America’s coffee cup seems filled to the rim.

Hot or iced, drip, French press, espresso, Chemex or Keurig, each of us downs about 23 gallons of joe a year on average. It’s in our blood. It’s also on our streets, where Starbucks SBUX, -2.07% outposts outnumber hospitals and colleges. And even on our resumes: 161,000 people list “coffee” as a skill on LinkedIn. See: Coffee as a skill on Linkedin

But the truth is, our cup is half empty. We could be drinking a lot more coffee and, in fact, we used to. In 1946, when America’s thirst for coffee peaked, each of us swallowed about 48 gallons a year on average, according to the U.S. Department of Agriculture — more than twice current consumption. “We’d drink coffee with breakfast, coffee with lunch, and coffee with dinner,” says John Sicher, publisher of Beverage Digest. “And mostly, we’d drink it at home.”

What makes midcentury America’s passion for coffee all the more amazing is what passed for a decent cup back then. Most coffee in the postwar years was made from canned, pre-staled, pre-ground beans, boiled to oblivion in a percolator or served so diluted as to become what folksinger Ani DiFranco calls “water dressed in brown.”

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And while Starbucks says a customer ordering a cup at one of its stores can choose from some 87,000 possible drink combinations, 60 years ago there was essentially only one. “All coffee tasted pretty much the same,” says coffee historian Mark Pendergrast, author of “Uncommon Grounds.” And it only got worse from there. “From this state of mediocrity, coffee went from safely middling to awful within the next two decades,” he writes.

The caffeination gap from the 1940s to the present day is significant beyond just as a historical curiosity, however. With coffee consumption on the rise again, the numbers suggest that despite appearances, the market is far from saturated, and that Starbucks, Green Mountain Coffee Roasters US:GMCR, Dunkin’ Donuts and independent cafes still have much ground to conquer.

“I don’t know if we can ever go back to the levels of the 1940s and 1950s, but there is no doubt that we can substantially increase consumption in North America,” says Mauricio Galindo, head of operations for the International Coffee Organization. “There is no reason consumption cannot begin to approach levels in Europe.” We’re teetotalers compared with the Finns, for instance, who set the coffee bar for the world by drinking a staggering 62 gallons a year.

Coffee consumption

The numbers also demonstrate just how swiftly and dramatically tastes can change. Since a person can only drink so much liquid in a day, due to the physiological limits of bladder and stomach, the rise of one beverage’s fortune cannot occur without the fall of another’s. Thirst is a zero-sum game.

Coffee’s star rose during Prohibition, and plummeted as soft drinks took hold in the 1960s. It’s unlikely any one beverage will achieve the dominance coffee or Coke held in prior decades for the same reason it’s doubtful any TV show in the cable era will ever manage the same ratings as the season finale of MASH: variety. “There have never been so many choices of beverage, and there have also never been so many beverages with high caffeine content,” says Agata Kaczanowska, a coffee industry analyst for IBISWorld, who nevertheless predicts the $11 billion U.S. business will have 3.1% annual growth over the next five years.

Though coffee executives and investors have good reason to feel optimistic about the drink’s fortunes, the history also demonstrates how fickle tastes are. We could fall out of love with coffee. In 1956, for instance, the coffee industry was so overconfident, it was in denial about the threat posed by Coca-Cola, Pendergrast says. “Coffee was here, on this earth, long before any of the colas,” Arthur Ransohoff, then chairman of the National Coffee Association boasted.

Meanwhile, soft drinks managed to market themselves to the not-yet-teenage baby boomer generation as the beverage of youth, energy, and vitality. When Coke hired pop singer Eddie Fisher as a pitchman in 1956, marketer Judy Gregg urged the coffee industry to follow suit. “The coffee manufacturer who decides to use the same personality technique and hires the services of one Elvis Presley could enjoy a strange success,” she said. “Imagine Elvis sipping just one cup on TV?” The industry did not bite, Pendergrast says, and while soda drinking quadrupled over the following decades, coffee sank.

