The Latte Index

One part of life of being a writer on the road is that I spend a lot of time at various Starbucks. Branches in Southern New Hampshire, for example, are vital for covering the presidential primary. That’s probably what helped prompt my column this week, The Latte Index.

Sound the alarm. Lock the doors. Hide the remaining cash in the mattress. We have a new troubling economic indicator to worry about — “the Latte Index.”

ABC television reported this weekend on a business slowdown at the world’s largest chain of coffee stores, Starbucks. The implications are apocalyptic. “Call it the law of the latte,” reporter Bianna Golodrga, said. “For years Americans have been paying $5 and more for Starbucks’ gourmet coffee.

But now the world’s largest coffee maker admits it needs a pick me up. For the first time ever, lagging sales are prompting the company to advertise on TV. Part of the problem, people now have less money for the little luxuries because they’re spending on things like fuel.”

There’s no question that the rising cost of energy and mortgage rates are taking a bite out of the wallets of many Americans right now. To link these economic forces, however, with problems at Starbucks, might be like making a venti instead of a tall: The coffee conglomerate boasted a 35% increase in profits during the fourth quarter, and all the buzz is over only a decline of about a 1% in customer traffic.

Starbucks’ problems are more rooted in the dynamics of the coffee drinks market that it helped to create. Competitors are squeezing in from both sides. At the high end of the market, Peet’s Coffee & Tea, is appealing to a crowd that values a finely-crafted, individually pulled shot of espresso. A brand that started on the low end, Dunkin’ Donuts, began offering lattes several years ago, is on the march out of its stronghold in the Northeast and spreading into other parts of the country. And McDonald’s even began selling gourmet-friendly Newman’s Own coffee in 2003. The fast food chain just announced a plan to make its joints a “beverage destination.” McDonald’s USA president, Don Thompson, said: “Our speed, our convenience, the value that we can afford to customers without quality comprise will make us a formidable player.”

Still, Starbucks can’t help be a grating addition to American life. If Starbucks has been guilty of anything, it is its annoying, almost embarrassing, omnipresence. So much so that the buzzwords of the chain’s ridiculous quasi-European lingo have entered the common lexicon: lattes, mochas, cappuccinos, frappuccinos, worst of all, “grande.”

Here are a couple of Starbucks tips. Americanos, which cost $2.42 for a grande, have less fat and are much cheaper than lattes. The best value might be the eight-cup French press. While it is not on the menu — like the short, known only to cogniscenti — the French press offers eight cups of the freshly-brewed coffee of your choice, Sumatra, say, or Mexican. You can snag this for around $3.50. So if you’re going to be in a Starbucks for a while with a friend, the two of you can drink better coffee for a cheaper than list price. For some newer Starbucks employees, the receipt of a French press order is cause for puzzlement or annoyance. But many managers and coffee aficionados tend to look with me with approval when I order this drink. That, they say, is how coffee is meant to be imbibed. (I guess I’m a member of the club at Starbucks as well as BJs.)

Finally,I’m bipartisan when it comes to coffee. I go to Dunkin’ Donuts plenty, both for their coffee by the pound as well as iced coffee and hot cups a Joe.