Coffee drinkers in Australia could soon face a big jump in costs. Experts in the industry believe a barista-brewed cup will go for anywhere between $8 and $12. Rachel-May Follan, owner of Whyld Coffee, reminds people about the tremendous effort and resources that end up producing a quality coffee. Surprisingly, the cost of this effort represents just 13 percent of their cost per cup finale.
In 2024, Lavazza saw a shocking $1.3 billion jump in costs. Climate-related disasters like wildfires and droughts devastated coffee bean crops across the world. Commodity prices are soaring, and that’s just part of the problem. Escalating rent, energy and wage costs are other catalysts propelling this coming price increase. As it stands, coffee in Australia is already $5.50 on average, but that number is only expected to climb.
The Cost Breakdown
Follan wants people to know the real story behind their everyday cup of joe. That price consumers are paying on their receipt isn’t just the cup of coffee anymore.
“You don’t realise how much work goes into that daily coffee,” – Rachel-May Follan
She explains further that thousands of hands help them process cherries, from hand-picking cherries to process them and sun-drying them for 30 days. In recent months, Follan has seen the price of organic green coffee beans skyrocket from approximately $4 per kilogram to $14 per kilogram.
The increasing prices don’t stop at the coffee bean. Todd Hiscock, another business owner, described the same alarming patterns. When you consider that in that same time his restaurant has experienced a 9 percent increase in labor costs, a 29 percent increase in rent and a 6 percent increase in insurance. These trends have pushed a growing number of café owners to start experimenting with new pricing models.
“We’ve got to come to the party and pay in a competitive global market,” – Todd Hiscock
The Impact of Climate Change
Extreme climate events have caused unprecedented disruption in the global coffee supply chain, difficult at any time, made worse by the pandemic. These challenges drove wholesale coffee prices up, climbing 119 percent since last November 2023.
Follan’s café provides the unique beans—which are imported directly from South America and Africa—to 11 other local cafés. Consumer advocate Jane Aholou claims that plant based milk is sky high. They’ve increased in price by 20 to 100 percent compared to regular cow’s milk. These increasing expenses put immense pressure on the operators of coffee shops to raise their prices to keep up with costs.
“It’s kind of like toilet paper in COVID-19,” – Rachel-May Follan
As the industry grapples with these challenges, major supermarket chains Coles and Woolworths have acknowledged that external pressures are driving record-high coffee prices.
Consumer Experience and Expectations
Even with the expected increase in cost, Follan is confident that consumers won’t shy away from finding quality coffee experiences. She states that coffee shops offer more than just beverages. They provide an environment where patrons enjoy music and ambience.
“You could be going in because you like the playlist or you like the ambience, it’s an experience as well,” – Rachel-May Follan
As much as we agree with Follan that sometimes prices need to go up, we feel they should be kept affordable. She makes a case for a range of $6 to $7 to be more attractive to potential riders. This approach would prevent it from reaching exorbitant levels.
“We’re not saying that it needs to reach crazy, crazy numbers,” – Rachel-May Follan
As the coffee industry navigates these tumultuous waters, it faces a complex balancing act. It must manage costs while providing high-quality products and maintaining customer satisfaction.
