OnDemand WTP Pricing Research

Thoughts on Starbucks pricing in South Africa | Moneyweb

According to The Economist’s measure, The Big Mac costs $4.93 (an average across four cities) in the US. Using the same method of conversion South Africans have been obsessing over regarding their cup of Seattle’s finest, you get to an equivalent “price” of over R70 for a Big Mac in South Africa. Of course we know that this is insanity….

Of course, Starbucks pricing will be in line with what it charges globally, as it told the Mail & Guardian, but it will be comparable with our purchasing power (as well as the pricing of offerings from other global food brands in this market). Taste did not price Domino’s Pizza – which it brought to the country in 2014 – at the equivalent of what you’d pay in London – £14.99 for one of its relatively ‘basic’ large pizzas.

So, what can we expect to pay for our Lattes, Mochas, Cappuccinos and Frappuchinos?

A good comparison to my mind would be Woolworths’ W Café pricing…. A ‘Tall’ Latte sets you back R26, while a ‘Grande’ is R30. Cappuccinos are a little cheaper at R24 and R28 for the same sizes. Mochas are a little pricier at R28 and R32. The prices at W Café are not dissimilar from those at Seattle Coffee Co. or Vida e Caffe, although the latter has a more limited coffee menu.

Where Starbucks excels – go stand in any store globally – is in the upsell. Origin Espresso is 20p, an extra shot of espresso is 40p and flavoured syrup and whipped cream are also each 40p.

Woolworths (and most coffee chains, for that matter) has a similar pricing structure, with ‘Fairtrade-certified coffee’ and cream at an extra R4 each (and soya milk at an extra R5). Syrups are a similar price.

We can expect Starbucks’ local pricing to be very similar.

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Thoughts on Starbucks pricing in South Africa – Moneyweb.