
The long running mystery of ice coffee pricing - jonsteinberg
http://jonsteinberg.com/2010/05/the-long-running-mystery-of-ice-coffee-pricing/
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JacobAldridge
Depends what exactly they mean by 'ice (or iced) coffee'.

When I was on holidays in Italy we discovered the 'cafe freddo' almost by
accident. (Needing to buy a coffee to use the cafe bathroom, my wife didn't
want a hot coffee, and in my limited Italian this was the best I could think
to ask for). They made an espresso, and poured it over ice.

Quick. Easy. _And the same price (90 cents) as an espresso._ In other words,
there was no price difference or mystery.

Back home in Australia, an Iced Coffee is a very different beast. There's
probably fresh coffee in there ... plus milk, ice-cream, cream, some chocolate
syrup on top. It's twice the size of a flat white. On a menu it is always
associated with iced chocolates and milkshakes, not hot coffee.

In this context, comparing ice coffee to hot coffee is almost like comparing
buffalo wings to buffalo mozzarella. The similarity in name doesn't
necessitate similarity in pricing.

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ihodes
Iced coffee or cold-press? There's a difference, though both are served over
ice.

Cold-press is actually brewed cold, and it takes hours to have a well-brewed
batch. That is a major reason the costs are different—prep time is much
longer, and there are risks associated with preparing food in advance.

Iced coffee, real iced coffee (not cold press), is crap. It's hot brewed
coffee refrigerated and/or poured over ice. This messes with the composition
of the liquid, and generally causes it to become bitter. (Though if it's
espresso, the results are different...)

Mystery solved, perhaps?

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jonsteinberg
Unlikely to be cost-plus pricing. It's about what the market will bear

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ihodes
Right. It would have nothing to do with the tangible increase in labor and
materials: electricity, space, more grounds-per-oz of coffee.

Come on, really? Yes the price is dependent on what people are willing to pay,
but there is a very real and legitimate reason for the drink to cost more.

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techiferous
_Come on, really?_

Yes. There's a great explanation from _The Undercover Economist_. It's a great
read. Highly recommended: [http://www.amazon.com/Undercover-Economist-
Exposing-Poor-Dec...](http://www.amazon.com/Undercover-Economist-Exposing-
Poor-Decent/dp/B0018SYWWU)

Update: Here's a link to the explanation:
[http://books.google.com/books?id=YAA8hPloNRcC&pg=PA30...](http://books.google.com/books?id=YAA8hPloNRcC&pg=PA30&lpg=PA30&dq)

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davi
This is a discussion of what the market will bear for Fair Trade branded
coffee, not what the production costs for iced coffee are.

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wanderr
My favorite coffee shop actually charges less for iced coffee than hot, but:
-They brew hot coffee one cup at a time with very high quality coffee -They
use an admittedly lower quality coffee for iced so that it tastes stronger.
It's still good, but their cost of supply is lower. -They brew iced coffee in
batches, so the labor involved in making 40 cups of iced coffee is
significantly lower than 40 cups of hot coffee.

Side tangent: It annoys the crap out of me that Starbucks makes it /cheaper/
to get a large iced americano with 4 shots compared to a medium with 4 shots.
Obviously a large americano costs them slightly more (bigger cup, more ice),
but they should at least be the same price. Absolutely ridiculous that I have
to pay more to get it in a smaller cup and have it be less diluted.

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pasbesoin
It used to be that, in some of these situations at Starbucks, you could
request the cheaper drink with a modification that made it essentially into
the more expensive drink. For example, ask for the large but with only so much
ice. The experienced baristas often knew what you were about, but never seemed
to mind.

A bit of a waste of a larger cup, but then... Maybe you could order the large
drink in a medium cup?

If you order a hot tea with only one bag but in a grande (medium) cup, they
are supposed to only charge you for a tall (small) (or were supposed to, at
one point). (Some staff knew this; others did not.)

I feel a bit silly, making this comment. On the other hand, it is another
aspect of Starbucks allowing the customer to customize/"hack" their drink. It
seems to accomplish a certain level of customer "engagement" with the purchase
activity and product offerings.

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wanderr
My girlfriend was a barista in college, so I know about the hacks but I feel
like enough of a dork ordering a "tall quad iced americano with a splash of
soy" without making it even more complicated. Honestly I'd rather just pay the
extra at that point. :P

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pasbesoin
Ah, yes, the "splash of soy". And, will they charge you the soy upcharge, or
not? ;-) (Back when I was a more regular customer, it seemed to depend on the
staff and/or attitude/directive of the management at the particular store.)

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wanderr
Yeah, entirely depends on the barista, unfortunately. Oddly if I ask them to
leave room and then ask for soy after they make my drink they have no problem
giving it to me...but all this is way too much interaction to just get a damn
coffee. :P

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jrockway
I have never noticed much difference between iced coffee and hot coffee, but I
am mostly an espresso drinker. In the case of iced espresso beverages, most
coffee shops around here (megachain or otherwise) typically add an extra shot
of espresso to the iced drinks, presumably to compensate for the melting ice.
This adds to the cost, as more coffee is going into the drink.

Now, whether or not a shot of espresso costs a dollar is a whole other issue,
but it does make sense. You aren't paying for coldness or the different cup or
"seasonal rarity", you're paying for that extra shot at the usual extra shot
price.

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ghshephard
I guess I shouldn't mention the coffee shops I know that simply refrigerate
their hour-old coffee and then put it on ice when someone asks for an iced
coffee...

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joecode
The real mystery is why regular coffee is so cheap in the U.S., compared to
say, France or Germany. I think Americans have just come to expect regular
coffee to be $2 maximum, and react irrationally when it is any higher. But
iced-coffee is a different beast, where market forces work more normally, and
so it is priced on par with lattes and other drinks.

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kgermino
To answer the author's closing question (why hasn't anyone lowered the price
and advertise it). It's likely because so far there's been room for everyone
and noone wants to start a price war on what I assume is a cash cow.

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scott_s
My local coffee shop (Bollo's in Blacksburg, VA) charges the same for iced
coffee as they do for a house mug and a small to-go.

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jonsteinberg
In New York and the northeast in general, they usually brew, cool, refrigerate
and then ice the coffee.

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psyklic
I bet it has to do with our psychological willingness to pay more for a cold
drink on a hot day.