Why coffee is going down market

In trying to make sense of coffee’s steady decline through the 1970s, a 1977 USDA report concluded it may have been a combination of two factors: first, changing lifestyles that “encouraged quick and cool food and beverage breaks as opposed to complete breakfasts and full meals that include coffee.” Though coffee is still offered at the conclusion of most dining experiences, these days one is more likely to have a bottle of water with lunch than a coffee, Sicher says. The second reason the report cited was taste: To lower costs, coffee producers began to adulterate grounds with growing proportions of Robusta beans, which are cheaper and substantially more bitter than the favored Arabica variety. See: U.S. coffee consumption, 1946-76.

It also didn’t help that while soft drinks managed (believe it or not) to come across as a healthy choice, coffee was increasingly portrayed as a poison. Research linked coffee drinking to heart disease, stunted growth and birth defects. In recent years, there has been a near total reversal on this front. Soda drinking is cited as a cause of the nation’s diabetes and obesity epidemics, while recent research makes coffee sound like a panacea, associated with reduced rates of heart disease, cancer, Alzheimer’s and Parkinson’s (link). Giving coffee an additional boost, a federal report recently tied energy drinks to a rise in emergency room visits. See: More Emergency Visits Linked to Energy Drinks.

Consumption is currently rising among a wide range of coffee drinkers, from those with pretensions once reserved for the finest wines (who admire how each drop on the tongue hits various highfalutin flavor notes) to those who guzzle it as thoughtlessly and automatically as tap water. So if American coffee drinking is to truly boom again, where is there still room for expansion? The battlegrounds are no longer the street corner cafes so much as kitchens, offices, and anywhere else there isn’t a fresh cup within arm’s reach at all times, executives and analysts say. Single-serve devices like Green Mountain Coffee’s Keurig machines have exploded in recent years, growing at more than twice the rate of the industry overall, according to IBISWorld.

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“Right now, 12 million out of 118 million U.S. households have a Keurig machine,” says David Sachs, vice president of brand management and innovation at Green Mountain. “By 2016 there is a market opportunity for 35 million single-serve brewers at home — roughly three times where we are today.”

Green Mountain also sees great potential in perfecting instant, single-serve iced coffee, Sachs says. “It’s become very popular away from home at Starbucks and Dunkin’ Donuts, but it’s really challenging for most people to make a good consistent cup at home with the right amount of coffee and ice,” he says. “This could boost the number of afternoon and evening coffee-drinking occasions.” In addition, given the increased awareness of coffee’s health benefits, the company sees potential in K-cup blends infused with antioxidants, he says. “Beverage trends do seem to come and go, and to be cyclical,” he says. “But right now, at least, coffee does seem to be on the rise.”

Coffee is growing on the snootier side of the spectrum, too, with more Americans taking care to buy premium, single-origin beans, sometimes even doing the roasting themselves and brewing their cups slowly and with far more complexity and care than is possible in a single-serve machine, says Galindo. “There is even a trend toward pairing coffees with particular desserts,” he says. Independent cafes like Brooklyn’s Café Grumpy say they are also doing more and more business selling high-quality beans, co-owner Caroline Bell says. “People are becoming more interested in preparing very good coffee at home.”

With some 13,000 U.S. locations, Starbucks also sees great potential for expansion in homes, offices and venues not traditionally associated with a good cup of coffee, spokeswoman Alisa Martinez says. The chain plans to open more “branded locations” within colleges and hotels, its coffee is now served at 30,000 feet on Alaskan Airlines, and though it isn’t yet available in IV-drip form, patients at hospitals around the country can now get Starbucks in their beds.

“We have Starbucks in health-care facilities across the country — including the Fred Hutchinson Cancer Research Center in Seattle -- and plan to add more,” Martinez says. “This is something the facilities, the staff, the patients and their families have been asking us for. We want to make it easy for someone to have Starbucks when they want it, no matter where they are.”