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The Economics of Coffee in One Chart

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The Economics of Coffee in One Chart

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Breaking Down the Economics of Coffee

What goes into your morning cup of coffee, and what makes it possible?

The obvious answer might be coffee beans, but when you start to account for additional costs, the scope of a massive $200+ billion coffee supply chain becomes clear.

From the labor of growing, exporting, and roasting the coffee plants to the materials like packaging, cups, and even stir sticks, there are many underlying costs that factor into every cup of coffee consumed.

The above graphic breaks down the costs incurred by retail coffee production for one pound of coffee, equivalent to about 15 cups of 16 ounce brewed coffee.

The Difficulty of Pricing Coffee

Measuring and averaging out a global industry is a complicated ordeal.

Not only do global coffee prices constantly fluctuate, but each country also has differences in availability, relative costs, and the final price of a finished product.

That’s why a cup of 16 oz brewed coffee in the U.S. doesn’t cost the same in the U.K., or Japan, or anywhere else in the world. Even within countries, the differences of a company’s access to wholesale beans will dictate the final price.

To counteract these discrepancies, today’s infographic above uses figures sourced from the Specialty Coffee Association which are illustrative but based on the organization’s Benchmarking Report and Coffee Price Report.

What they end up with is an estimated set price of $2.80 for a brewed cup of coffee at a specialty coffee store. Each store and indeed each country will see a different price, but that gives us the foundation to start backtracking and breaking down the total costs.

From Growing Beans to Exporting Bags

To make coffee, you must have the right conditions to grow it.

The two major types of coffee, Arabica and Robusta, are produced primarily in subequatorial countries. The plants originated in Ethiopia, were first grown in Yemen in the 1600s, then spread around the world by way of European colonialism.

Today, Brazil is far and away the largest producer and exporter of coffee, with Vietnam the only other country accounting for a double-digit percentage of global production.

CountryCoffee Production (60kg bags)Share of Global Coffee Production
Brazil64,875,00037.5%
Vietnam30,024,00017.4%
Colombia13,858,0008.0%
Indonesia9,618,0005.6%
Ethiopia7,541,0004.4%
Honduras7,328,0004.2%
India6,002,0003.5%
Uganda4,704,0002.7%
Peru4,263,0002.5%
Other24,629,00014.2%

How much money do growers make on green coffee beans? With prices constantly fluctuating each year, they can range from below $0.50/lb in 2001 to above $2.10/lb in 2011.

But if you’re looking for the money in coffee, you won’t find it at the source. Fairtrade estimates that 125 million people worldwide depend on coffee for their livelihoods, but many of them are unable to earn a reliable living from it.

Instead, one of the biggest profit margins is made by the companies exporting the coffee. In 2018 the ICO Composite price (which tracks both Arabica and Robusta coffee prices) averaged $1.09/lb, while the SCA lists exporters as charging a price of $3.24/lb for green coffee.

Roasting Economics

Roasters might be charged $3.24/lb for green coffee beans from exporters, but that’s far from the final price they pay.

First, beans have to be imported, adding shipping and importer fees that add $0.31/lb. Once the actual roasting begins, the cost of labor and certification and the inevitable losses along the way add an additional $1.86/lb before general business expenses.

By the end of it, roasters see a total illustrated cost of $8.73/lb.

Roaster Economics($/lb)
Sales Price$9.40
Total Cost$8.73
Pre-tax Profit$0.67
Taxes$0.23
Net Profit$0.44
Net Profit (%)7.1%

When it comes time for their profit margin, roasters quote a selling price of around $9.40/lb. After taxes, roasters see a net profit of roughly $0.44/lb or 7.1%.

Retail Margins

For consumers purchasing quality, roasted coffee beans directly through distributors, seeing a 1lb bag of roasted whole coffee for $14.99 and higher is standard. Retailers, however, are able to access coffee closer to the stated wholesale prices and add their own costs to the equation.

One pound of roasted coffee beans will translate into about 15 cups of 16 ounce (475 ml) brewed coffee for a store. At a price of $2.80/cup, that translates into a yield of $42.00/lb of coffee.

That doesn’t sound half bad until you start to factor in the costs. Material costs include the coffee itself, the cups and lids (often charged separately), the stir sticks and even the condiments. After all, containers of half-and-half and ground cinnamon don’t pay for themselves.

Factoring them all together equals a retail material cost of $13.00/lb. That still leaves a healthy gross profit of $29.00/lb, but running a retail store is an expensive business. Add to that the costs of operations, including labor, leasing, marketing, and administrative costs, and the total costs quickly ramp up to $35.47/lb.

In fact, when accounting for additional costs for interest and taxes, the SCA figures give retailers a net profit of $2.90/lb or 6.9%, slightly less than that of roasters.

A Massive Global Industry

Coffee production is a big industry for one reason: coffee consumption is truly a universal affair with 2.3 million cups of coffee consumed globally every minute. By total volume sales, coffee is the fourth most-consumed beverage in the world.

That makes the retail side of the market a major factor. Dominated by companies like Nestlé and Jacobs Douwe Egberts, global retail coffee sales in 2017 reached $83 billion, with an average yearly expenditure of $11 per capita globally.

Of course, some countries are bigger coffee drinkers than others. The largest global consumers by tonnage are the U.S. and Brazil (despite also being the largest producer and exporter), but per capita consumption is significantly higher in European countries like Norway and Switzerland.

The next time you sip your coffee, consider the multilayered and vast global supply chain that makes it all possible.

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Maps

Mapped: Indian States with Cities Over 1 Million People

Ten Indian states—most of them from the northeast region of the country—don’t have a single city with 1 million residents.

