By JEN WIECZNER
One of the most frequently repeated bits of personal finance advice is also one that many office workers detest hearing: Skip your morning latte and you'll save a significant chunk of your paycheck.
The solution, stingy caffeine addicts and coffee snobs say, is to make coffee yourself. But home brewing isn't necessarily where the savings are. Take Starbucks' newest foray into kitchen appliances. Unveiled this week, the Verismo machine (available in a $199 model, and starting Nov. 23, in a larger $399 model) promises customers instant lattes without having to whip out their Starbucks gold card (or smartphone, as the case may be). The single-cup system, like other instant machines, requires consumers to purchase coffee "pods," or packaged cups of coffee ingredients.
But the machine, while it may save coffee drinkers the time they would've spent waiting in line at the local Starbucks, doesn't exactly make a cheap latte. Each latte brewed from a Verismo pod costs $1.62, compared with $0.29 for a cup of espresso made with Starbucks whole beans (plus a few additional pennies for the milk, which currently costs about $1.79 for a half-gallon). Asked about the price difference, a Starbucks spokeswoman conceded that the Verismo machine also produces a smaller latte (6 ounces) than the smallest size on its menu. While a 12-ounce "tall" latte costs $2.75 on average in stores, she says making the same sized cup on a Verismo would cost $2.45 -- only $0.30, or 11% cheaper.
For habitual latte sippers, the difference adds up -- even when you factor in the cost of a new espresso machine. While buying a tall latte at the store every day costs about $1,292 a year with tax (based on the price of a tall latte at the Starbucks (SBUX)
Indeed, coffee consultants say that brewing using the instant packaged stuff costs six to eight times more than starting from scratch with espresso beans: While a pound of beans ranges from about $8 to $15 from a high-end roaster, the equivalent of one pound of coffee in pods costs $60 to $70, according to Tom Pirko, the CEO of Bevmark Consulting. (At Starbucks, $12.95 gets you either eight pods of caffe lattes or a pound of beans worth more than 45 cups of espresso.) And consumers are paying for convenience, adds Pirko, at the expense of taste and authenticity: "I'm making far better espresso for $8 a pound than for $60 a pound," he says. "It's the ultimate in convenience, but you're not drinking an espresso."
A Starbucks spokesperson says its Verismo system uses the same espresso roast it serves in its cafes and offers Swiss technology that delivers the necessary pressure "required to brew a true espresso shot, ensuring the taste in the cup meets Starbucks and our customers' expectations."
But the company adds that market research shows that the Verismo system, while allowing customers to drink lattes at their convenience, won't replace visits to Starbucks, which "provide a special moment of connection in one's day that drinking Starbucks coffee at home cannot replace."