How Much Can You Save by Brewing Your Own Coffee?
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Let's begin with a quick look at some facts and figures about coffee consumption in the US in 2014 - a year in which the cost of coffee is rising dramatically in price (more on that later):
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While one of the most common money saving tips you'll encounter on the web revolves around how much you stand to save by avoiding that specialty cup o' Joe every morning, we wanted to dig a little deeper and break down the important numbers related to coffee consumption in an effort to help you identify exactly how much you stand to save each year. This isn't to advocate avoiding coffee all together (we know how important a little pick-me-up is at the start of the day), rather it's to emphasize the importance of educated choices and to analyze one choice: brewing your coffee at home vs. picking up a delicious latte at your favorite specialty shop.
It's not news that coffee is a popular beverage, and in spite of what you may have heard, a cup of coffee can actually be good for you. According to MedicalNewsToday.com, drinking a daily cup of coffee can reduce your risk of diabetes, Parkinson's disease and liver disease. Does this mean you should chug as many lattes as possible? Absolutely not - the addition of milk, cream and sweeteners (which 65% of coffee drinkers add to their beverage) are where most of the caloric value of coffee comes from. That's why coffee often gets a bad rap.
In truth, Coffee is the #1 source of antioxidants in the diet of most Americans, and a regular cup of black coffee has an extremely low calorie count (a typical cup of black coffee has only 2 calories - that's right ... just TWO!), so in moderation coffee can be a healthy beverage for a lot of people - and it's a popular way to boost energy and encourage you to stay active during the day - something which can improve overall health. While the price of coffee at your local grocery store is still manageable, most coffee drinkers are in the habit of paying a premium for the convenience (and delicious but unhealthy additions) which come when purchasing their beverage at the local coffee shop. Titans like Starbucks and Dunkin' Donuts (who combine to own 50% of the out-of-home market share) are cashing in and recently Starbucks announced another price increase to reflect the rising price of coffee. It's safe to say this price increase is also a direct response to the increase in demand for their products among consumers who prefer their coffee on the go. |
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Coffee Price Trends Over the Last 10+ Years
One important factor to analyze before we dig into the specifics of how much you can save on an annual basis by brewing your coffee at home is the recent annual tends in terms of the cost of coffee imported to the US each year. Let's look at that now:
Compare the price increase of Coffee over the past 10+ years to other beverages such as tea and it's easy to note a significant difference in the rate of price increase. In 2014 coffee prices have surged again - reaching nearly $2.20 per pound in May (up from $1.11 per pound at the end of 2013). This recent alarming price surge is the product of a severe drought in Brazil (the nation responsible for the production of about 1/3 of the world's supply of coffee), but even with this year's price increase put aside, the chart above indicates a steady trend of rising coffee prices which is expected to continue in the years ahead. Worth noting as part of this price discussion.
A specialty coffee drink like this one could cost you over $6 at your local coffee house. With practice could you make a similar cup at home?
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But what does this mean for the consumer who purchases a daily cup of coffee at Starbucks, Dunkin' Donuts or their local, privately owned specialty coffee shop? After all - none of these retailers are selling coffee at cost. Well let's begin by taking a closer look at how much you can actually save by brewing coffee at home. Later we plan to add an article with a similar analysis of the increasingly popular K-Cups.
Cost of Coffee Brewed At HomeThe SCAA (Specialty Coffee Association of America) states that 8.25 grams of ground coffee per 150 mL of water is the proper ratio to brew the ideally balanced cup. For the sake of comparison we'll use a 16 ounce cup of coffee (473 mL) for our analysis. We chose this size because it is the size many people would take with them on their way to work (or order at their local specialty coffee shop - this is the size of a Grande beverage at Starbucks). Brewing a cup of coffee of this size at home would require 26 grams of coffee. For reference 28.3 grams is an ounce.
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The logical next question becomes a matter of evaluating the cost of an ounce of coffee. For the sake of convenience we'll round up and estimate the average person will use 1oz. of coffee per 16 oz. serving. The brand of coffee you purchase to brew at home will dictate the cost. A 20 oz. bag of Starbucks coffee presently costs $13.99 (not including tax) or approximately $0.70 per ounce. To save money you could buy in bulk - for example a 4-pack of 12 ounce coffee bags by Eight O'Clock Coffee costs $21.97 ($0.46 per ounce) on Amazon at the time of writing. As an alternative - Folgers roasted grounds cost $0.34 per ounce. To reach an acceptable middle ground for the sake of this demonstration let's estimate that the average savvy shopper with sophisticated taste buds can expect to spend around $0.50 per ounce for coffee.
Additional Factors: Let's Get Specific
Of course if we're going to do an accurate comparison we should include all external factors. There's the cost of water and the electricity required to brew the cup (let's estimate this at one cent per cup) and the cost of coffee filters (we'll call this two cents per cup) plus the cost of buying the cup you'll drink it in (this is included when you buy a cup of coffee at a coffee shop - we'll call this one cent per cup of coffee you brew at home, spreading out the investment in a quality travel mug over time). Additionally you'll need a coffee pot with which to brew your coffee. If you invest in an inexpensive pot we can pro-rate this over time at 2 cents or so per cup. All told a cup of 16 oz. black coffee brewed at home will cost you an average of $0.56 per cup - less if you enjoy a budget coffee brand and slightly more if you purchase more expensive grounds.
