According to XTB, there has been a significant rise in coffee prices, including a 100% year-on-year increase in commodity prices. Consumers have already felt the squeeze, with the price of an average Americano increasing by over 12% in the last three years.
If, like many, you rely on a caffeine hit to get you through the day, here are some easy ways to keep a lid on your coffee spending.
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The rising price of coffee in 2021
Due to the substantial price rise, XTB reports that the coffee market was “in serious chaos last year”. The ICE Arabica coffee futures contract is currently trading around $240 per pound, compared to $100 in January 2021. According to Fortune.com, coffee has posted “the largest price rise of any commodity in 2021 – a year that has consistently broken records across markets for energy and food.”
What’s caused this increase in coffee prices? Two key factors are extreme weather events impacting supply, and an increase in energy, shipping and labour costs. These costs are now being passed on to consumers, with XTB estimating the price of a cup of coffee could increase by 30%.
What are the most expensive coffee choices?
According to XTB, cappuccino-lovers pay the highest average price per cup at £2.75. Lattes are a close second at £2.74. The cheapest option is a single espresso at £1.67. The average prices of Americanos, cappuccinos and lattes have all increased by more than 10% in the last three years.
The major coffee shop chains charge very similar prices for regular coffees. Based on a medium Americano to take away, Costa offers the cheapest option at £2.85, followed by £2.90 at Starbucks and £2.95 at Caffè Nero (in Central London).
How to save money on your takeaway coffee
Here are a few tips to help you save money on your takeaway coffee:
- Most coffee shops offer a 25p-50p discount for bringing your own reusable mug.
- Sign up for loyalty schemes: Costa offers your ninth cup of coffee free, although Starbucks requires you to buy 20 regular Americanos to earn one free cup.
- For heavy (coffee) drinkers, the monthly subscription at Pret a Manger might be worth considering. It offers five hot drinks a day for £25 per month. At £2.40 per coffee, this might be good value for people drinking more than eight coffees a month.
- Look beyond the coffee shop chains: McDonald’s offers a cheaper option at 99p for an Americano.
- Consider ordering a smaller size or dropping the extras: although a painful test of willpower, losing the whipped cream, marshmallows and extra shot of vanilla might be a good option for your wallet – and your health.
- And the best cost-saving tip? Make your own coffee at home and fill up a flask.
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Save money by brewing your coffee at home
For the more casual coffee drinker, the price of a cup of Nescafe Gold Blend is around 5p and the more upmarket Nescafe Azerais 10p.
If you’re looking to buy a coffee machine, Nespresso machines are a popular choice. Their machines typically cost upwards of £80 and require you to buy individual capsules to make a cup of coffee. There’s a wide range of speciality coffee types, costing around 35p-50p per capsule.
At home, I had a Nespresso machine that was small and easy to clean. However, the cup size was relatively modest and required two capsules to make a large Americano. During lockdown, my coffee-loving husband got through £150 of capsules in a month, so it was time for a rethink.
Bean-to-cup machines may be attractive to households drinking a large number of coffees. Budget models cost around £50-£100, with mid-range machines costing £300-£500. The beans cost around 14p for a large Americano, enabling us to recoup the higher initial outlay on the bean-to-cup machine after a few months.
How the savings can add up
A New Year’s resolution to buy one less takeaway coffee a day could add up to a substantial saving of £20 a week or £1,000 a year. Invest it for a few years in a Stocks and Shares ISA and you might be able to upgrade from a wet mini-break in the UK to a dream trip to Sydney.
According to Goldman Sachs, the S&P 500 achieved annual returns of 13.6% over the past 10 years. Although past performance is not an indicator of future results, investing £1,000 a year for five years would have resulted in a pot of nearly £6,000 based on these annual returns. It’s a good way to stop your morning coffee habit leaving a bitter taste in your mouth.
