Starbucks cost the same on both sides of the border
I am SO incredibly shocked. A latte in Vancouver = $3.50 CND. A latte in Mexico City = $35 pesos (aka, pretty much 3.5 CND). Some people may not think that this is even worth blogging, but I’m trying to get back into the groove after everyone here (Mom included) has insisted that I try to get slowly back into the swing of things.
I had heard about the Big Mac Index before, but I didn’t know we had parity on Starbucks. The shocking thing is that, with the salaries here (for an Average Joe), I would think they wouldn’t want to buy it. I normally don’t buy Starbucks anyways, but I was kind of shocked. Thoughts?
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August 11th, 2008 in
random thoughts | tags: purchasing power parity
For many, ordering a $3.50 coffee is not about satisfying your thirst, but rather satisfying your need to be trendy and show others that such an dollar amount is a pittance to you. Yes, some buy it because they enjoy it more than other coffee; but Starbucks isn’t making it’s profits off of those people. Instead, Starbucks is charging as much as they can get away with and still turn a decent profit.
Of course, there are fancy economic terms and graphs for this, which both you and I probably took in university courses; but basically what I’m saying is that the price of a Starbucks coffee is not an indicator of what the average local will pay for it, but rather the price that the average local status seeker will pay for it. So those in Mexico City that have extra spending cash and want to flaunt it probably have quite a bit more extra cash over the average person.
I’d like to see a comparison that accounts for cost of living/income figures as well. Based on my thoughts and what you said about salaries in Mexico, a $3.50 latte for the average Mexican citizen is more out of reach than for the average Canadian. If true, then the cost of that latte would be much higher by comparison.
I should know what Starbucks runs in the U.S. but sadly I don’t. I am guessing about the same. Is it more or less the same segment of the population on all sides of the border who partakes?
To add to what I already said, go to John Chow’s blog and go back a few months to read all the posts he made while he travelled Asia for a month. He spent most of that month in China, and he explained what the average worker and one that was a little better off made. Without checking my figures, I think they are below the average Mexican by quite a bit. But then when John looked at luxury items, they sold for up to double what the sell for in Canada. Apparently China is becoming BMW’s biggest market. The percentage of the population that can afford a BMW is minuscule, but everyone that can afford one HAS to have one, so they can jack the price up even though it’s a poorer country.
When I was in London last year, I accidentally bought a frappuccino for 3,5 pounds. Since I saw the 3,5, I thought $3.50 in my head, and forgot that I was supposed to double it for the conversion. Sooo…yeah, in London last summer, a grande frap was about $7 US. And the place was packed, and with more locals than stupid tourists like me.
It was a really good frap, though.
Skip the water and milk additives which, as Flash wrote, mya be considered a status symbol (like the $999 iPhone iamrich app) – what is the price for an espresso?
Oh, yeah. I worked at Starbucks for seven years and even I was shocked when a latte in Manila was the same in Canadian dollars as it was here. That’s considerably more than the average day’s wages, closer to a week’s wage for a mocha.
London will ding you whatever you order. Even in dollars, the restaurant prices are outrageous. I have no idea how those Brits survive there.
[...] Tags: strange trackback While I was finding out some information on the Big Mac Index for my post on a comparison of costs of coffee in Canada and Mexico, I found a list of humorous units of measurement (on Wikipedia, of [...]