With the International Coffee Day coming up next Tuesday (1 Oct), financial comparison website Finder created The Starbucks Index 2019 to compare the differences in price for the same cup of coffee in 76 countries around the world.
The study revealed that Singapore ranks as the 8th most expensive city to buy a tall latte, at USD$4.50.
Topping the list is Copenhagen, Denmark where the same coffee costs the equivalent of $6.05. Meanwhile, those in Istanbul, Turkey get the best for their buck, paying just $1.78.
While the cost of a coffee includes other variances that are not included in the research – such as the cost of raw coffee, local labour costs, and taxes – this Index is noted as an informal way to measure local prices for a common item against other countries.
According to Finder, the study itself has two components: a coffee cost comparison and a currency valuation index. The coffee cost comparison converts the local cost of a tall latte into US dollars across all 76 countries. The currency valuation index takes into account the fact that dollar values alone are insufficient to determine how much a coffee actually costs in different countries since wages (as reflected in GDP) are higher in some countries than others.
The Index measures each country’s coffee cost to GDP-per-capita ratio against the average trend across all countries. It measures the actual cost of a coffee compared to what a country’s GDP indicates it ought to be.
Collecting the data
Individuals in 76 countries around the world were asked to purchase a hot Starbucks tall latte from a store in their respective city. The cost of a coffee in each of the city/country is then recorded for further analysis.
Additionally, the individuals were required to submit three photos; a picture of them with the coffee, an image of the receipt, and a photo of the coffee menu.
Coffee Cost: Local coffee prices were converted to US dollars using the exchange rate on 12 September 2019 according to xe.com. Countries were then ranked based on the cost of the coffee in US dollars.
Starbucks Index: The USD coffee cost figure was plotted against GDP per capita for all countries. The resultant trendline was used to determine the average increase in coffee cost against an increase in GDP. The final currency valuation is the difference between each actual plot point and the trendline – or how far each country differs from the average.
Rankings: The cost of coffee was round to the nearest two decimal places. Where prices were exactly the same, we gave them the same ranking. Russia and Kazakhstan are higher or lower value when rounded to three decimal places.
Limitations of the research
The cost of a Starbucks coffee can vary significantly due to a range of variables across a country or city. Given only one coffee price was used per city/country, the data may not be representative of the area as a whole. Also, different countries measure their GDP in different ways, so the data in this study should be considered as an indicator rather than an exact measure of currency value.
For more findings and info from the study, click here.