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Coffee; Should You Drink Out or Home Brew?

Everyone loves their coffee, whether it be home brewed, store bought, iced, hot, black, etc. And many people can’t go a day without their morning cup a Joe. If you’re one of the countless Americans who rely on coffee to get their morning started, how do you know if you’re getting the best bang for your buck? As heavy coffee drinkers ourselves here at SprinkleBit, the question we’re posing is, is it a better investment to buy and brew your own coffee at home or drink out at coffee shops like Starbucks? We’ll break down the pros and cons of each and the estimated costs people spend on coffee and let you decide.

Home Brew

Most people know that brewing your own coffee at home is much cheaper then buying at your local coffee shop. Then what causes people to still drink out? The taste? Too lazy? Or maybe they just don’t care? Well it’s probably because people don’t really know just how much they save if they brew at home.

According to the National Coffee Association, more Americans are making coffee at home: A whopping 85% of them self-brewed in 2010, using either whole beans or ground coffee.

Some of the most popular home brew-able coffee brands include Folgers, Maxwell House, Millstone, Nescafe, Moccono, Eight O’Clock, Starbucks, and so forth.

Shop-Bought

Of course it’s hard to not buy from your favorite coffee shop, especially when their baristas are trained to deliver artistic and delicious blends of your favorite java. Some of the most popular coffee shop chains in the world include Starbucks at number one, Dunkin’ Donuts, Costa Coffee, The Coffee Bean, Gloria Jean’s Coffee, Caribou Coffee, Tim Hortons, Coffee Beanery, Peet’s Coffee and Tea, Tully’s Coffee, and so on.

A recent U.S. survey revealed that 69 percent of American coffee drinkers consider coffee to be an “affordable luxury.” With that being said, lets get to the actual costs of home brewed coffee vs. shop-bought coffee.

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How Much Does it Cost to Make Standard Coffee at Home?

From bargainbabe.com:

A pound of beans costs $14 from Starbucks, where a barista grinds it for my french press. 1 pound of coffee beans = 100 tablespoons of ground coffee. I use two tablespoons for each large cup of coffee. So that $14 pound bag of coffee beans makes me 50 CUPS OF COFFEE at a cost of $.28 per cup ($14/50 cups = $.28 cents). A stainless steel french press from Amazon was $45. So that means an additional $5 per year for the cost of my at home coffee habit. That’s less than the cost of two cups of coffee bought at a coffee shop, so basically negligible.

So let’s do the math as if you had one cup of coffee every day. Making coffee at home for one year adds up to $.28 x 365 days = $102.20. Or, $8.52 per month. Buying coffee once a day for one year adds up to $2.40 x 365 = $876. Or, $73 per month.

What About Pre-Made Coffee like Keurig or Nespresso?

Even with 85% of people now starting to home brew their coffee, a large part of that chunk don’t use the standard coffee beans. Companies like Keurig and Nescafe have created pre-made coffee capsules that you place in their special machines to create a variety of coffee flavors quick and easy. But how much does that cost compared to traditional home brewing and buying out?

Let’s start with Keurig

The Keurig B40 Elite Gourmet Single-Cup System for $96.99 with $19.85 s&h is a single serving coffee machine boasts a 48-oz. water reservoir and two brewing volumes. The Keurig B130 Hotel Brewer ($60.17 with $10.20 s&h), is also perfectly sized for a single cup of coffee, and features a mug sensor and auto off, and brews an 8-oz. cup in just three minutes. The day-to-day cost for one of these machines would be $0.24/day (Keurig B40 Elite); $0.19/day (Keurig B130).

Looking around, we typically see 24-packs of K-Cups for as low as $9 (although we briefly saw a 24-pack for just $5 last week, since expired). It’s advisable to stock up on K-Cups when they hit this price point, although you may have a harder time finding the popular brands and flavors at this cost. In terms of name-brand deals, we’ve seen 24-packs go for as low as $13, as well as 48-packs for about $19. Office Depot sells 18-packs of many popular brands (including CaribouGreen Mountain, and Tully’s) starting at just $11.99. And you can commonly find K-Cup coffee bundles that qualify for Subscribe & Save discounts at Amazon. So the day-to-day cost, assuming the Office Depot price, would be $0.67/day for an 18-pack.

