Australia’s Coffee Prices Could Hit $12 a Cup – Here’s Why!

Coffee prices in Australia could soon hit $12 per cup as global supply issues and increasing demand push costs to new highs.

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Australia's Coffee Prices Could Hit $12 a Cup – Here’s Why! - Credit: Canva | en.Econostrum.info - Australia

As global demand for coffee continues to rise, Australians may soon face a steep price increase for their daily cup. Experts predict that prices could skyrocket to $12 per cup, driven by a combination of supply chain challenges, extreme weather events, and shifting international demand. The price of beans has already reached record highs, and with ongoing global pressures, the cost in Australia is expected to climb even higher.

Coffee has long been a beloved staple in Australian culture, with cafes and coffee shops forming a central part of daily life. However, as the cost of raw beans increases, these price hikes are set to trickle down to consumers. Factors such as poor harvests in key producing countries, increased demand from China, and climate-related disruptions are pushing prices to new levels, creating a brewing storm for both producers and cafes.producers and cafes.

Global Coffee Prices Hit Record Highs

The price of coffee beans has surged to unprecedented levels, with significant impacts on the coffee industry. In April, benchmark prices reached an all-time high, reflecting the compounded pressures of environmental factors and global demand. A major contributor to this surge has been Brazil, which produces over one-third of the world’s beans. The country’s harvest in 2024 was severely affected by both a prolonged drought and a cold snap, reducing the overall yield.

Similarly, Vietnam, the second-largest producer, has been grappling with the effects of El Niño, which has plunged its growing regions into drought. The drought has damaged many plants, with some expected to take up to two years to fully recover. These weather-related challenges, combined with broader global inflation, have more than doubled wholesale prices since November 2023.

Increased Chinese Demand Complicates Supply

As the Chinese market increasingly embraces coffee, demand for beans has intensified. Todd Hiscock, CEO of Essential Coffee, pointed out that China’s shift from tea to coffee is putting additional strain on the global supply. The country has been purchasing beans at an unprecedented rate, often buying up entire shipments, including stock from Brazil. This demand is further exacerbating an already tight global supply chain and contributing to rising prices.

This shift in Chinese consumption patterns has created competition for beans in markets like Australia. With demand increasing from one of the world’s largest consumers, the cost to secure adequate supplies has risen. As a result, producers in Australia are facing pressure to keep up with higher wholesale prices, and these increases are ultimately passed on to the consumer.

Prices set to skyrocket: Would you pay $12 for a coffee? | Sunrise

Price Hikes Impacting Australian Cafes

The rising cost of beans is having a significant impact on Australian cafes. Essential Coffee, one of the industry’s larger players, has seen its costs rise sharply, with wage bills increasing by 9% over the past two years, along with a 29% rise in rent and a 6% increase in insurance costs. With the cost of wholesale coffee up by 119% since late 2023, cafes are left with little choice but to raise their prices to maintain profitability.

As a result, drinkers in Australia could see their daily cup cost anywhere between $8 and $12. Todd Hiscock explained that in order to stay competitive in the global market, Australian cafes will likely have to increase prices, which could lead to a backlash from customers. As Hiscock noted, drinkers are often very sensitive to price changes, and even slight increases can result in strong negative reactions from loyal customers.

The Long-Term Impact of Coffee Price Increases

The price surge in coffee is not a temporary issue but a long-term trend. As global demand continues to grow, particularly in emerging markets like China, and as weather events like droughts continue to disrupt production, the cost is likely to keep rising. These shifts in the global market have far-reaching consequences for both producers and consumers in Australia.

In addition to the price hikes, Australian cafes are facing increased pressure to keep their operations running as prices for labor, rent, and other operational costs rise. While cafes are working hard to absorb some of the increased costs, they will ultimately need to pass them on to customers, which could mean Australians are paying much more for their coffee in the years ahead.

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