“Why, this Satan’s drink is so delicious that it would be a pity to let the infidels have exclusive use of it. We shall fool Satan by baptizing it and making it a truly Christian beverage.”
– Pope Clement VIII, papacy from 1592-1605
Alcohol played a central role in the development of ancient Greek culture and medicine. The Greeks even worshiped Dionysus as the god of wine. The Romans later called this same god Bacchus.
Yet the ancient world never mentioned a far more popular beverage that, today, about 90% of the developed world drinks regularly.
What is this mystery drink?
As far as beverages go, coffee is a new kid on the block.
Even as recently as five centuries ago, coffee was an obscure berry from the highlands of Ethiopia.
Today over 1 billion people in the world drink coffee. That makes it the most widely used psychoactive substance in the world.
As author Michael Pollan observes, “For most of us, to be caffeinated to one degree or another has simply become baseline human consciousness.”
And it’s hard to overestimate coffee’s impact on culture and the global economy. As Pollan puts it, coffee “ushered in a shift in the mental weather, sharpening minds… freeing people from the natural rhythms of the body and the sun.”
A Short Shot of Coffee History
Let’s begin with the name “coffee.”
The word is derived from the Arabic word qahwah, which originally described a type of wine.
The humble berry first made its impact in the 15th century.
That’s when coffee cultivated in East Africa began trading in the Arabian Peninsula.
Historical accounts tell us that Sufi monks in Yemen brewed the world’s first cups of coffee. They would drink the beverage during religious gatherings to get into high spiritual states.
It would also help them stay awake during observances.
The monks traveled around the world, bringing their coffee beans with them.
Merchants rapidly opened coffeehouses throughout the Ottoman Empire.
By the following century, they were popping up throughout Europe.
Amsterdam – then a leading hub of international trade – was home to Europe’s first coffeehouses. Other commercial centers, like Venice, weren’t far behind.
England’s first coffeehouse opened in Oxford in 1652, and the trend quickly spread to London. Within a few decades, London boasted one coffeehouse for every 200 Londoners.
And the growing interest in coffee awoke London from its medieval alcoholic-induced slumber.
In 1757, when Benjamin Franklin retired to London, he abstained from the low-alcohol ale that kept most Englishmen in a perpetual state of drunkenness.
As court historian James Howell wrote, morning drafts of ale rendered apprentices and clerks “unfit for business.”
In contrast, coffee – a “wakefull and civil drink” – helped them “play the good-fellows.”
Franklin quickly became a coffee convert.
As Franklin put it…
Among the numerous luxuries of the table… coffee may be considered as one of the most valuable. It excites cheerfulness without intoxication; and the pleasing flow of spirits which it occasions… is never followed by sadness, languor or debility.
Indeed, coffee indirectly helped fuel ensuing scientific, financial and cultural revolutions.
Ludwig van Beethoven, Johann Sebastian Bach and Napoleon Bonaparte credited their success to coffee. French novelist Honoré de Balzac reportedly downed 50 cups a day, spurring him to write his nearly 100 novels. President Theodore Roosevelt drank a gallon of coffee a day.
The Culture of Coffee
Coffeehouses rapidly became places to exchange information and collaborate. Even in their infancy, they were a place where you paid for a coffee. But for that small investment, you also got free access to newspapers, books, magazines and conversation. (Today, you get free Wi-Fi.)
In coffeehouses, the leading minds of the day debated science, mathematics and politics.
Coffeehouses also became a hub of commercial activity. Dutch coffeehouses were the center of the tulip mania that peaked in early 1637.
London’s famous Exchange Alley was a network of coffeehouses where shares in the South Sea Company and other bubble companies traded. In Paris, the Rue Quincampoix played the same role in the Mississippi Bubble.
As French historian Jules Michelet wrote, coffee became “the sober drink, the mighty nourishment of the brain.” Like the microscope, the telescope and the pen, coffee became an indispensable tool in the new age of rationality.
Coffee also played a vital role in the economic development of the United States.
The U.S. government abolished tariffs on coffee imports in the early 19th century. As a result, U.S. coffee imports doubled every decade between 1800 and 1850. The widespread availability of cheap coffee helped ensure the U.S. would become a nation of coffee drinkers.
During the Civil War, the average Union soldier drank five cups of coffee a day. By the turn of the 20th century, people in America were consuming twice as much coffee per person as in France and 10 times more than in Italy.
Coffee and Capitalism
Coffee draws the ire of critics of capitalism.
After all, coffee is a stimulant. As such, coffee is a means to exploit employees to work harder for longer.
In 1911, a Coca-Cola study concluded that the caffeine in the beverage acted as a mild stimulant for both motor and cognitive performance.
A later study by Samuel Prescott, then a biology professor at MIT, dubbed coffee a kind of miracle, as it provided instant energy not subject to appetite or digestion.
Today, investors can take advantage of this coffee obsession as well.
Starbucks (Nasdaq: SBUX) has been one of the great moneymakers in the U.S. stock market over the past three decades. The nation’s largest coffee chain went public on June 26, 1992, at $17 per share.
A $10,000 investment on that day would have been worth around $4.8 million by the end of 2021 – a compound annual growth rate of 23%.
You can also buy a coffee exchange-traded note – a close cousin of the exchange-traded fund – in the form of the iPath Bloomberg Coffee Subindex Total Return ETN (OTC: JJOFF).