In the end, $87.99 (for the machine) + $243.13 (in K-Cups) = $331.12 for the first year.
If you opt for the K-Cup system using the Kreuig B40 Elite machine and K-Cup refills from Office Depot, your total cost for the first year will come to about $331.12, or $0.91/day. Comparatively, a Tall (small) coffee at Starbucks (12 oz.) will run you $1.65 plus tax (but minus costs for cream and sugar, which are supplied gratis) or $602.25 per year.

How Does Nespresso Compare?

In the first generation of capsule-based home-brewers, Keurig Green Mountain clearly won in the United States with its K-Cup system, which has become the dominant single-cup coffeemaker. However, with the VertuoLine, Nespresso wants a bigger share of the market in the U.S., which it plans to gain by offering a higher-end alternative to Keurig’s machines. That’s a crowded space as Keurig has its Vue system as well as its Rivo latte/cappucino makers, and Starbucks is competing as well with its Verismo system, which makes full-size cups of coffee, espresso, and lattes.

Starbucks may have fallen so far behind Keurig in single cup that it had to partner with its rival and start selling K-Cups. However, it holds a number of distinct advantages over Nespresso in selling higher-end machines. Starbucks has over 11,000 stores in the United States where it can demo and sell the Verismo. Starbucks also has a price advantage (likely because it can afford to take a loss selling the brewer to gain pod sales down the road) — the Verismo often sells for as low as $99 while the Nespresso VertuoLine retails for $299.

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Traditional Coffee Still Prevails Over The Rest

A study by WUSA-TV’s Daniel Guzman shows that ground coffee costs just 3.7 cents per ounce, making it the most frugal option by far.

Making Coffee at Home Every Day Saves You 773.80 per Year

That is a savings of $64.48 per month. Say you put those savings into a basic mutual fund and each month added an additional $64.48 that you saved making homemade coffee. How much would that turn into over ten years?

If the mutual fund average earnings of 6.50% interest and you compounded whatever you made (which means buying more mutual funds with the dividends), that measly $64.48 would grow into $10,981.93.

Getting the Best Bang for Your Buck by Dailyfinance.com

Surf the web for a range of coffee deals. Scour Coffeeforless.com for savings on all things coffee and for helpful ratings and reviews. Monitor deal and coupon websites such as Dealnews.com, which finds the lowest prices from retailers (like a recent Amazon.com offer for an .99 can of Lavazza coffee). Tap BradsDeals.com for coupons (such as off a bag of Peet’s Coffee at your local grocery store). If you have a taste for premium coffee, tap specialty outlets such as Oren’s Daily RoastPorto Rico Importing Co. and Café Grumpy. They roast their own beans and by cutting out the middleman, offer a high value-to-quality ratio for upscale java.

In The End

While it’s no surprise that making your own cup of coffee is cheaper than buying it on the outside, the savings over time are eye-opening. Here’s a telling contrast: A 6-ounce cup of coffee made at home, at about 17 cents a cup per day, adds up to $1.19 a week and $62.05 a year. A 16-ounce grande coffee from Starbucks, at $2.29 per day, adds up to $16.03 per week, and a hefty $835.85 per year — the price of a mini vacation.

So, will you start brewing your own coffee at home or are you sticking to old habits? And what about Keurig or Nespresso? Which would you invest in? Let me know what you think in the comments below! And be sure to follow the discussion on other topics here.

 Continue the discussion! 



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Paul Ponce

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Paul is an incoming fourth-year at the University of California, San Diego pursuing a degree in Linguistics and International Studies: Economics. Though he hopes to pursue a career in foreign affairs and language study, he is still interested in learning how investment in stocks works and how it runs an economy's market.

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