Of course not everyone enjoys their coffee black. The cost increase of additions like cream and sweeteners will vary based on your tastes, but for the sake of this analysis let's keep it simple. For an International Delight creamer product you could expect to add about 10 cents per cup, but if you have more expensive tastes you could estimate adding $0.25-$0.30 per cup for delicious organic additions. This will bring the total cost of a tasty cup of coffee brewed at home to a very affordable price of less than a dollar ($0.81 - $0.86 per cup for expensive add-ons or just $0.76 per cup if you use a generic creamer). Worth noting: if you buy your coffee or creamer products in bulk you could save even more than these estimates.
Of course not everyone enjoys their coffee black. The cost increase of additions like cream and sweeteners will vary based on your tastes, but for the sake of this analysis let's keep it simple. For an International Delight creamer product you could expect to add about 10 cents per cup, but if you have more expensive tastes you could estimate adding $0.25-$0.30 per cup for delicious organic additions. This will bring the total cost of a tasty cup of coffee brewed at home to a very affordable price of less than a dollar ($0.81 - $0.86 per cup for expensive add-ons or just $0.76 per cup if you use a generic creamer). Worth noting: if you buy your coffee or creamer products in bulk you could save even more than these estimates.
"I like coffee because it gives me the illusion that I might be awake." -Lewis Black |
And what about the time invested? A major argument readers are sure to make at this point is that it's more convenient and/or efficient to stop at their local coffee shop on their way to work than it is to wake up early to brew their coffee. After all - part of the reason we love drinking coffee in the morning is that we aren't morning people! It's a valid argument so let's take a closer look:
If you get in the habit of setting up your coffee pot before going to bed (with practice this will take about a minute) you can flip a switch and start to brew your coffee the moment you get up in the morning. Once it's brewed you'll have to add cream, sweeteners and stir it all in your travel mug before heading out the door. This may take another minute or two, but even if you move slowly in the morning this will take you no more than 5 minutes of total time invested once you factor in clean-up each day. This is probably less time than it takes to go to your local coffee shop, stand in line, order, pay and wait for your drink. You may actually save time by brewing your daily coffee at home. |
The Results Are In: Let's Look at the Savings
While the price of coffee at your local coffee shop will vary based on your zip code (everything costs more in New York City, for example), for the sake of our analysis let's estimate that a Starbucks Grande (16 oz.) regular coffee will typically cost just over $2. The number of trips you make to Starbucks each week for a cup of coffee will likely vary, so we've put together this chart, estimating a conservative average savings of $1.25 per cup ($2.10 - $0.85) to give you a sense of how much you stand to save by brewing your coffee at home and using organic cream and natural sweeteners vs. buying regular coffee at a specialty coffee house.
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And if you're one of those brave souls who takes his or her coffee black then you stand to save 23% more ($1.54 savings per cup vs. $1.25 savings per cup).
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Lost in this table, though, is perhaps the most interesting and useful statistic of all - the fact that the average coffee drinker consumes 27.9 ounces of coffee daily - nearly 75% more than the amount of coffee used in the 16 ounce comparison above. If we recalculate based on this figure we get an average daily savings of $2.19 per day ($1.25 x 1.75). Let's take another look based on this adjusted figure to examine the average savings the average coffee drinker could expect based on the number of days per week he or she consumes coffee.
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Keep in mind that these savings estimates are based on a conservative cost differential for a traditional cup of coffee with high quality cream and sweetener for an individual who drinks an "average" amount of coffee each day. If you believe that you drink more coffee than the average coffee drinker or if you are in the habit of purchasing a more expensive caffeinated drink like a latte, cappuccino, etc. (which 30% of all Americans do) then these estimates are low and you could save even more money by switching to brew your coffee at home.
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The average price of an espresso-based coffee drink in the US is $2.45 per 9 ounces. If you switched from five 16 oz. espresso-based drinks a week to five 16 oz. cups of coffee with cream and sugar brewed at home we estimate that you would save $936 per year - enough for a small vacation. Final Thoughts & ObservationsClearly the data supports the frequently reported claim - if you are in a situation where you're trying to save money, pay down debt or increase your monthly cash in hand, then eliminating a stop at your local coffee shop by brewing your coffee at home is one way to make this change. But the fact of the matter is that where you get your coffee in and of itself has very little to do with your financial freedom. The financial lessons we can learn from the analysis contained in this article is a starting point ... a segue into a broader conversation - one which centers on owning your choices.
The main take-away from this coffee cost analysis has nothing to do with coffee. The lesson here is one of moderation and daily choices. These figures demonstrate how small changes to your lifestyle can have a significant impact on the state of your finances. The same lessons can be learned through a similar analysis of regularly dining out, spending money on drinks at a bar a few nights each week and many other choices that you make each day. It's always more expensive to pay someone else to provide a service that you're capable of doing yourself (cooking, mixing drinks, brewing coffee, your taxes, etc.). You pay extra when you ask someone else to provide the goods and services you're looking for and it's up to you to decide where your priorities lie. Would you rather pay down your debt or carry around a trendy cup with a mermaid on it? Would you rather put money away for a down payment on a home or make a daily coffee run with your coworkers as a break from the office grind? (bad pun, we know) Responsible money management is a matter of commitment and priorities. There's nothing wrong with buying expensive coffee every day and paying the minimum amount on your credit card bill - you're simply making a choice and saying to yourself and the rest of the world that the small but regular joy of a delicious beverage is more important than the feeling of accomplishment which will come when you're debt free.
If you're struggling with debt or hoping to save money for retirement, saving for college tuition or a large purchase, our advice isn't to swear off coffee. Rather, we recommend that you take the time to analyze the costs associated with daily expenses like coffee so that you're in a position to make educated choices which support your long-term goals. |
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