Coffee is one of the most popular beverages worldwide. In the United States, the figures related to coffee consumption are impressive, with more than 60% of adults drinking coffee daily. According to the National Coffee Association (NCA), 46% of coffee consumed in 2017 was tasted outside the home, while an emerging trend privileged the consumption of specialty coffee (Auffermann, 2017). The price for a coffee ranges from $2,7 for an average cup of standard coffee to even $80 for a cup of Kopi Luwak, the most expensive coffee in the world. In this paper, I will evaluate which is the cost I would be willing to pay for an average cup of coffee, highlighting how ethical considerations could affect this value, and assessing the consumer surplus on my consumption.
The popularity of coffee is steadily growing, and the demand for quality and fairly traded coffees is on the rise. The diffusion of ethical principles in trading has led to a widely spread social awareness, where recognizing the right value to small coffee producers is considered paramount by consumers, producers, and sellers. Even a giant like Starbucks shows attention to small producers and evaluates sustainability, claiming that 100% of its coffee is ethically sourced. The fair trade ideal has progressively led to the abandonment of the traditional market in favor of direct trading, giving birth to the Third Wave coffee market. Interestingly, this practice has favored the emerging of shared values across the market, with a new lexicon that defines the quality of the coffee through the narrative of its provenance, ecology, attention to detail, and integration (Morland, 2018). These symbolic values influence demand, offer, and prices across the globe.
Such an approach to the world of coffee is desirable, as it makes the simple act of tasting a cup of coffee a unique experience, a sort of narration, where taste, flavor, and scent evoke distant and exotic lands. Indeed, I agree with those scholars who claim that authentic social interaction thrives in third-wave coffeehouses, where even shop employees play a role in the narration (Manzo, 2015). However, consumers should keep themselves informed on the dynamics behind the fair trade market and expensive coffees such as the Kopi Luwak. For example, while many buyers prefer fair trade brands in the trust that they are improving the lives of small producers worldwide; recent changes in the certification policies are creating more than a problem for small coffee farmers. Also, the increasing popularity of the Kopi Luwak coffee has resulted in intensive farming where civet-cats, essential in the manufacturing process of this coffee, are caged and forced to live in terrible conditions.
Assessing the cost of a cup of coffee should take into consideration all the topics discussed above. Considering the cost of production per cup of coffee ranging from $0,30 to $0,60, and a labor cost comprised between $0,20 and $0,40, I would be willing to pay no more than $3,00 for a cup of standard coffee at Starbucks or McDonald. However, for a cup of specialty coffee, I would be willing to pay even $5,00 or more, depending on the shared values involved in the ‘narration’. On this consumption, there is a consumer surplus, as I am willing to pay a cup of coffee more than the current price.
Summing up, the average cost of a cup of coffee should take into consideration the added values of the current trend in the market besides the traditional parameters of the labor force and the production cost. These values are the result of the fair trade policies and relate to some narrative components of specific coffees, such as origins, history, and ecological impact among others. Under this perspective, I would be willing to pay more than the current average cost for a cup of coffee, creating a consumer surplus.
References
Auffermann, K. (2017). From brew boomers to the gourmet generation: National coffee drinking trends 2017 [Blog post]. Web.
Manzo, J. (2015). “Third-Wave” coffeehouses as venues for sociality: On encounters between employees and customers. The Qualitative Report, 20(6), 746-761. Web.
Morland, L. (2018). Values added in speciality coffee. Connecting product and place through songlines.The International Journal of Entrepreneurship and Innovation, 19(2), 113-124. Web.