‘If I increase the price, I may lose my business’: Should Australians pay more for coffee?

Aussies are very lucky to enjoy such low coffee prices locally.

Aussies are very lucky to enjoy such low coffee prices locally. Photo: Getty

It seems everywhere Australians turn, costs are rising. The one small area of relief? Cups of coffee from our favourite local cafes, which seem to rarely rise in price.

Research from Pablo & Rusty’s Coffee Roasters found a small flat white costs an average of $4.78 across Australian capital cities.

Overseas, the cost can range from about $5 in Queenstown, New Zealand, to more than $10 in Basel, Switzerland.

Although Australian coffee lovers might be smug at enjoying some of the best brews in the world so cheaply, it comes at a significant cost to business owners, who say they are already pricing coffees below cost.

And they could soon face even higher costs.

Inglewood Coffee Roasters co-owner and procurement manager Cory Slater told The New Daily recent poor weather in Brazil and Vietnam – the world’s largest coffee producers – had potentially harmed their latest crops.

The resulting fiercer global competition for beans has already pushed up global prices.

Fluctuations of the global cost of coffee in the year to April 19, 2024. Source: Nasdaq

“Maybe six weeks ago, the price was at $1.70, now it’s at $2.40,” Slater said.

He said he hoped that ‘‘volatile’’ coffee prices would fall again soon, and many of the cafes Inglewood Coffee Roasters supplied would likely be protected by price-lock contracts either way.

However, not every cafe in Australia could be as lucky, with a significant price hike in coffee beans spelling potential doom for businesses already pushed to their limits.

Aussie coffee selling for a steal

A lot goes into the price of a cup of coffee. Photo: The Conversation/Pablo and Rusty’s Coffee Roasters, CC BY-SA

Co-owner of Sydney cafe Bertoni, Anthony Iacono, told TND he charges $4.50 for a small flat white, up from $3 when the business opened 20 years ago.

He said if he truly tried to meet rising costs of everything from beans to packaging, a coffee would cost $6.50.

“[The price of coffee for customers] has pretty much gone up 50 per cent since we opened,” Iacono said.

“In that time … our costs have risen [between 200 and 500 per cent for everything from electricity to wages].

“That’s why I think you find in the countries overseas that are charging … $10 for a coffee, they do it as a percentage of … the cost. We just can’t physically do that, in Australia … at the moment.”

The owner of Melbourne’s Two Birds One Stone Cafe, Jags Nijjer, echoed the sentiment. He charges $5 for a regular coffee, but he said costs for everything from coffee beans to takeaway cups had risen about 25 per cent in the past 18 months.

Like Iacono, Nijjer said he was absorbing the cost rather than reflecting it in prices due to the risk of losing customers, particularly as most are also struggling with their finances.

Cafe owners Anthony Iacono and Jags Nijjer feel unable to raise prices despite footing the bill for higher costs. Photo: TND/Anthony Iacono/Jags Nijjer

His business has already been affected by the ongoing cost-of-living crisis, and Nijjer claimed his willingness to put in extra hours at work himself was one of the only reasons it has been able to stay open.

“If I increase the price, I may lose my business, because people will immediately switch to next-door coffee shops,” Nijjer said.

“[Between] a year and a half ago and now, my coffee sales have gone almost 40 per cent down, especially the takeaway ones.

“Regular customers, they still come sometimes when they feel tired or stressed … so I haven’t actually lost my customers, but they have stopped coming that often because they want to cut down their expenses.”

Both Iacono and Nijjer pointed out the inability to raise prices due to stiff competition had already killed many hospitality businesses this year, new and established.

But the owners are sympathetic to the struggles of everyday Aussies; Iacono’s cafe even offers a cheap lunch special, despite losing money on it.

“Most customers look at a hospitality business from the outside, and when they see … people lined up outside they think, ‘Wow, these guys are making a lot of money,'” he said.

“I can tell you genuinely that is not the case.”

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