How the "latte levy” could affect our coffee habit

Earlier this month MPs recommended a 25p charge on disposable coffee cups to cut waste amid wider calls for a ban unless manufacturers can make them easier to recycle. Out of Home expert Sophie Read shares her view of the potential impact of the so-called “latte levy”.

The nation's favourite habit

It’s the most frequently purchased out of home product, with 3.6 billion cups of coffee purchased every year. Currently, the UK out of home coffee market is worth a staggering £6.2 billion and is rapidly growing. 70% of our coffee purchases out of home are taken to go.  That equates to spending of £4.3 billion – and 2.5 billion non-recyclable cups used a year.  Adding the 25p “latte levy” to these purchases could generate a further £630 million a year.  

So how will this affect consumer behaviour?

The 25p “latte levy” would increase the average price of a cup of coffee from £1.71 to £1.96. At this point, some 1.1m shoppers would be at risk of dropping out of the market. This could potentially stunt a fast-growing market and in the long-run shrink the coffee market by 0.9%. However, some retailers such as Starbucks and Costa Coffee have already started to offer discounts to shoppers with reusable cups, a move that may mitigate against potential shopper losses.

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