Global coffee prices rose to record highs this year, sending the cost of cappuccinos and lattes soaring. But a caffeine habit is hard to kick.<\/p>\n
So instead of giving up their daily brew, people are choosing cheaper options such as drive-through baristas or whole beans delivered to their door.<\/p>\n
An array of data, including visits to US coffee shops and international consumer surveys, point to a growing shift in coffee drinkers\u2019 habits that mirrors how consumers of everything from burritos to beef steaks are adapting to persistent inflation.<\/p>\n
It\u2019s a business trend that\u2019s raising competition for some of the biggest chains, but also a cultural shift among cost-conscious members of Gen Z.<\/p>\n
\u201cCoffee shops lost a bit of the shine, a bit of momentum as the home market grew,\u201d said James Hoffmann, a coffee connoisseur, YouTube influencer and co-founder of roasters Square Mile Coffee. The cheaper end of the market will keep expanding because \u201cthere are cost pressures on people, they need caffeine,\u201d he said at Europe\u2019s coffee-shop summit in Berlin last month.<\/p>\n
The price of high-end arabica beans favoured by chains such as Starbucks Corp. has surged over the last year as global supplies, largely from Brazil, were hit by a combination of poor weather and tariffs. Even with the recent pullback after President Donald Trump backed away from some trade levies, New York futures are trading for about $3.60 a pound, more than double the average level seen over the past two decades.<\/p>\n
The median price of a regular cup of coffee on menus across the US has risen almost 20% since early 2023, according to data compiled by Toast, which provides point-of-sale systems to restaurants.<\/p>\n
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US consumers spend more than $100 billion a year on coffee products, according to the National Coffee Association. As prices have risen, people \u201chave not necessarily been cutting back coffee consumption,\u201d Kona Haque, head of commodities research at ED&F Man, a top trader in agricultural goods, told Bloomberg Television. \u201cThey\u2019ve been trading down.\u201d<\/p>\n
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Exactly how they do this depends very much on whether a person views coffee as essential fuel or a quintessential luxury. An aficionado who craves a particular variety of bean or darkness of roast is going to do it differently from a busy parent who grabs a cup after the school run.<\/p>\n
Ed Harrison, a managing director at communications firm Inkhouse, falls into the first category. He used to go to a coffee shop six to seven times a week, but now visits just four times a month. Instead, he\u2019s purchased a grinder, drip-coffee maker and espresso machine for his Massachusetts home.<\/p>\n
It\u2019s expensive upfront but \u201cthere\u2019s no comparison\u201d in the daily savings, Harrison said.<\/p>\n
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<\/p>\nWorkers wash and dry coffee cherries following a harvest in Jacutinga, Minas Gerais state, Brazil in July.<\/p>\n<\/div>\n
In an October survey of 1 900 international coffee consumers, Citigroup found that rising prices have driven 37% of people to make more coffee at home. This was a worldwide trend, with drinkers in the US, Australia, China, Thailand and the UK showing similar shifts. Of those who weren\u2019t already doing so, about two-thirds told the bank they expect that to change in the next 12 months.<\/p>\n
US-based Trade Coffee, which sells from local roasters direct to consumers largely via a subscription, previously tailored to aficionados who bought whole beans to grind at home. Its latest cold brew offerings brought new customers who instead \u201cvalued that they were saving money,\u201d said Jessica Crystal, the company\u2019s director of growth marketing.<\/p>\n
During last month\u2019s Black Friday sales in the UK, purchases of home coffee machines jumped by 43% from a year earlier, according to data compiled by NielsenIQ.<\/p>\n
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Even cheaper options for decent homemade coffee \u2014 private-label brands that are produced by roasters but sold under a major retailer\u2019s own brand name \u2014 are \u201cincreasingly more important when budgets are tight,\u201d said Jeffrey Young, managing director at research firm Allegra Strategies.<\/p>\n
Westrock Coffee, a private-label manufacturer with a ready-to-drink plant in Arkansas that opened last summer, is already getting demand that exceeds its capacity and building new production lines, said Chief Operating Officer Will Ford.<\/p>\n
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Among people without the time or the inclination to brew coffee at home, behaviour is also changing.<\/p>\n
Locations in the US that specialise in cheaper drive-through and convenience store coffees are seeing growth in customer visits, some in the double-digits, said RJ Hottovy, the head of analytical research at Placer.ai, which tracks foot traffic. In contrast, established chains Starbucks and Tim Hortons Inc. \u2014 which also have drive-throughs \u2014 saw declines in per-store visits from January to November from a year earlier.<\/p>\n
Starbucks Chief Executive Officer Brian Niccol said on a call with analysts earlier this year that the company\u2019s three businesses \u2014 in-store, drive-through and digital \u2014 \u201care each substantial on their own.\u201d He said in October that customer value perceptions had strengthened across all generations for the fiscal year, as the company snapped a six-quarter decline in sales at established stores.<\/p>\n
A Tim Hortons spokesperson said the company serves both coffee and other food options \u201cwith strong everyday value that is highly competitive versus our peers.\u201d<\/p>\n
The expanding chains have \u201cdone a good job keeping that average cup of coffee or coffee-based drinks relatively cheap,\u201d Hottovy said. They are also benefiting from rural and suburban population growth where coffee shops are less concentrated, he said.<\/p>\n
Companies like 7 Brew Drive-Thru Coffee are opening new stores to meet demand.<\/p>\n
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\u201cTo continue to grow and be successful, we don\u2019t need the coffee market to expand,\u201d said Scott Romanoff, a co-managing partner at Franchise Equity Partners, which bought a majority stake in the second-largest franchise owner of 7 Brew in September. The company can keep taking market share away from legacy chains, he said.<\/p>\n
These various trends come together in what could be a generational shift away in how and where people drink coffee.<\/p>\n
There\u2019s been a surge in popularity on TikTok of Gen Z users who share their tricks for emulating the coffee shop experience on a budget, from making cold brew in their refrigerators to bulk-buying plastic cups for iced lattes. The number of posts featuring the hashtags #HomemadeCoffee or #CoffeeMaker have doubled over the past year, according to figures from the social media company.<\/p>\n
Fueling this trend are people like 27-year-old Abi Whitlock, the self-styled \u201c7Brew Lovin\u2019 Bestie\u201d from central Illinois who enthusiastically reviews beverages from the driver\u2019s seat of her car for 62 000 followers. Or Gill Riley, a 20-year-old American attending college in Barcelona, who shares tricks like foaming milk at home with a French press.<\/p>\n
Even with all the cost pressures, human nature is likely to keep coffee shops alive, Hoffmann said in Berlin.<\/p>\n
\u201cI still like hanging out with people, and coffee shops remain the place to do that,\u201d he said.<\/p>\n
Riley said she might be inclined to grab a cup in a coffee shop more often if prices came down. But for now she \u201ccan just make coffee at home and it\u2019s a lot easier and a lot cheaper.\u201d<\/p>\n
\u00a9 2025 Bloomberg<\/p>\n Follow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\n