Starbucks Index: it shows how expensive is Argentina compared with other countries
Miami, Dubai, Sydney, Shanghai, Santiago, Chile, Buenos Aires… it doesn't matter where you are in the world. In virtually every major city around the planet, it is very likely that there is a Starbucks store.
With 24,000 stores scattered in about 70 countries, this company, born in Seattle, United States, back in 1971, has now become the world's largest chain of coffee shops.
That is why this hyper globalized company, like other firms of the likes of McDonald's, is usually considered a kind of "thermometer" to evaluate some economic variables internationally.
It happens that, as from the mid-80s The Economist began to relieve the values of the most popular hamburger of the company of the golden arches around the world and then dump them semiannually in its "Big Mac Index", The Wall Street Journal Then he did the same with the so-called "LatteIndex".
This glass, printed with the figure of the mermaid, contains a coffee with milk that is served practically the same in all the stores in the chain. And, being so standardized worldwide, it has become a reference for many economists when it comes to establishing how much appreciated or depreciated the monetary sign is in each nation.
In addition, it allows you to have an approximate reference on how competitive at the exchange level an economy turns out to be.
With the exception of coffee beans - which are produced in specific regions and then imported into each of the countries - and some plastic materials, a good part of the costs that make up the final price of the classic latte glass are strongly influenced by The local situation.
In this same line, it is not strange to see, for example, that the times when the price of this coffee with milk was more expensive in a store in Buenos Aires than in one in Santiago de Chile - always in dollar terms -, this coincided with the times when tens of thousands of Argentines took advantage of vacations or long weekends to cross the mountain range and do "shopping tourism".
The ranking of the "Starbucks Index"
When analyzing the ranking of the most expensive countries -measured in US currencies- it can be seen quickly that now Argentina not only ceased to be in the main positions but is well placed at the bottom of the table, among the cheapest nations .
Indeed, when plotting this survey it can be seen that Switzerland leads the list. There the most expensive latte glass is being paid globally, with a price equivalent to about $ 5.90.
France - taking the current value in Paris as a reference - and Hong Kong follow it in this list, with levels exceeding US $ 4.60 for this classic coffee with milk.
And what about the United States, a country that is set as a reference? In a city like New York, it averages $ 3.80, although in some places with a lower GDP per capita its price may be slightly lower.
However, among Latin American countries it can be seen that Uruguay and Chile head the "Starbucks Index", while Argentina is very comfortably in the last position, below Mexico and Brazil.
In Buenos Aires, the lattetall glass (the smallest format) costs about $ 112, a figure that, at the official exchange rate, represents about $ 2.51.
Strangely, in the last year, this size stopped being included in the price billboards that are exhibited in each of the Buenos Aires stores - only the "large" and "venti" measure is shown. But it is still possible to request it in the box.
Beyond this detail, the important thing is that the price that must be paid in a local cafeteria is $ 1.30 below that which governs in some cities of the United States, while implying $ 1.45 less that in the case of Montevideo, according to the survey carried out by iProUP.
In this type of comparison, such as the one The Economist makes with the global hamburger, the concept of "purchasing power parity" is applied, which compares the cost of the same good in different countries.
This theory establishes that, with the same amount of dollars, it should be possible to buy an identical good in all nations, be it a standardized food or service.
Thus, if in a country a product has a value far from the reference market - the United States, for trading in dollars - then it is considered that the local currency is undervalued against the dollar. Otherwise, if that same drink is more expensive than in the US, the domestic monetary sign would be overvalued.
For practical purposes, it is interesting to analyze what happened, for example, in the comparison with Chile.
Now, the price in a store in the trans-Andean capital is 50% higher than in a Buenos Aires store (US $ 3.80 vs. US $ 2.51).
However, the situation was very different in mid-2016, when the planes were still traveling loaded with passengers to the other side of the mountain range to take advantage of the low prices on services and goods, mainly technology and clothing.
At that time, in Buenos Aires the popular coffee was obtained at a price of $ 54 which, at the exchange rate of that time, showed a figure close to US $ 3.90.
In return, in June 2016, Santiago's latte glass was cheaper: it amounted to $ 3.50.
What happened in these three years? The value of the dollar, end to end, varied very little in the neighboring nation: it went from 680 to 691 Chilean pesos, in a context in which the accumulated inflation there was only 8%. In contrast, in Buenos Aires, the price of coffee increased by about 107%, but the jump experienced by the greenback was much higher: 215% ($ 44.5 vs. $ 14.11).
This ended up generating a collapse of the Argentine latte price internationally, always taking the greenback as a reference.
But, of course, this currency movement generated other "side effects", such as the fact that more wages are needed today to travel and buy abroad.
To put it in context, according to data from the Department of Studies of the National Chamber of Commerce, Services and Tourism of Chile (CNC), purchases with debit and credit cards of Argentines in the third quarter of 2016 were still growing at a surprising rate : 119% year-on-year.
On the other hand, between January and March of this year (last available data), operations collapsed by 71%.
Something similar happened with Uruguay: as a result of the jump of the greenback in Argentina, that neighboring country suffered a collapse of receptive tourism last summer, which forced the authorities to extend their tax benefits plan for all of 2019, in order to attract visitors with albiceleste ID.
Finally, there is the case of Brazil, which in the surveys of recent years always positioned itself as one of the cheapest countries in the region when buying coffee in a Starbucks store.
Since 2016, in fact, the price of the latte in dollars has changed very little, given that the accumulated inflation in that country - 13% - was offset by a devaluation that, from end to end, was 20%.
X-ray of a glass of coffee with milk
Beyond the particularities that can occur in each market, the reality is that a glass of the classic coffee with milk of this American chain is a good thermometer of the value, in dollars, of the prices of goods and services.
It happens that, contrary to what is usually believed, the imported content contained in a latte is minimal. And Argentina is no exception.
Indeed, coffee, which is the essential raw material and the reason for existing of this company, barely represents 4% in the cost structure that ends up determining the final price that a consumer must pay at the cashier.
Milk - I consume that is produced locally - represents about 4%. The glasses, the cardboard covers to avoid burning and other products - napkins, sweeteners, spoons, etc. - add another 7.5%.
Depending on where in the world the store is located, profitability can represent about 10% of the value of each coffee.
As for taxes, labor - including taxes and social security - and the rental of the premises - summing up commercial costs - can explain no less than three quarters of the final value of the classic latte.
There is one last key point to understand why Argentina's position in the international ranking fell so much. Along with the strong devaluation, there is a fact that cannot be overlooked: the domestic crisis, which caused a sharp drop in consumption and caused non-essential products to keep pace with inflation.
This can be seen in a no lesser figure: since mid-2016, the CPI experienced an advance of 113%. In return, the value of the latte in Starbucks increased 107% in the same period.