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What is the reason for the high cost of pumpkin spice lattes?

Just over two decades ago, Starbucks introduced its iconic pumpkin spice latte, a seasonal flavor that has become synonymous with autumn. Since then, the pumpkin spice trend has exploded, with the flavor being incorporated into countless products from candles to cereals. However, customers may find that indulging in their pumpkin spice cravings comes at a premium, as retailers often mark up pumpkin spice items compared to their non-pumpkin counterparts.

According to MagnifyMoney, a personal finance site owned by LendingTree, the phenomenon of the ‚pumpkin spice tax‘ has been studied since 2007. The data collected over the years has shown a steady increase in the average mark-up on pumpkin spice flavored items. In 2022, the pumpkin spice tax averaged just over 14%, up from 8.8% two years prior.

Starbucks, the coffee house chain that kickstarted the pumpkin spice craze, charges an 18% premium for their pumpkin spice lattes compared to other seasonal flavors. This trend of marking up pumpkin spice items can be seen across various retailers, as they capitalize on the demand for this seasonal flavor.

Ismat Mangla, the executive editor of MagnifyMoney, explained to CBS MoneyWatch that retailers take advantage of specific demand by raising prices on limited-run or seasonal products. This strategy plays into customers‘ fear of missing out and their willingness to pay more for products they perceive as exclusive or in high demand.

The spike in the pumpkin spice tax in 2022 can be attributed to robust demand and lingering inflation from supply chain disruptions caused by the pandemic and geopolitical events like Russia’s invasion of Ukraine. Retailers use the popularity of pumpkin spice as a way to offset costs by raising prices on items they know customers will clamor for during a short period of time.

Despite the increasing mark-up on pumpkin spice items, interest in the flavor seems to be waning. Google Trends data shows a decline in search traffic for pumpkin spice, with a nearly 30% drop in interest in August 2022 compared to the peak in 2018. This downward trend suggests that consumers may be growing tired of the pumpkin spice craze or seeking out new flavors and trends.

In conclusion, the pumpkin spice tax is a phenomenon that highlights the intersection of consumer demand, marketing strategies, and seasonal trends. While retailers may continue to capitalize on the popularity of pumpkin spice by charging a premium for these items, changing consumer preferences and market dynamics may ultimately impact the longevity of this seasonal flavor trend.

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