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The price of latte in Lucerne
A new index shows how much Starbucks costs around the globe. Bangkok's a bargain; Zurich's not.
January 30, 2004: 3:55 PM EST
By Sarah Max, CNN/Money staff writer

BEND, ORE. (CNN/Money) – Starbucks debuted in Paris in January, marking its first entrée into France.

A 20-ounce coffee served in a paper to go cup may fly in the face of French café culture. But then again, so did two all-beef patties served on a sesame seed bun. That didn't stop McDonald's from selling le Big Mac, complete with fries for the French.

It's fitting then, that on Friday the Economist magazine launched its "Tall Latte Index." Like its counterpart the Big Mac Index, which the Economist launched in 1986, the new ranking is meant to show how currency-exchange rates translate to actual purchasing power.

Quite simply, the index shows how many lattes (as opposed to Big Macs) U.S. dollars buy in a given country when exchanged for the local currency.

One theory has it that, if all is working right in currency markets, the price of baskets of goods should be the same all over the world. Deviations can suggest that a currency is over- or under-valued. The cost of doing business from place to place may be a factor, too.

The idea works best with goods that are more or less the same from country to country. Anywhere a Big Mac is sold, of course, it consists of two all beef patties, special sauce, lettuce, cheese, pickles, onions, and a sesame seed bun.

Now comes the latte. Starbucks uses the same formula to appeal to caffeine freaks in 34 countries, and innumerable languages. (Let's see, what's the French term for "yuppie"?)

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To come up with the index, the magazine determined the average price of a latte in 16 countries outside of the United States. Then it used the most recent exchange rates to see what the frothy drink costs in dollars.

Here in the United States, according the index, the average price of a latte is $2.80. In Thailand, caffeine fiends will pay only $1.93 to get their fix, while in Switzerland they'll have to shell out $4.54.

The average price of a tall latte in countries that are part of the European Union, meanwhile, is 2.93 euros or about $3.70.

Oddly enough, both the Starbucks latte and the Big Mac cost $2.80 in the United States. Yet, in a number of countries there's a significant price gap between the coffee and the burger.

In Hong Kong, a tall latte is $3.22, but a Big Mac is only $1.54. In Britain and Switzerland, however, you'll actually pay more for a Big Mac than you will for a latte.  Top of page

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