Behavior Elasticity > Demand Elasticity. A quick Coffee Poll

Are you someone who used to drink a coffee (or two) everyday at the barista next to your office? If, yes spare a quick minute to tell us how WFH during COVID has impacted your coffee+work association.

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Read below on why this quick poll….

Let me explain why this quick poll.

There’s a lot of talk about how COVID and the resulting lockdown has resulted in a compression of demand and supply across sectors and across categories.

In most of the articles i read and discussions I am part of , people talk about how demand for most non-essential items will take a long time to pick up and reach the old levels.

No arguments there.

But I think for most non-essential spends, we need to ask what is the elasticity of behavior.

What is behavior elasticity?

I am defining this as the # of days it takes consumers to get back to the old patterns of spending.

Yes, it will vary by the spend-category . Essential and non-essential spends will have very different elasticities.

Hence I have chosen coffee for this poll.

Why Coffee for this poll ?

Few reasons:

• For many like me, coffee is an essential spend 🙂
• Its reasonably addictive to nudge consumers to find alternates – espresso machines, other brews etc
• For years, marketing dollars were spent to leverage the power of association. For regular coffee drinkers, work/productivity may have a strong association with coffee. Is this association broken down easily
• Lockdown has been in effect for long enough to build new habits .

So the key question is – once offices open, will coffee drinkers be behaving as earlier?

If yes, how soon?

I think demand elasticity (not in the traditional price based elasticity) will follow behavior elasticity. And could be a big component of how fast demand recovers.

E.g. I think for the coffee shops, there may be loss in business due to

• People losing jobs – say 10-15%
• People working from homes post opening of lockdown – another 10%
• People who will be at work but don’t buy coffee anymore – This could be the make or break – hence the poll.

What do you think?