhere? It's really easy to support another business that is doing authentic work that you actually appreciate and enjoy. If you're going to make a latte a part of your [everyday] ritual, then I think that everybody deserves a good latte.”
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