Aussies, beware! Your daily dose of caffeine is about to get a whole lot pricier. Cafe owners across the country are facing increased pressure from all sides, and it's likely that these costs will be passed on to consumers. So, what's behind this price hike?
The Perfect Storm: Cost-of-Living Crisis and Soaring Coffee Bean Prices
The cost-of-living crisis and weakened consumer spending are already taking a toll on cafes. But the main culprit behind the impending price increase is the skyrocketing cost of Arabica coffee beans, which have reached a record high, surpassing the all-time peak set in 1977. Melbourne cafe owner Dan Dick told Yahoo Finance that cafes will have no choice but to pass on these increased costs to customers.
Why Cafes Can't Absorb the Increased Costs
According to Dick, cafes spend triple what they do annually on rent in coffee alone. A small increase in coffee prices can have a significant impact on a small business's bottom line. "Ultimately, that's going to have to be passed on down again. No one wants to do it, but it's already become a very difficult situation," he said.
What's Driving the Coffee Bean Price Hike?
The main reason behind the surge in coffee bean prices is the perfect storm of bad weather conditions in major coffee-producing countries like Brazil and Vietnam. Brazil, one of the biggest producers of coffee beans, was hit with higher-than-average rainfall in October, followed by drought-like conditions and high temperatures. Vietnam, another huge coffee bean producer, has been hit with a severe drought that has impacted supply. This combination has contributed to the bean price jump and has led to major concerns about the availability of the crop over the coming months.
Aussies Already Feeling the Pinch
Many Aussies are already feeling the effects of higher coffee prices. Phoebe Parsons, a pilates instructor, was shocked when she was charged $15 for two small cappuccinos on New Year's Day. Others have taken to social media to share their own experiences of being charged exorbitant prices for coffee.
What Goes into the Cost of a Cup of Coffee?
It's not just the cost of coffee beans that determines the price of your cup of coffee. Cafe owners also factor in utility bills, rent, staff costs, and a wage for themselves, among other expenses. Small bumps in individual coffee prices can go a long way in "clawing back" some of the money lost in other parts of the business.
The Future of Coffee Prices
According to the Australian Financial Review, Arabica futures could shoot between $US4.00 and $US5.00 in the coming months. This means that coffee prices could continue to rise, even if the cost of other expenses comes down. So, Aussies, be prepared to pay more for your daily coffee in 2025. It's not just the cost of coffee beans that's going up – it's the entire cost of running a cafe that's being passed on to consumers.
