Podcast
Coffee prices could rise up to $6 dollars in Melbourne metropolitan and the suburban areas by the end of this year
Produced by Caitlin Duan
Melbourne is famous for its rich café culture and is said to have more cafes per person than any other city on the planet. However, based on ABC news, coffee lovers will be paying up to $7 for a regular cup because cafes nationwide struggle to absorb growing overhead costs. This price increase may affect café industry and coffee consumers in Melbourne, as Caitlin Duan reports.
Melbourne coffee lovers will pay $6 for their morning coffee ritual by the end of this year
Written by Caitlin Duan
It is a typical chilling and rainy morning in Melbourne, and people are in a hurry to get to work. In fact, it is not the 7am alarm clock that awakens Melbourne people, but the ubiquitous coffee shop located along the streets. Whether it is long black with caffeine or a mug of latte with a smooth balance of milk and coffee beans, a cup of coffee is enough to warm people’s hearts on a rainy day.
According to the statistical website, Australians consumed around two kilograms of coffee per person in 2021. In Melbourne, it has more than 1600 cafes and some of the world’s best baristas. However, with such high sales volume, the President of Cafe Owners and Baristas Association of Australia, David Parnham, points out that “by the end of this year, coffee lovers in Melbourne will pay up to $6 for a cup of coffee because cafes nationwide struggle to absorb growing overhead costs.
Mr Pharham has around 8 years of experience in cafe research, and his recent research shows that the average price of coffee is $4.5 to $5 in Melbourne. The coffee price has gone up almost $1 in the last couple of weeks as business has returned to normal in Melbourne. “But it’s still not enough, I think that the Melbourne metropolitan and the suburban prices will be around $6 by the end of the year. If you’re in places like Broome or Darwin, you’re definitely going to see the price get to $7, but in the suburban areas of the metropolitan capitals and the state capitals, you’re going to see the price around $6,” he says.
Mr Pharham thinks the $6 price increase will impact the cafe industry more as the cafe owners have to pass on some of the extra costs incurred due to the global conditions. He points out that this increase is related to the price of green bean commodity and the damage of the major frost in Brazil. An article from The World shows that Brazil is the world’s largest coffee exporter, and it was hit hard by the extreme weather of frosts as 30% to 40% of the coffee plants have been damaged.
The Brazilian coffee problems are bad news for Australian coffee lovers. “The Brazilian coffee is very much part of the espresso mix of beans that they choose to roast coffee in their espresso blends. If you’re getting espresso from a cafe that you enjoy, there would be some component of presumed coffee in that taste profile,” he says.
Another reason behind this price change is the shipping costs and container imports. Mr Pharham explains that Australia is not known as a growing nation of coffee, and “there is less than 5% of all the coffee grown here in Australia, so 95% of the coffee is imported”. Australia imports coffee from high mountain locations in most third-world countries. The price behind the process, from picking up the beans to shipping them to Australia has been expensive.
“I’ve heard that the price is now five times what it was.
If a container posted $2,000 (Australian dollars)18 months ago, it’s now more than 12,000 or $10,000 for the same container. This means that
the coffee is more expensive before it even arrives in the country,” Mr Pharham says.
There has been discussion about growing coffee in Australia, however, it can take up to “five years or seven years” before the tree has the coffee cherries to harvest. “We would like to see more coffee grown here, but it’s a long term solution, not a short term,” he says.
The President of Cafe Owners and Baristas Association of Australia, David Parnham’s research shows that 31% of cafes sold 100 to 200 coffees in a day. (Photo: Ketut Subiyanto)
There has been a rough journey for cafe owners to increase the price to survive in the industry. Mr Pharham explains that the coffee prices in Melbourne have been sitting at $4 for around five years, “no one was wanting to go over $4 because that was seen as expensive,” he says. During the pandemic, most cafes in Melbourne could do restricted trading for takeaway only. The extra cost of using paper cups instead of washable mugs increased the cost of production.
“A lot of the cafes, not just in Melbourne but around Australia, they were worried that if they pass that price increase on to the customer, they may lose them, or they may be seen as being expensive, so the ceiling for coffee was at the most $4 in Melbourne,” Mr Pharham says.
As the cost of coffee continued to rise, cafe owners had to decide whether to increase prices while facing the pressure of losing their customers. Mr Pharham says, “It was a very harsh lockdown in Melbourne that actually caused a lot of business to go out of business.” He witnessed many cafe owners relocate their business to other places like Westfield and Regional Victoria. Many of them could not survive and had no other choice but to leave the cafe industry.
Seven Seeds Coffee Roasters is one of the most popular cafes located in Carlton, Melbourne. (Photo: Seven Seeds)
Seven Seeds Coffee Roasters is one of the cafes that increased their coffee prices around three months ago. This cafe is located in Carlton, Melbourne, a busy street next to the University of Melbourne and the CBD. Seven Seeds is usually packed with customers sipping coffee and eating brunch inside the cafe, and people would know when their coffees are ready by hearing the barista say, “Coffee up”.
In this bustling but cosy coffee shop, the Revenue Manager Scott Griesberg, says that they currently charge between $4.5 to $5 depending on the coffee, and the change of price was in line with inflation of alternative milk and the cost of regular milk. After the price increase, most of the Seven Seeds customers showed support and understanding towards this change.
Scott Griesberg has been working at the Seven Seeds Coffee Roasters as a Revenue Manager for a year. ( Photo: Caitlin Duan)
“Seven Seeds pays the right money for our beans, so we charge accordingly. I think as long as there’s transparency around why you’re charging, what you’re charging and you’re charging for quality products, then there’s usually no concern. Some customers won’t want to pay that price and they’ll go get a coffee cheaper, but at the end of the day, when you pay $2 to $3 for a cup of coffee, I can’t guarantee that that was responsibly and or sustainably sourced,” Mr Griesberg says.
Melbourne people are very supportive of their local cafes. It is not only about the coffee itself, but the connection with each other. “Maybe yourself, you have a repertoire, maybe three or four cafes that you always go to, you know the barista, the waitstaff there, and you know the setup of that cafe very well, this is why I think people are a little bit forgiving,” Mr Pharham says.