Consumption Patterns

Article Analysis

Consumption patterns of certain products can be useful indicators on how the demand of the product affects the supply of the product, as well as the market and equilibrium prices. Coffee is one of the most consumed products in the United States and with the recent additions of specialty coffees offered by franchised coffee shops like Starbucks, coffee consumption has increased over the past few years. This paper will describe the basis for the trends in consumption patterns of coffee by explaining the utility derived from coffee, the effects of supply and demand as related to coffee, and discuss price elasticity determination of coffee.

Consumption patterns of coffee are strong and have increased over the past few years, and according to Lofstock, (2012), this increase and solidarity in consumption is a result of regained financial confidence in the consumer markets, particularly among consumers between the ages of 18 and 39. Data from the National Coffee Association's (NCA) National Coffee Drinking Trends reveals coffee is consumed by various age demographics and given the variety and options for coffee drinkers; future growth is predicted to be a solid forecast. With more than three quarters of the United States population being active coffee drinkers, and a reported 58% of the population that drinks coffee on a daily basis, there is an obvious utility derived from drinking coffee. Many people drink coffee as a part of their morning routine in order to "perk up" with the caffeine based drink, while others simply enjoy the taste of a freshly brewed cup of java. The satisfaction level derived from drinking coffee has not decreased over time, but rather has increased, therefore; coffee has a powerful economic role in consumption patterns and solid utility in the consumer market.

The demand for coffee and coffee-based drinks and products has steadily increased with the introduction of gourmet coffees and single cup coffee brewers. Polls given by the NCA indicate the amount of U.S. household owning a single cup coffee brewer has risen at an average of 1% per year between 2005 and 2011 (Lofstock, 2012). Novelty and convenience have created a platform for a higher demand of coffee, and as noted earlier, confidence in financial situations have also played a factor in the recent increase in coffee consumption, creating a larger demand for the product. When households have extra money to spend, they will do so by purchasing products that bring pleasure to the consumer, or in this case, the coffee drinker.

Changes in climate and the increase in demand have created a decrease in the supply of coffee beans over the past 25 years. Global warming has attributed