Why oat milk lattes are still so expensive
- March 17, 2023
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It may sound silly that a grain’s juice costs more than a giant creature’s milk—but it’s more expensive to grow grain and blend and bottle it than it is to raise and milk a cow. “Milk is pretty close to what comes out of the cow,” explains Carolyn Dmitri, a food systems economist at New York University. Almonds, oats and soybeans “require more processing to become milk, which means higher production costs.”
However, that doesn’t explain why dairy is so cheap. Cow’s milk is still nearly three times more popular than plant-based options, but its fan base continues to dwindle every year, as suggested by customer preferences at chains like Blue Bottle and Stumptown. Falling demand has created a surplus of milk (and cheese) in the US, driving prices even lower. And dairy is just unnaturally cheap to begin with because taxpayers’ money has supported the industry in various ways for more than 70 years.
Coffeeshops need to figure out how to deal with these price differences. For a 12 oz. latte from Maman, a bakery and coffee shop chain with locations in the Northeast US and Canada, you pay an extra 75 cents if you want oat, almond, coconut, or soy milk — plus an extra 1. $25 for Tache Pistachio Milk. “There has to be an extra charge because it’s a more expensive product,” says beverage director Caitlin Burke. The cheapest milk alternatives cost the store “almost twice as much” per ounce of milk. Those costs drift further apart when you consider more “boutique” milks, like pistachios, which are four times more expensive wholesale than dairy milk and twice the price of options like oats and almonds.
Is flat pricing really cheaper?
Stumptown and Blue Bottle both declined to explain how they calculate their flat price for all dairy products, but Burke suspects reasonable profit margins are built in. At Stumptown, all 8-ounce lattes are now $5. In 2018, before the surcharges were scrapped, a spokesperson recalled the same drink costing $4, with a 75-cent surcharge on non-dairy milk.
That means you now pay an extra dollar for a cow’s milk latte and 15c more for oat milk. Depending on what you order, this flat pricing structure won’t necessarily save you money on your drink. Of course, inflation over the past five years should be taken into account, but it’s easy to imagine how larger profit margins (say, on dairy) could offset smaller ones (on oats).
For one-off coffeeshops that operate on a much smaller scale, flat-rate pricing is more difficult to enforce. At The Mud Club in Woodstock, New York, 70% of customers still order whole milk, says owner Gray Ballinger. He says the store “doesn’t make a lot of money” with the $1.50 add-ons that apply to all plant-based milk drinks, but otherwise wouldn’t be able to stock as many options. “If we would buy more [of each milk] at one time we got a lower price,” he says. Large chains, which have eliminated additional fees, “can afford it, while smaller businesses are forced to adjust their orders to meet demand.”