With reference to the information provided, examine the likely numerical value of the cross elasticity of demand between UK specialty coffee subscription services.
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |
|---|---|---|---|---|---|
| BeanBox | 38.5% | 36.8% | 34.5% | 33.0% | 31.2% |
| RoastClub | 22.0% | 23.5% | 24.8% | 26.1% | 27.5% |
| AromaArabica | 15.0% | 14.8% | 14.0% | 14.2% | 14.2% |
| CaffeineCrave | 10.5% | 11.2% | 12.0% | 12.5% | 12.8% |
| Others | 14.0% | 13.7% | 14.7% | 14.2% | 14.3% |
| Subscription service provider | October 2024 cost |
|---|---|
| BeanBox Premium (Single Origin, 1kg) | £28.50 |
| BeanBox Standard (House Blend, 500g) | £16.50 |
| RoastClub Standard (500g) | £14.99 |
| AromaArabica Organic (Premium tier, 500g) | £21.00 |
| RoastClub – Student/NHS discount | £9.99 |
In recent years, direct-to-consumer subscription brands have leaned heavily on behavioural economics to lock in recurring revenue. Platforms like BeanBox and RoastClub utilize default choices, automatic billing renewals, and friction-filled cancellation paths (requiring multiple clicks or phone calls to unsubscribe). The automated monthly dispatch mechanism acts as a robust default bias, preventing consumers from assessing whether they actually need more coffee before the next payment is taken.
However, during the inflationary squeeze of late 2023, rising living costs prompted many households to re-evaluate non-essential discretionary spending. While overall premium cancellations spiked, RoastClub—positioning itself as a high-quality yet budget-friendly alternative—recorded strong subscriber growth. Customers leaving BeanBox reported that price increases, combined with a perceived reduction in the value of premium origins, led them to switch. Meanwhile, RoastClub's aggressive marketing of its value-oriented blend allowed it to capture highly price-sensitive switchers.
To defend market share, specialty coffee subscription brands increasingly rely on price discrimination. RoastClub, for example, offers deep discounts of up to 35% for students and healthcare workers, yielding a subscription rate of just £9.99. This targets younger, highly price-sensitive demographics whose demand curve is highly elastic. In contrast, existing legacy subscribers who remain on standard packages (often due to inertia or brand loyalty) are charged full price, allowing platforms to exploit their lower price elasticity of demand.
