Coffee drinkers, especially frequent coffee drinkers, consider availability of coffee at work to be “very” to “extremely” important. This was one of the findings of the research conducted by Harris Interactive on beverage consumption trends presented at the National Automatic Merchandising Association Coffee Service Education Summit in Cherry Hill, N.J. earlier this summer.
Another significant finding was that consumption of bottled water at work has increased dramatically over the past year, outpacing all other beverages. During the same period, coffee consumption held steady overall while there was a drop in soda/iced tea, hot chocolate/iced tea and specialty coffee drinks.
The Harris Interactive research reinforced some of the findings reported earlier this year in Automatic Merchandiser’s “Case for Vending” series, beginning in January. Automatic Merchandiser extracted some of the findings of the Harris Interactive research to formulate part 6 of “The Case for Vending,” specifically those findings regarding how consumers view the importance of beverage refreshments in the work place.
One takeaway from the Harris Interactive research is that in the past year, heavy coffee consumers are increasing their consumption of coffee and other beverages in the work place. The growth could be driven by the desire to spend less money on refreshments outside of the work place due to the recession.
The Harris Interactive information revealed that a cadre of consumers place a great premium on the availability of workplace refreshments. This finding supports Automatic Merchandiser’s report in January that a minority of consumers make the majority of vending purchases, and among this select group, vending sales have not declined as much as sales in other venues.
SPECIALTY COFFEE: AN OPPORTUNITY
The Harris Interactive findings concerning specialty coffee reveal an opportunity for refreshment service providers. The research found that specialty coffee consumption at work, unlike regular coffee consumption, declined in the past year.
However, the decline in specialty coffee drinks at work was likely due to a drop in availability, which the survey also found. The consumption of specialty coffee in all retail channels continues to hold steady, according to various industry sources. The lack of availability in the work place represents an opportunity for refreshment service operators to add sales.
The Harris Interactive research, which is based on an online survey among a stratified random sample of employed American adults, age 18 and above, was conducted in June of 2009. A total of 1,438 respondents participated in the survey.
COFFEE AT WORKS MAKES EMPLOYEES FEEL APPRECIATED
The research found that having coffee in the work place makes coffee drinkers feel like their employer cares about them, making them feel appreciated and valued at work, the researchers claimed.
The obesity epidemic has inspired calls for public health measures to prevent diet-related diseases. One controversial idea is now the subject of public debate: food taxes.
Forty states already have small taxes on sugared beverages and snack foods, but in the past year, Maine and New York have proposed large taxes on sugared beverages, and similar discussions have begun in other states. The size of the taxes, their potential for generating revenue and reducing consumption, and vigorous opposition by the beverage industry have resulted in substantial controversy. Because excess consumption of unhealthful foods underlies many leading causes of death, food taxes at local, state, and national levels are likely to remain part of political and public health discourse.
Sugar-sweetened beverages (soda sweetened with sugar, corn syrup, or other caloric sweeteners and other carbonated and uncarbonated drinks, such as sports and energy drinks) may be the single largest driver of the obesity epidemic. A recent meta-analysis found that the intake of sugared beverages is associated with increased body weight, poor nutrition, and displacement of more healthful beverages; increasing consumption increases risk for obesity and diabetes; the strongest effects are seen in studies with the best methods (e.g., longitudinal and interventional vs. correlational studies); and interventional studies show that reduced intake of soft drinks improves health.1 Studies that do not support a relationship between consumption of sugared beverages and health outcomes tend to be conducted by authors supported by the beverage industry.2
Sugared beverages are marketed extensively to children and adolescents, and in the mid-1990s, children's intake of sugared beverages surpassed that of milk. In the past decade, per capita intake of calories from sugar-sweetened beverages has increased by nearly 30% (see bar graphDaily Caloric Intake from Sugar-Sweetened Drinks in the United States.)3; beverages now account for 10 to 15% of the calories consumed by children and adolescents. For each extra can or glass of sugared beverage consumed per day, the likelihood of a child's becoming obese increases by 60%.4
Taxes on tobacco products have been highly effective in reducing consumption, and data indicate that higher prices also reduce soda consumption. A review conducted by Yale University's Rudd Center for Food Policy and Obesity suggested that for every 10% increase in price, consumption decreases by 7.8%. An industry trade publication reported even larger reductions: as prices of carbonated soft drinks increased by 6.8%, sales dropped by 7.8%, and as Coca-Cola prices increased by 12%, sales dropped by 14.6%.5 Such studies — and the economic principles that support their findings — suggest that a tax on sugared beverages would encourage consumers to switch to more healthful beverages, which would lead to reduced caloric intake and less weight gain.
The increasing affordability of soda — and the decreasing affordability of fresh fruits and vegetables (see line graphRelative Price Changes for Fresh Fruits and Vegetables, Sugars and Sweets, and Carbonated Drinks, 1978–2009.) — probably contributes to the rise in obesity in the United States. In 2008, a group of child and health care advocates in New York proposed a one-penny-per-ounce excise tax on sugared beverages, which would be expected to reduce consumption by 13% — about two servings per week per person. Even if one quarter of the calories consumed from sugared beverages are replaced by other food, the decrease in consumption would lead to an estimated reduction of 8000 calories per person per year — slightly more than 2 lb each year for the average person. Such a reduction in calorie consumption would be expected to substantially reduce the risk of obesity and diabetes and may also reduce the risk of heart disease and other conditions.
