Is Pumpkin Spice Basic? No, It's Just Economics.
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It’s the most wonderful time of the year… if you love pumpkin spice. The return of the Pumpkin Spice Latte (PSL) marks the unofficial start of fall for coffee lovers and it’s usually the moment when people start noticing just how many other products have started offering pumpkin-spiced versions of their original offerings. If people really love pumpkin spice flavoring so much, why isn’t it available all year long?
Starbucks originally launched its version of the pumpkin spice latte back in 2003. Dunkin has offered a pumpkin flavor swirl on its menu since 2007, but it wasn’t until 2020 that it decided to offer its version of the PSL. Each company’s fall menu has generally been released earlier each year, but only Starbucks really sees an increase in sales after the drink is released:
The sudden desire for pumpkin spice and apple cinnamon treats around this time of year is a great example of how tastes and preferences impact the demand for products. Those autumnal smells provide a cozy, familiar memory and create a national nostalgia that ends with our grocery carts packed with pumpkin spice inspired cereal, pretzels, Twinkies, and even dog treats. If you wanted to change up your Oktoberfest-inspired beer lineup, you could even add some Bud Light seltzers based on your favorite fall flavors.
The pumpkin spice demand shift is big. According to Nielsen data from 2019, consumers spent around $500 million on pumpkin spice-flavored grocery products in the U.S. alone. That’s an increase of 4.7% from the previous year and doesn’t include all the pumpkin spice offerings at coffee shops, restaurants, and body lotion. A Forbes estimate from 2018 included pumpkin-related products and came to a total of $608 million:
If pumpkin spice products are that popular, why don’t firms just offer them all year long? While the products are flavorful on their own, part of the joy from these items comes from the fact that they aren’t available two-thirds of the year. That first taste brings back positive memories for people, but eventually, that nostalgia wears off. The second drink may still be really good, but it’s usually not as good as the first one. The same phenomenon happens with the third drink, fourth drink, and so on. After we have our twentieth pumpkin spice latte of the year, it’s time to start thinking about switching to peppermint mochas.
If we convert that experience to economic language, drinking pumpkin spice lattes and eating pumpkin spice foods are each subject to diminishing marginal utility. Even though there may be an increase in demand, the release of pumpkin spiced items simply increases the happiness we gain overall. After enough time, that happiness wears down and we’re ready for the next seasonal treat. Thus, leaving the beverage off the menu and items off the shelves creates that longing. In a sense, pumpkin spice scarcity creates demand for pumpkin spice products.
If you have a favorite fall-flavored item, please let me know in the comments. If you have a friend who is obsessed with the pumpkin spice latte, share this post with them and teach them about the economic concepts behind their obsession. If you want to learn more about the pumpkin spice mixture (as a spice), check out this article from Food & Wine.
A grande (16 fl oz.) pumpkin spice latte from Starbucks has 390 calories and 50 grams of sugar [Starbucks]
More than 200 million Starbucks PSLs were sold in the first decade of its release [Delish]
As of 2021, Starbucks had 15,444 locations in the United States [Statista]
Based on data from 2014, a Starbucks pumpkin spice latte buyer spends $7.81 compared with $6.67 for non-buyers [Forbes]
The median worker classified as a “food and beverage server” earned $12.49 per hour in 2021 [Bureau of Labor Statistics]
40% of adults think pumpkin spice products should be available year-round [Morning Consult]
Awesome post, Jadrian! I'll share this with my econ students when talking about demand shifters today. Very timely! You're the best.
I loved the eggnog latte they used to offer in November and December. It's probably for the best they stopped offering it at 450 calories and 52 grams of sugar!