Coffee Prices Soar in 2024: A State-by-State Analysis

Does $4 sound like a "latte"? A new report examines coffee and tea trends across all 50 states to understand how much Americans are paying per cup and why.

Average Prices Across the U.S.

In its Q1 2024 Restaurant Trends Report, Toast analyzed the average prices of regular coffee, cold brew, lattes, and tea in each U.S. state. The financial services company found that during the first quarter of 2024, guests across the country paid an average of:

• $3.08 for a cup of regular coffee

• $5.14 for cold brew

• $5.46 for lattes

• $3.74 for tea

Coffee Prices by State

The study highlighted significant regional variations in coffee prices. Hawaii had the highest average coffee prices in the country at $4.89 per cup, approximately 59% higher than the national average. California followed with an average price of $3.88, still 26% higher than the national average. In contrast, Nebraska offered the lowest average price at $2.12 per cup, 31% below the national average.

Trends in Cold Brew and Tea

Similar trends were observed with cold brew and tea prices, with Hawaii and California topping the charts. However, Alaska surpassed California for the second-most expensive latte, priced at $6.09. The highest average latte price was found in Hawaii at $6.69. The high prices in Hawaii and Alaska are attributed to the cost of milk and the logistical challenges of shipping goods to these remote locations.

Tea Popularity

Interestingly, the report found that tea is more popular than coffee in 31 states, indicating a significant regional preference for tea over coffee.

Most Expensive States for a Cup of Coffee

1. Hawaii: $4.89

2. California: $3.88

3. Washington: Higher than national average

4. Arizona: Higher than national average

5. Massachusetts: Higher than national average

6. Colorado: Higher than national average

7. Utah: Higher than national average

8. Florida: Higher than national average

9. Vermont: Higher than national average

10. New Mexico: Higher than national average

Cheapest States for a Cup of Coffee

1. Nebraska: $2.12

2. Montana: Lower than national average

3. Kansas: Lower than national average

4. North Dakota: Lower than national average

5. West Virginia: Lower than national average

6. South Dakota: Lower than national average

7. Iowa: Lower than national average

8. Wisconsin: Lower than national average

9. Mississippi: Lower than national average

10. Indiana: Lower than national average

External Factors Affecting Coffee Prices

The report underscores the increasing focus on beverage costs amid high inflation and extreme weather affecting harvests. Cultivating coffee and cocoa requires specific conditions, and frequent weather events like heat waves, heavy rainfalls, and droughts are damaging harvests and impacting supply. For example:

• Brazil: In 2021, a sustained drought followed by two July frosts significantly affected Brazil's coffee output, raising wholesale prices for Arabica beans to over $2 per pound. The frost severely impacted the 2022-23 harvest.

• Adverse Weather: Adverse weather conditions, mostly in the Southern Hemisphere, have played an important role in driving several food commodities sharply higher, as noted by Ole Hansen, head of commodity strategy at Saxo Bank.

Inflation's Role

While inflation has decreased from its peak of 9.1%, progress has plateaued since last summer, keeping prices high. This persistent inflation affects the cost of living, including the prices of everyday commodities like coffee.

Impact on Small Businesses

Small businesses like Pluto Organic Cafe in Seattle have struggled with rising costs. Owner Maher Youssef explained that while they've relied on credit cards to cover expenses, they can only raise prices minimally to avoid losing customers.

"We’re a small business. I can’t raise the prices too much. The maximum we can raise is about 50 cents to a dollar because if we set prices too high, people won’t buy from us," Youssef told Fox News.

Conclusion

As inflation and external factors continue to affect the coffee market, consumers and small businesses alike are navigating the challenges of rising prices. The Toast report highlights the importance of understanding regional price variations and the broader economic impacts on everyday commodities like coffee and tea. With significant differences in prices across states and the influence of global market conditions, staying informed can help consumers make better choices and businesses adapt to ongoing economic pressures.