If you live in northeast Montana, the nearest Starbucks might be 192 miles from home while you could choose among 62 Starbucks between 42nd and 59th Street in Manhattan. Beyond the US, Italy has no Starbucks, Canada has 1396 and China, 1219. And, except for Morocco and Egypt, Starbucks has no stores in continental Africa.
You can see from this worldwide Starbucks map that the US has the most. The US total at the end of May 2014 was 11,563.
Below, The Economist compares worldwide tea and coffee consumption:
Why are we looking at coffee consumption? Because coffee is perceived as a luxury good in the developing world, it can be a handy economic indicator.
In Uganda, a 28-year old dentist says her 7:30 in-the-morning cup of coffee at a coffee shop is her favorite time of the day. Although Uganda is a tea drinking country and a coffee exporter, the number of “swanky” (a WSJ adjective) coffee shops is growing. Correspondingly, The Economist’s Global Forecasting Service reported that coffee consumption was up 5% to 6% in developing nations. They also point out though that recently “muted economic conditions” have led to less coffee consumption growth.
Our bottom line? 2 economic ideas:
1. Income shifts demand curves: As a luxury good, coffee consumption depends on rising incomes. Consequently, when incomes increase, so too does the demand for coffee.
2. Luxury goods usually have an elastic demand curve: Not only do we have a curve that shifts when income changes but also, because the coffee demand curve itself is somewhat elastic, we sloped it a bit more horizontally. Thinking economically, elasticity means that when price changes by a certain percent, the quantity response takes an even larger leap.
A final thought: With tea possibly making a comeback, could it also become an economic indicator? Please let us know your opinion in a comment.
How Can Coffee Consumption Be an Economic Indicator?
Elaine Schwartz
Elaine Schwartz has spent her career sharing the interesting side of economics. At the Kent Place School in Summit, NJ, she has been honored through an Endowed Chair in Economics and the History Department chairmanship. At the same time, she developed curricula and wrote several books including Understanding Our Economy (originally published by Addison Wesley as Economics Our American Economy) and Econ 101 ½ (Avon Books/Harper Collins). Elaine has also written in the Encyclopedia of New Jersey (Rutgers University Press) and was a featured teacher in the Annenberg/CPB video project “The Economics Classroom.” Beyond the classroom, she has presented Econ 101 ½ talks and led workshops for the Foundation for Teaching Economics, the National Council on Economic Education and for the Concord Coalition.
