Why are pumpkin spice lattes so expensive?
As summer comes to an end pumpkin spice lovers are getting ready to indulge. But for those craving their fix, they can expect to pay a premium.
Just over two decades ago Starbucks introduced its pumpkin spice latte whose popularity has made it the taste of autumn as the seasonal flavor has been put into countless products. However, customers will find that their desire to get their fix of pumpkin spice will cost them a premium over other non-pumpkin menu items at most retailers.
MagnifyMoney, a personal finance site owned by LendingTree, has been conducting studies on what they dub the ‘pumpkin spice tax’ since 2007. The average amount that retailers are marking up pumpkin spice flavored items has been rising over the years. Their latest data published in 2022 saw the pumpkin spice tax averaging just over 14%, that was up from 8.8% just two years earlier.
The coffee house chain that began the pumpkin spice trend charged an 18% premium compared to an almost 16% mark-up for its autumn-flavored lattes over the same time period.
Why are pumpkin spice lattes so expensive?
Where retailers see an opportunity to take advantage of a specific demand “they are going to capitalize on it,” said MagnifyMoney executive editor Ismat Mangla speaking to CBS MoneyWatch. It’s a tried and true marketing strategy by retailers to put a premium price on limited-run or seasonal products where customers may be willing to pay more due to their fear of missing out.
The spike in the pumpkin spice tax in 2022 was the result of robust demand and still elevated inflation at the time from lingering pandemic-era supply chain bottlenecks and Russia’s invasion of Ukraine.
However, there were no such problems for pumpkin spice itself. Instead, according to Mangla retailers used it as a way to “offset certain costs by raising prices on things they know people are clamoring for for a short period of time.”
That said though, the rising pumpkin spice tax may be taking a toll as interest in it is waning according to Google Trends, with search traffic dropping from its 2018 peak in August, the month when Starbucks has historically begun offering pumpkin spice lattes.
Interest was down almost 30% in August 2022 compared to the same time in 2018. There was an even greater drop the following year.