Why the price of your daily coffee is rising (but won’t hit $7 any time soon)

Why the price of your daily coffee is rising (but won’t hit $7 any time soon)

The cost of your daily cup of coffee may be on the rise, but it’s unlikely to reach the $7 mark within the next 12 months.

Despite reports this week by president of the Cafe Owners and Baristas Association of Australia, David Parnham, that coffee lovers could pay up to $7 for a regular cup, a 50¢ increase seems the likelier outcome according to other industry experts.

The price rise comes after a series of wild weather events has wreaked havoc on the world’s largest exporters over the past few years.

Industry Beans co-founders and brothers Steve (left) and Trevor Simmons.
Industry Beans co-founders and brothers Steve (left) and Trevor Simmons. Photo: Eddie Jim


In Brazil, damaging frosts followed the country’s worst drought in 90 years, causing production to fall by an estimated 30 per cent. In Columbia, La Nina has slowed crop production by at least 10 per cent.

Coupled with the soaring costs of shipping, “the price of a cup of coffee has suddenly become not very profitable”, said co-founder of Sydney specialty roaster Black Market Coffee, Angus Nicol.

“It’s a challenging environment,” Nicol said.

Industry Beans cafe in Fitzroy has raised the price of its regular coffee to $5.20.
Industry Beans cafe in Fitzroy has raised the price of its regular coffee to $5.20. 


“All of these pressures have come at the same time … It’s changed everything.”

The trickle-down effect is only now being felt by Australia’s importers and roasters, who have copped a massive increase to the cost of green beans – in some cases by up to 100 per cent.

General manager of Melbourne-based roaster Industry Beans, Trevor Simmons, said the industry had been ignoring the warning signs for years.

“The prices were creeping up and no one was talking about it. Then it just exploded,” Simmons said.

Roasters have taken pains not to pass the cost onto cafes, many of which are already on the cusp of closure due to COVID-related economic pressure.

“We will be doubling down on our own profit-loss statement before going to the cafe owners,” Nicol said.

"Every day you go to your local cafe and you expect the same coffee and the same service at the same cost," says Trevor ...
“Every day you go to your local cafe and you expect the same coffee and the same service at the same cost,” says Trevor Simmons. Photo: Eddie Jim


“There are so many cafes for sale right now, and the reason is because of all of these price increases. They can’t bear it.”

While Nicol holds on, “hoping and praying” increased prices are transitory, other wholesalers have no choice but to pass the price down the line.

Surry Hills specialty coffee suppliers Single O announced a 50¢ increase in the price of their regular cup of coffee on March 1, but general manager Mike Barbant said he saw the move “not as a price rise, but an opportunity to be transparent about the price of a cup of coffee”.

“It’s our hope it will give others the confidence to do the same,” Barbant said.

A 50¢ price rise was similarly introduced by Industry Beans at its cafes two weeks ago, bringing its regular cup up from $4.70 to $5.20.

“The cost of coffee is so tangible,” Simmons said. “Every day you go to your local cafe and you expect the same coffee and the same service at the same cost, and if anything changes it can trigger an immediate reaction.

“We held off as long as we could.”

In Sydney’s eastern suburbs, Bru cafe owner Sondra Beram anticipates a regular cup of coffee won’t increase any further this year at her Bondi hole-in-the-wall.

“I think a reasonable price would be $5 for a regular cup of coffee,” she said.

“If we increased the price, it would remain that way for at least a year.”

But while cafes have grounds to raise prices, Nicol cautioned that consumers ultimately set the ceiling.

“We need to be careful,” he said.

“We’ve built this amazing industry where customers are willing to pay substantial amounts every day to drink quality coffee, but I think there will be a ceiling to that.

“What I’m hearing and seeing from working in cafes is that there will be a limit to what people will pay. We can’t keep sliding the dial up from $4.50 to $5.50 and so on.”

Coffee trends in 2022

Parachutes

“We’re seeing a lot more drip bag products, such as parachutes, that open up specialty coffee to everybody,” says Mike Brabant. Parachutes are essentially little tea-bag style pouches of coffee with an open top and cardboard “arms” that hook over the rim of a cup. “Just add water and they replicate that specialty pour-over experience,” he says.

Cold brew

“The iced coffee market and cold brews are really taking off,” says Trevor Simmons. “We’ve been watching both rise over the past decade, but in the last couple of years, sales have really gone through the roof.”

Bring-your-own cups

Better-for-the-environment reusable cups were becoming more and more common before the pandemic, but a focus on disposable goods through COVID reversed the movement. Now Keep Cup use is back on the rise, says Sondra Beram. “I don’t use the word ‘takeaway’ ever. We say ‘single-use’ cups, because it really makes people think. More often than not, people then start bringing their own cups.”

‘Cafe quality’ at home

“COVID accelerated the progression of the home barista,” says Brabant. “We had a massive influx of people taking online courses, and a boost in sales of equipment and beans.” Many bean brands traditionally associated with cafes are now following a path established by Vittoria Coffee in the 1980s and expanding their retail offering into supermarkets too.

Hold the milk

Or hold the dairy-based milk at least. “I would say 60 to 70 per cent of all of our coffee sales are made with an alternative milk or no milk,” says Brabant. “We got rid of macadamia milk because it wasn’t selling as much, but oat milk is here to stay.”

Regular flat white prices across Sydney

7-Eleven – $1

The Grounds of the City – $3.70

The Grounds of Alexandria – $4

McCafe – $4.50

Bills, Double Bay – $4.60

Gloria Jeans, Darling Harbour – $4.80

Single O, Surry Hills – $5

Regular flat white prices across Melbourne

7-Eleven – $1

McCafe – $4.50

Wide Open Road, Brunswick – $4.80

Industry Beans, Fitzroy – $5.20

St. Ali, South Melbourne – $5.80

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