The ‘latte levy’ and the value of a collapsible coffee cup

09 January 2018

by Henry le Fleming, a specialist in PwC's circular economy team

The Environmental Audit Committee has proposed a “Latte Levy” of £0.25 per disposable coffee cup. This is alongside some good advice that reusable cups should be used wherever possible, and an insight into the problems of recycling composite materials combining paper with the plastic coatings that go into making a coffee cup. It’s something worth thinking about as recyclers face up to no longer being able to ship plastics for recycling  to China

Whilst I recognise the problem they are seeking to address, and I think a levy on cups could have significant environmental benefits as did the plastic bag tax, I was surprised to find that this incentive is already in place at some coffee shops.

As someone that works on circular economy projects, my family sometimes buy me birthday presents on this theme. This year I got a collapsible coffee cup as one of my birthday presents in August 2017. I had been thinking I should get one,  so I was very happy to be given it and to have a chance to try it out.

Collapsing coffee cup















But I had this nagging doubt about walking into a coffee shop and asking them to fill up my own cup. I have no idea where this feeling came from, perhaps I am becoming a conventional creature of habit in my middle age. Finally though, I marched into my favourite shop, handed over my Pokito cup and asked for a coffee.

I was sort of expecting them to say no, so I was completed amazed when they said that’s fine, and even more amazed that they took £0.25 of the price of the coffee. Somehow the news that they offered a discount for using your own cup had passed me by.

Now coming back to work in the New Year, more coffee chains are offering an incentive Costa and Starbucks have introduced the same £0.25 reduction for your own cup. In response Pret a Manger  have recently doubled their incentive to £0.50. This completely changes the economics of collapsible coffee cups. Even if you do not get one for your birthday and they cost you £15, if you manage to use them for 2 years say, buying 200 cups of coffee a year, you will be up £185.

If we apply a little more economic rigour, assume a preference for money now, rather than at the end of the first year of savings of 10%, the Net Present Value after two years is £144. Now of course in any financial decision, the certainty of the benefit stream is key. Whilst Pret a Manger or the other chains might reduce their reduction as behaviour of their customers changes, the good news is that the Environmental Audit Committee’s proposal, if enacted, would still provide with a £0.25 per cup benefit anyway. So you would still get your money back in the first year anyway.

Collapsing coffee cup chart

What about the carbon footprint I hear you ask? Well a brand of reusable cups did the comparison and found they created 35 times less GHG emissions even accounting for the washing of the reusable option. A commercially sound circular economy solution with a lower carbon footprint. Now if only we could scale this kind of thing to the rest of the economy…

So if you have read this far, the next question for you is what is stopping you from buying one? Are you commercially savvy enough to take the plunge?


Henry le Fleming, PwC

Sustainability and Climate Change -

+44 (0) 207 213 4097 | [email protected]