Comments on: Starbucks and the Coffee-Wine Paradox

By: Ms. Drinkwell

Ms. Drinkwell — Tue, 20 Oct 2009 01:05:21 +0000

Admittedly I don’t know much about coffee, but I do know a little about the costs associated with wine — some of which are mentioned in the comments above. One that hasn’t been mentioned is the cost of vineyard land, which in Napa Valley, for instance, is very expensive, a quarter million dollars an acre is common, and if you find that cost prohibitive and decide to buy your grapes from a grower you’ll pay a lot, too. In California the best quality cabernet and pinot noir grapes sell for around $4 – $6,000 dollars a ton or more. Everybody likes oak barrels, and a new one costs about $1,000. Factor in the costs of fancy steel tank fermenters, labor, bottling, marketing, time the wine spends aging before you can sell it, etc. and the price for a producer to break even suddenly isn’t so low. Then there’s the restaurant markup, which is often pretty astronomical….
That said, you can get some really good, interesting bottles for under $20, even under $15, you just don’t typically find them among the usual suspects.

By: Rob Boyd

Rob Boyd — Mon, 19 Oct 2009 07:22:42 +0000

Good question and a couple of very good answers here, Mike. Another factor not mentioned so far is that coffee is roasted and then as fast as the supply chain allows it is served and drunk, while wine sits around in expensive French oak barrels for months or even years, adding to the eventual cost.

By: Steve

Steve — Sat, 17 Oct 2009 22:36:58 +0000

Hi Mike,

Your blog is one of the 5 best on the planet!

The 2 things that really differentiate coffee from wine is 1. shipping (much, much cheaper for coffee) and 2. wine is a complete product when sold, which amplifies wholesale and retail costs. If coffee was brewed in Colombia and then shipped to Starbucks around the world, the price would be astronomical.

By: RobL

RobL — Sat, 17 Oct 2009 04:41:43 +0000

Another odd thing about espresso coffee prices, they are not all that much more than coffee in a restaurant. Down here in SW WA I typically pay $2 for my coffee. And I wouldn’t dream of customizing it. The waitress would likely burst out laughing.

Wine price ratios – it beats me. I have compared some of our better WA wines at the $6, 10, 15, and 30 price range (haven’t gone above that). The upper two are better than the lower two, but I don’t think I could differentiate between adjacent price points. I am not sure it is a rational market.

By: steve kirchner

steve kirchner — Fri, 16 Oct 2009 18:08:03 +0000

i bet shipping and storage costs are lower for coffee. and there are more taxes on wine than on coffee. plus the cost of a local license to sell beer/wine. plus all the other dealings with the authorities over alcohol.
i think there is also a marketing factor. ‘gourmet’ coffee seems like a (relatively) recent phenomenon while ‘fine’ wine has been around for centuries. maybe some smart guy in colombia will come up with something like a ‘single vineyard wine’ – how do you say ‘terroir’ in spanish?
And finally, is the best coffee in the world really that much better than average coffee? I haven’t tasted the best wine in the world but i recently had a ’98 cheval blanc. Coffee will never be able to do that (for me, at least).
And the long-term trend for the price of water is up – a better investment than diamonds!