2015-07-29

More Gallup Fun: This Time On Coffee

Here's a result that surprised me (emphases mine):
With research studies showing that moderate coffee consumption has no adverse health effects, and may even have some health benefits, it may be surprising that the proliferation of coffee shops throughout the country hasn't hooked more people or caused current coffee drinkers to consume more. It may be that people are sensitive to their body's tolerance for caffeine and know when enough is enough, creating a natural barrier to consuming ever-increasing amounts. As a result, corner coffeehouses and advanced home brewing machines may make drinking coffee more convenient -- and even more pleasant -- for people, but they are not stirring Americans to drink more.
As it turns out, coffee is not a particularly lucrative investment from a non-drinker's standpoint. TradingEconomics.com shows the price of coffee as being approximately flat (trend-wise) over a 30-year period:



Can you think of many other commodities that show an essentially flat trendline over the same period of time?

In inflation-adjusted terms, this means that coffee has actually fallen in price since 1980 despite an increase in consumption (although not per capita). As Gallup indicates, this at least in part comes from the increase in coffee suppliers out there. More coffee shops means lower prices, satisfying the law of supply.

Those of you hoping to participate in the so-called "artisan economy" may want to do your homework first. An increasing number of coffee shops chasing a somewhat static number of coffee dollars means progressively less profit for coffee artisans. Nothing an Italian barista couldn't have told you, but how many people know one of those?