Some argue that government should not interfere in the market and that products and prices will change as consumers demand more healthful food, but several considerations support government action. The first is externality — costs to parties not directly involved in a transaction. The contribution of unhealthful diets to health care costs is already high and is increasing — an estimated $79 billion is spent annually for overweight and obesity alone — and approximately half of these costs are paid by Medicare and Medicaid, at taxpayers' expense. Diet-related diseases also cost society in terms of decreased work productivity, increased absenteeism, poorer school performance, and reduced fitness on the part of military recruits, among other negative effects.
The second consideration is information asymmetry between the parties to a transaction. In the case of sugared beverages, marketers commonly make health claims (e.g., that such beverages provide energy or vitamins) and use techniques that exploit the cognitive vulnerabilities of young children, who often cannot distinguish a television program from an advertisement.
A third consideration is revenue generation, which can further increase the societal benefits of a tax on soft drinks. A penny-per-ounce excise tax would raise an estimated $1.2 billion in New York State alone. In times of economic hardship, taxes that both generate this much revenue and promote health are better options than revenue initiatives that may have adverse effects.
Objections have certainly been raised: that such a tax would be regressive, that food taxes are not comparable to tobacco or alcohol taxes because people must eat to survive, that it is unfair to single out one type of food for taxation, and that the tax will not solve the obesity problem. But the poor are disproportionately affected by diet-related diseases and would derive the greatest benefit from reduced consumption; sugared beverages are not necessary for survival; Americans consume about 250 to 300 more calories daily today than they did several decades ago, and nearly half this increase is accounted for by consumption of sugared beverages; and though no single intervention will solve the obesity problem, that is hardly a reason to take no action.
The full impact of public policies becomes apparent only after they take effect. We can estimate changes in sugared-drink consumption that would be prompted by a tax, but accompanying changes in the consumption of other foods or beverages are more difficult to predict. One question is whether the proportions of calories consumed in liquid and solid foods would change. And shifts among beverages would have different effects depending on whether consumers substituted water, milk, diet drinks, or equivalent generic brands of sugared drinks.
Effects will also vary depending on whether the tax is designed to reduce consumption, generate revenue, or both; the size of the tax; whether the revenue is earmarked for programs related to nutrition and health; and where in the production and distribution chain the tax is applied. Given the heavy consumption of sugared beverages, even small taxes will generate substantial revenue, but only heftier taxes will significantly reduce consumption.
Sales taxes are the most common form of food tax, but because they are levied as a percentage of the retail price, they encourage the purchase of less-expensive brands or larger containers. Excise taxes structured as a fixed cost per ounce provide an incentive to buy less and hence would be much more effective in reducing consumption and improving health. In addition, manufacturers generally pass the cost of an excise tax along to their customers, including it in the price consumers see when they are making their selection, whereas sales taxes are seen only at the cash register.
Although a tax on sugared beverages would have health benefits regardless of how the revenue was used, the popularity of such a proposal increases greatly if revenues are used for programs to prevent childhood obesity, such as media campaigns, facilities and programs for physical activity, and healthier food in schools. Poll results show that support of a tax on sugared beverages ranges from 37 to 72%; a poll of New York residents found that 52% supported a “soda tax,” but the number rose to 72% when respondents were told that the revenue would be used for obesity prevention. Perhaps the most defensible approach is to use revenue to subsidize the purchase of healthful foods. The public would then see a relationship between tax and benefit, and any regressive effects would be counteracted by the reduced costs of healthful food.
A penny-per-ounce excise tax could reduce consumption of sugared beverages by more than 10%. It is difficult to imagine producing behavior change of this magnitude through education alone, even if government devoted massive resources to the task. In contrast, a sales tax on sugared drinks would generate considerable revenue, and as with the tax on tobacco, it could become a key tool in efforts to improve health.
The price of green Arabic coffee is at a 13-year high, and other ingredients such as dairy, sugar and cocoa have experienced market volatility. That means the company is upping the price of some of its more complicated beverages and considering raising the price of packaged coffee.
“Over the last six months a highly speculative green coffee market and dramatically increased commodity costs have completely altered the economic and financial picture of many players in the coffee industry,” said Starbucks CEO Howard Schultz. “And while many, if not most, coffee roasters and retailers began raising prices months ago, we have thus far chosen to absorb the price increases ourselves and not pass them on to our customers.”
Not anymore. Schultz said the “extreme nature of the cost increases” is forcing the Seattle-based coffee company to raise prices.
Starbucks officials said Wednesday the company will maintain or lower the price of some of its most popular beverages, including its $1.50 tall coffee. But more “labor-intensive and larger-sized beverages” will cost more.
If green coffee prices continue to rise, it’s possible Starbucks will charge more for packaged products, too.