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A cropped map of Indian states and the number of 1 million+ cities in them.

Mapped: Indian States with Cities Over 1 Million People

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Slightly more than one-third of the 1.4 billion Indian population lives in an urban area. So where are the country’s most populous cities, and how are they spread across the country’s 28 states and eight union territories?

This map shows the number of Indian urban agglomerations (cities) with more than a million residents in each jurisdiction. Data for this graphic is sourced from 2024 urban agglomeration estimates in the UN World Urbanization Prospects.

Ranked: Indian States by Cities with 1M Residents

India’s Uttar Pradesh state has 10 cities with a population size of 1 million or more. It is also India’s most populous state, home to 240 million people. This makes it comparable to the size of Pakistan, the fifth most populous country in the world.

Indian StateCities with 1M Residents (2024)City Names
Uttar Pradesh10Lucknow, Kanpur, Agra, Meerut,
Varanasi, Prayagraj,
Bareilly, Aligarh,
Moradabad, Saharanpur
Kerala7Kozhikode,
Malappuram,
Thrissur, Kochi,
Thiruvananthapura,
Kannur, Kollam
Maharashtra6Mumbai, Pune,
Nagpur, Nashik,
Aurangabad, Solapur
Tamil Nadu6Chennai, Coimbatore,
Madurai, Tiruppur,
Tiruchirappalli, Salem
Gujarat4Ahmedabad, Surat,
Vadodara, Rajkot
Madhya Pradesh4Indore, Bhopal,
Jabalpur, Gwalior
Jharkhand3Jamshedpur, Ranchi,
Dhanbad
Karnataka3Bengaluru, Mysore,
Hubli-Dharwad
Punjab3Ludhiana, Amritsar,
Jalandhar
Rajasthan3Jaipur, Jodhpur, Kota
West Bengal3Kolkata, Asansol, Siliguri
Andhra Pradesh2Visakhapatnam,
Vijayawada
Chhattisgarh2Raipur, Durg-Bhilainagar
Telangana2Hyderabad, Warangal
Assam1Guwahati
Bihar1Patna
Odisha1Bhubaneswar
Uttarakhand1Dehradun
Chandigarh*1Chandigargh
Delhi*1New Delhi
Jammu & Kashmir*1Srinagar

*Union Territories. Figures rounded. Some city names may have changed since this data was published.

Further south, Kerala (7), Maharashtra (6), and Tamil Nadu (6) also have more than five cities with a million or more people.

Meanwhile, some cities, including India’s national capital, New Delhi, are either in or are themselves union territories—areas directly administered by the central government.

Ten Indian states—most of them from the country’s northeast region—don’t have a single city with 1 million residents.

All together, India has 65 cities with more than one million inhabitants. For comparison, China has 105, and the U.S. has nine.

RankCityState/Union Territory2024 Population
Estimates
1New DelhiDelhi*34M
2MumbaiMaharashtra22M
3KolkataWest Bengal16M
4BengaluruKarnataka14M
5ChennaiTamil Nadu12M
6HyderabadTelangana11M
7AhmadabadGujarat9M
8SuratGujarat8M
9PuneMaharashtra7M
10JaipurRajasthan4M
11KozhikodeKerala4M
12MalappuramKerala4M
13LucknowUttar Pradesh4M
14ThrissurKerala4M
15KochiKerala4M
16IndoreMadhya Pradesh3M
17KanpurUttar Pradesh3M
18NagpurMaharashtra3M
19CoimbatoreTamil Nadu3M
20ThiruvananthapuramKerala3M
21PatnaBihar3M
22BhopalMadhya Pradesh3M
23AgraUttar Pradesh3M
24KannurKerala2M
25VisakhapatnamAndhra Pradesh2M
26VadodaraGujarat2M
27NashikMaharashtra2M
28VijayawadaAndhra Pradesh2M
29KollamKerala2M
30RajkotGujarat2M
31LudhianaPunjab2M
32MaduraiTamil Nadu2M
33RaipurChhattisgarh2M
34MeerutUttar Pradesh2M
35VaranasiUttar Pradesh2M
36SrinagarJammu & Kashmir*2M
37TiruppurTamil Nadu2M
38JamshedpurJharkhand2M
39AurangabadMaharashtra2M
40JodhpurRajasthan2M
41RanchiJharkhand2M
42KotaRajasthan2M
43JabalpurMadhya Pradesh2M
44AsansolWest Bengal2M
45GwaliorMadhya Pradesh2M
46AllahabadUttar Pradesh2M
47AmritsarPunjab1M
48DhanbadJharkhand1M
49BareillyUttar Pradesh1M
50AligarhUttar Pradesh1M
51MoradabadUttar Pradesh1M
52MysoreKarnataka1M
53Durg-BhilainagarChhattisgarh1M
54BhubaneswarOdisha1M
55TiruchirappalliTamil Nadu1M
56ChandigarhChandigarh*1M
57SaharanpurUttar Pradesh1M
58Hubli-DharwadKarnataka1M
59GuwahatiAssam1M
60SalemTamil Nadu1M
61SiliguriWest Bengal1M
62JalandharPunjab1M
63SolapurMaharashtra1M
64WarangalTelangana1M
65DehradunUttarakhand1M

*Union Territories. Figures rounded. Some city names may have changed since this data was published.

Interestingly, three of the five most populous Indian cities (Mumbai, Kolkata, and Chennai) were villages that became key British trading outposts. As a result all three cities have a fort within their city limits which acted as protection against competing colonial interests at the time.

Finally, Uttar Pradesh—which leads the states by number of cities with 1M people—doesn’t have a single metropolis within the top 10.

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