By Anne Kadet
When I was young, Mom would sit me down with the Bible to review
signs of the coming Armageddon: earthquakes, famine, pestilence.
She neglected to include the most obvious portent: the $4 iced
coffee.
I first noticed this scary trend at a Ditmas Park cafe. Whoa. I
looked around for the cops. Iced coffee should cost $2, right?
Maybe $3 if you're drinking fancy coffee in Fancytown with Mr. and
Mrs. Fancypants.
But now the $4 iced coffee is popping up everywhere. At some
upscale cafes, a large iced coffee is heading into $5
territory--the price of a summer outfit at Conway.
Why does iced coffee cost so much more than hot? This is an
extremely critical societal issue. The wealthy can survive the New
York City summer by escaping to their sissy beach towns, but for
the rest of us, there's iced coffee. The combination
fuelent/coolant makes it possible to brave the hot streets without
collapse.
Alas, when it comes to iced coffee prices, both the National
Guard and the U.N. Human Rights Council are falling down on the
job. Clearly, I'd have to conduct my own investigation.
The first step was to gauge the severity of the situation. I
visited 13 coffee places around town to determine how much they
were charging, per ounce, for iced coffee versus hot.
There's a lot of ice in your typical iced coffee. Using a
super-scientific method (dumping the drink through a funnel into a
Pyrex measuring cup), I measured the actual coffee content of a
16-ounce iced coffee at each cafe.
The worst offender, judging by the ice-to-coffee ratio, was my
corner bodega. It managed to fit 8 ounces of ice into its $2
coffee. I had to admire this scrappy feat of daring-do.
The runner-up on ice overload turned out to be the city's
biggest chain--and nation's self-proclaimed top retailer of iced
coffee--Dunkin' Donuts. A $2.59 iced coffee had 7 ounces of
ice.
The $2.65 Starbucks, with 5 ounces of ice, fell right in the
middle. A spokeswoman said that while variations may occur "as
every beverage is handcrafted," a Starbucks iced coffee should have
three parts coffee to two parts ice.
To their credit, the city's pricier coffee joints were putting a
lot more java in their iced coffee. Joe, Think Coffee and Jack's
Stir Brew Coffee all added fewer than 4 ounces of ice.
But let's not skirt the real issue--the difference between the
price of hot coffee versus cold. This varies widely. At one end of
the spectrum, many McDonald's charge $1 for both iced and hot
coffee, no matter what size. Then there's Dunkin', which charged
126% more per ounce for its iced coffee than for the hot stuff.
On average, the hot coffee cost 16 cents an ounce while iced
coffee cost 24 cents an ounce--a 50% premium.
For an explanation, I turned to Sarah Lovett, co-owner of
Maybelle's Cafe in Carroll Gardens, a sweet neighborhood spot that
charges $2 for a 12-ounce hot coffee and $3 for a 16-ounce iced
coffee--prices roughly in line with the survey average.
Like most upscale coffee joints, Maybelle's serves cold
brew--iced coffee produced by steeping grounds for a day or so in
cold water. This produces a less acidic beverage. It also requires
a lot more beans.
Ms. Lovett walked me through the numbers. She pays a
surprisingly high wholesale price for coffee from a well-known
specialty purveyor--$10.50 a pound, up from $8.50 a pound in
2012.
It takes 360 grams of beans to brew a gallon of cold-brew
coffee, compared with 200 grams for a gallon of the hot stuff.
Even though it's priced a dollar less, said Ms. Lovett, the hot
coffee is more profitable.
Later, I did the math. Ms. Lovett was right. On an
ounce-per-ounce basis, Maybelle's charges a 400% markup on its hot
coffee, compared with a 315% markup on the cold brew.
Is cold brew worth the higher price? That's a trick question.
Some prefer the smoother flavor, others find it too mild.
I say the best way to enjoy any iced coffee is the super summer
fun-time way--with a river of cream and a mountain of sweetener.
Once properly doctored into an artery-clogging caffeine carnival,
every iced coffee in my survey was fantastically delicious.
Alas, even places that hot-brew their iced coffee hike the price
for the cold stuff. Perhaps there are costs to iced coffee beyond
the beans?
Don't blame the ice. Ms. Lovett said she pays $163 a month to
lease an ice machine.
"It's a fancy, complicated piece of machinery," she said. "It
has to make the right size cubes, very clear and beautiful."
Her hot coffee brewer, on the other hand, racks up huge
maintenance and electricity bills. Between the two, it's a
wash.
Cups aren't the culprit either. The iced-coffee container of
choice in New York City is the ubiquitous Solo Ultra Clear TP16D
("superb clarity and crack resistance for a high-end look and
feel"), which runs about six cents per cup--roughly the same as the
12-ounce paper equivalent.
Again, it comes down to the cost of ingredients. Starbucks said
its iced coffee costs more because it's lightly sweetened.
Dunkin', meanwhile, said its iced brew is made double the
strength of its regular coffee, so you don't wind up slurping a
watery drink when the ice melts.
So perhaps the $4 iced coffee isn't Armageddon after all--just
the inevitable result of rising prices on wholesale beans.
It's easy to get the two confused. I probably just need another
iced coffee.
Anne.Kadet@dowjones.com
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