Comments on: Starbucks and the overvalued yuan

By: Casper

Casper — Tue, 03 Nov 2009 11:05:53 +0000

Very funny and thought provoking. Is this a cheese burger or a cheesed-off burger ? Maybe the new $1 Big Mac breakfeast should replace the cholesterol bomb as universal parity comparator ? I prefer to call it the $1 Parity Breakfast.

I maintain that there is an unfounded fear of the Yuan. My collective subconscious tells me that this is the reason why China is stalling. A major sell-off of Treasury Bills and Bonds, come on. I read lately that the Euro and Yen would suffer most in such a scenario, something to do with cross-rates ?

By: Paulus

Paulus — Tue, 03 Nov 2009 09:09:43 +0000

Heading should be:
Overvalued Starbucks and the yuan

By: Daniel

Daniel — Tue, 03 Nov 2009 07:06:54 +0000

Great blog.

It’s also worth pointing out that the size of a Starbucks cup in China is much smaller, (a grande in the US = a venti in China), since the cool niche concept here, and in many other countries outside the US is not based on the Big Gulp. I remember the last time I came home to Seattle on vacation. I had really forgotten just how us American’s love to scarf down those barrels of fat and sugar.

By: Chris W.

Chris W. — Tue, 03 Nov 2009 03:08:41 +0000

Purchasing Power Parity is supposed to be for products that would appear in the basket of goods that an average person buys. In China, a country of 1.3 billion, maybe .5% of the people buy these products. Maybe, but probably much less.

By: Johnny

Johnny — Mon, 28 Sep 2009 03:33:49 +0000

Nice article. As for coffee being a niche product catering to well-heeled urbanites in China, the Big Mac is actually also a niche product in China. A Big Mac in China is VERY expensive when you consider how little a proper (non-burger) meal for the average person in China costs

By: Simon Rabinovitch

Simon Rabinovitch — Sat, 26 Sep 2009 03:24:48 +0000

As the writer of this blog, I can honestly say that I had no knowledge of the Tall Latte index, though perhaps it was buried somewhere deep in my subconsciousness. It seems to have been run only once by The Economist, in 2004 (see Matthew’s link), and then abandoned. Guess it was time for a revisit.

By: Matthew

Matthew — Fri, 25 Sep 2009 18:31:38 +0000

The Economist does a ‘tall latte’ index

http://www.economist.com/finance/display story.cfm?story_id=E1_NPGTDSN

By: Sucan

Sucan — Fri, 25 Sep 2009 18:15:19 +0000

This is a very well written article good analysis. These kind of questions would make many think about on what basis are these prices decided. http://bit.ly/psf9999

By: Mark Beauchamp

Mark Beauchamp — Fri, 25 Sep 2009 15:44:46 +0000

The price of the coffee can also be part of the branding, image, and marketing of the latte. Consider this quote, which was written about college tuition prices a few weeks back at the NYT:

“This is because such costs “serve as markers of institutional quality and prestige,” the authors write.”

Here: http://economix.blogs.nytimes.com/2009/0 9/01/us-news-college-rankings-yes-they-m atter/?src=twt&twt=nytimeseconomix

By: susan Doubilet

susan Doubilet — Fri, 25 Sep 2009 13:16:02 +0000

Love this blog: judging an exchange rate on the basis of burger and beverage prices. Now THERE’S accessible economics information.
However, at least in the USA, where I live, a latte would still be considered a luxury item. Is its price, then, a fair standard for exchange rate comparisons?
S in NY