Is Inflation Changing People's Coffee Habits?

Coffee is one of those daily rituals that many people can't go without. There are plenty of memes, mugs, and T-shirts that will tell everyone just how you feel about the caffeinated beverage. And despite many American homes owning a coffee brewing device of some sort, coffee places like Starbucks still thrive. The reason for this is because coffee is more than just a caffeine buzz, it's comforting, it's something people enjoy socializing over, and a beverage that has become part of a routine for many people, per The Fashionisto.

In the first year of the pandemic, Starbucks saw a 12% decrease in sales. As people stayed in their homes, online coffee sales rose, per Reuters. However, during 2021, Starbucks and other coffee chains started seeing profits again. In fact, Starbucks profits outpaced pre-pandemic profits by a whopping 28%, per Macrotrends. Now, as inflation continues to skyrocket, will people's coffee habits change?

Coffee and inflation

According to Placer, coffee was more profitable than many other dining options during the pandemic. And even with inflation gripping the United States, coffee continues to be profitable. Starbucks saw an 18% increase in North American sales in the first quarter of fiscal year 2022 (via Starbucks), and that's despite raising its prices three times since October 2021, per CBS News. The increase in coffee beverage prices has been due to a number of factors such as the cost of milk, which CNN reports has increased by at least 38% in wholesale prices, and coffee beans. Coffee prices have increased partially due to drought and frost that hit Brazil's crops last year (via Barchart). The events have likely curbed the growth potential for Brazil's coffee for the next two years.

The truth about coffee seems to be that people still love it even with the rising costs of inflation. Yet, we could now be seeing a breaking point as sales for several coffee chains such as Starbucks and Dunkin' started to dip in June, with Starbucks seeing a 4.1% drop in profits and Dunkin' a 7.8% decrease (per Placer).