On January 5, 2022, Starbucks stores across the UK dropped the surcharge on non-dairy milks. Until that point, the coffee chain giant had added an extra £0.40 ($0.54) for any drink ordered with a dairy milk alternative, including soy, almond, oat, coconut, and its own Nut Blend.
Naturally, the decision has put the pressure on other coffee shops with surcharges on non-dairy milks to follow suit. This is amid growing calls from groups such as PETA, Veganuary, and Free4DairyFree, who claim the additional fee serves only to “tax” climate-conscious consumers.
However, with many coffee shops using the surcharge as a means of covering the higher costs typical of non-dairy milks, is it reasonable to expect everyone to drop the extra fee?
The rising popularity of non-dairy milks
Over the last few years, non-dairy milks have experienced a popularity boom.
According to recent data from Mintel, a market research company, almost a quarter of the British public now actively chooses non-dairy milks in their coffee. For those aged between 16 and 24, this figure rises to a third.
The growing demand has led to emergence of several “barista” milks that act in a similar way to cow’s milk when added to coffee. They are made with the intention of complementing espresso-based drinks and typically offer a richer, creamier texture than the regular range.
Forerunners in this space are Mälmo-based drinks company Oatly, who reported massive growth following the launch of their Barista Edition oat milk in 2019.
While many have made the switch due to environmental or ethical concerns, a large proportion has no alternative: it is estimated around 65% of the global population is lactose intolerant and therefore cannot drink dairy milk.
Therefore, when an additional charge, known as a surcharge, is attached to non-dairy milk choices, it can quickly alienate or exclude certain consumers.
Those in opposition to the surcharge often refer to it disapprovingly as a “tax” and claim that it subsidies dairy milk consumption. This has led a number of brands, including Costa, Pret A Manger, and, most recently, Starbucks, to scrap the fee altogether.
Is there a case for surcharges?
Historically, the low supply of non-dairy milks meant they cost significantly more than dairy. However, changes to consumer habits have altered the landscape.
At the time of writing, the price per litre of the cheapest non-dairy option in a large UK supermarket is 55p, while the cheapest dairy option is 51p – just a few pence difference.
The problem arises, however, when it comes to non-dairy milk for coffee. Products added to replicate the fat, lactose, and protein of dairy milk tend to drive up the costs. Yet without it, creating a vegan latte, cappuccino, or flat white would be difficult for even the most skilled baristas.
Although some have explored ways around the additional cost, such as by making their own non-dairy milks or adding extra soy lecithin as a structural aid to cheaper, commercially prepared milks, a surcharge is often the most logical option.
The introduction of free swaps for dairy alternatives, then, can pose an increased cost to small businesses. So is it fair to expect coffee shops to foot the bill?
In a Vegan Society blog post , Rosamund Mather says that it’s important for coffee shop owners to “present an equal choice” and “think about who their customers are”.
While surcharges are ultimately an independent decision, consumers increasingly expect coffee shops to swallow the extra cost of vegan options.
This means that if the bulk of your customers are looking for non-dairy milks, adding an extra fee could start to be seen as a deterrent.
The potential implications of non-dairy milk surcharges
In a climate of shifting customer expectations, if businesses do choose to keep a surcharge they run the risk of being left behind by their competitors.
As the ubiquitous high street chain shops drop their surcharges, smaller, independent businesses could be priced out of the market.
For example, if a coffee shop charges £2.25 for a latte before adding a 50p surcharge for oat milk, that represents a 22% relative increase in the price of the drink. What began as a relatively competitive price suddenly looks expensive in comparison to those who offer oat milk free of charge.
Perhaps more important than pricing is the potential damage to your public image. With studies showing that 88% of consumers will be more loyal to a company that supports positive environmental change, it is more important than ever to ensure that your customers can see that you place a high value on environmental protection.
It is not much of a stretch to assume that they will thank you for covering the cost of that rather than adding it to their bill.
More than just being an issue of perception, it is a necessary shift. As a society, we are at a point where positive environmental choices must be encouraged not penalised.
According to Joseph Poore, lead author of recent research conducted by the University of Oxford on the reduction of food’s environmental impact, “A vegan diet is probably the single biggest way to reduce your impact on planet Earth”.
Charging more for non-dairy milks seems to be becoming a thing of the past. In our globalised and environmentally self-conscious economy it is important for businesses to keep up with changing consumer expectations as they are shaped by the industry leaders and informed by their own ethical codes.
Now, more than ever, we should be looking as an industry at what the most successful businesses are doing to stay relevant.
At MTPak Coffee, we are committed to helping your brand do the best that it can from an environmental and commercial stand-point.
Stay up to date with our Education Centre to keep abreast of the latest industry changes and how they may affect you, or feel free to speak to one of our advisors today for more information about how you can improve the sustainability of your business and incorporate more eco-friendly products, including biodegradable cups and sustainable coffee bags.