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The Economics of: Coffee

The Economics of: Coffee

The Sasquatch household did a fun experiment last month. I wanted to see how much each home brewed coffee cost in our house. We get our coffee in bulk from Community Natural Foods, our favourite is the Fair Trade Organic Medium Roast Coffee from Costa Rica. To fill our reusable coffee container with whole coffee beans costs $23.00. In order to see how many coffees this amount made, Mama Sas and I tallied up each coffee we made until the container was empty. This turns out to be 50 Americano coffees... OK, OK, it was only 49.5 coffees but let's round up to keep this simple. Our tallies show us that $23.00 of beans turns into 50 coffees equating $0.46 a coffee. I think that it is pretty reasonable to drink premium coffee daily for under 50 cents!

How much would this have cost if we bought our daily cup of joe at a coffee shop? According to The Huffington Post, the average person pays $3.28 for coffee at a coffee shop. In this particular scenario, we would be saving ($3.28-$0.46) $2.82 per coffee. As you can see each coffee you buy at a coffee shop is costing you over 7 times what it would cost to make your coffee at home. What would the daily savings of this be? According to the 2010 Canadian Coffee Drinking Study, Canadians drink 2.8 cups of coffee each day. Multiplying that amount for both Mama Sas & I, by our coffee savings number of $2.82  (4 x $2.82) $7.90 savings a day. I put that into our spreadsheet for 40-year savings at 5% and wow...making coffee at home just saved us $365,742.46. 

Those savings are unreal,  but let's get a little bit more detailed and look at the numbers more closely as it relates to the Sasquatch Family. Mama Sas and I take our Coffee habit pretty seriously and as a result we have bought some pretty high-end coffee equipment. Between our coffee bean grinder and Expresso machine we have sunk around $900 into delicious coffees at home. We mostly make Expressos and Americanos. Starbucks charges $2.89 for a tall Americano saving us $2.43 a coffee every time we brew one at home. We both drink around 2 Americanos a day. So that’s a savings of $9.72 a day. It only took us 93 days to pay off our coffee equipment by simply brewing our own coffee at home. 

I also extrapolated these new Sasquatch family numbers. We save $9.72 a day and I deducted the $900 it cost to buy our fancy coffee machines. Over a 40 year period, this would save us $443,967.83. So making our coffee at home is saving us nearly half a million dollars! 

Now, I know only a crazy person would buy every single coffee at a coffee shop, so let's look at some additional savings models. If the average Canadian coffee drinker drinks 2.8 cups a day that's roughly 20 cups of java a week. Using the Sasquatch family savings of $2.43 per coffee listed above we can assume a weekly savings potential of $48.60.  That means that potentially every coffee you buy would reduce the savings amount of $48.60 by $2.43. I will now graph the savings potential if you were to buy 1 coffee a week, 3 coffees a week, 5 coffees a week, and finally 10 coffees a week. The following graph compares these 4 options versus not buying any coffee at all at a coffee shop.

Coffee Savings

 

Visually it's crazy to see that buying just 1 coffee a week could potentially effect your savings by over $16,000, buying 3 coffees knocks your savings down by nearly $50,000...but nothing compares to dropping your savings in half if you by 10 coffees a week. I hope this graph illustrates how small changes can easily make a huge difference in your savings! 

Papa Sas

Food for Thought

Food for Thought

The Economics of: Buying Nothing New April 2016

The Economics of: Buying Nothing New April 2016