Rising Australian coffee prices today - we’re getting a lesson on how to practice gratitude
- 26 May 2022
We break down why it’s happening and what we can do about it by learning how to budget, support local businesses, use home coffee machines and consume with intention.
Jump to a Section:
- Why the Coffee Shortage?
- Impact on Aussies
- The Weather Factor
- Price Increase Trends
- Upsides of Costly Coffee
- Supporting Local Business
Many of us are adding our coffee to the ‘mental health’ section of budget spreadsheets, snuggled right up to the avocado toast that’s locking first home buyers out of the domestic housing market - despite rising costs.
There’s been a global coffee shortage brewing for a long time, and we’re set to see the Australian coffee menu change as coffee prices increase.
While this might be news to some, those of us in the coffee biz have been doing our best through global coffee crop losses, decreasing choices or sureties that we can access the favourite single origins that underpin our core coffee blends, and increasing variability in green coffee bean quality.
You could call it a storm in a teacup. It’s been a stinging series of unfortunate events that means getting consistency or a guarantee on supply is now as difficult as squeezing crema out of an old coffee bean.
So what does that mean for Aussies, many of whom would put up a fight to the death before giving up their morning sparkly bean juice?
Well-priced quality home coffee machines and office coffee machines being purchased is one obvious answer, but there’s more feel-good positives to sip on during what might seem a very dark roast (haha!) moment for all.
The Coffee Shortage Started Back in 2021
The sudden uptick in coffee prices can be broadly but clearly attributed to two main offenders: climate change and transportation difficulties.
The weather is becoming more extreme and less predictable, and our coffee growers are copping the brunt of it
In 2021 the world’s largest producer of coffee beans was smashed by severe weather events. Brazil grows and exports more than 40% of the entire global coffee supply, and in 2021 it was affected by a severe drought, which was quickly followed by two sharp and ferocious frosts.
One of the main coffee producing regions in Brazil – Minas Gerais – lost a whopping 3.45 million units (60kg bags) in one swoop. When you compare that to the usual total output yearly of coffee beans from Brazil – 49 million units – that figure hints at the extent of the damage to be exacted across the entire country, and the pain passed on to importing countries.
With other major global coffee suppliers like Indonesia also predicting decreased supply due to lighter crops, the upward squeeze on current green coffee bean prices is set to keep tightening.
Figure 1: Coffee production worldwide, by leading country (in 1,000 60 kilogram bags)
The proof is in the financial data on the global coffee prices chart, and us coffee lovers are weeping just a little bit
The price of coffee as a global commodity increased an eye-watering 84.7% in a single year, measured from April 2021.
The trend shown below in Figure 2 shows the steep climb from the $130 mark per unit (60kg bag) in April 2021, to above $236 per unit today – and projects show that this is expected to keep climbing to at least $260 per unit.
Figure 2: Coffee increased 84.7% since the beginning of April 2021, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity.
The great Supply Chain Disruption started with the pandemic, and it’s painfully slow to recover
Most of us have experienced our fair share of delays, shortages and interruptions due to COVID-19 crashing across the world, like a big nasty wave. But freight and shipping isn’t something all of us think about when we’re grumbling about our online orders getting dropped off late by the postie.
If you’ve ever wondered how raw, green coffee beans make their way to our sparkling shores, it’s almost exclusively by sea. We’ve all seen firsthand the international travel restrictions, differing testing and isolation practices, and staff shortages due to illness and sadly – death. We’ve seen it happen at home on a smaller scale, and it’s happened in the global logistics space too. Making the situation arguably worse is the rising prices of fuel combined with port processes that aren’t harmonious or efficient after so much disruption.
And while growing coffee in Australia is on the rise, it won’t fill the shortfall for decades to come.
It’s gonna get worse before it gets better, but the coffee industry is ready to rise to the challenge
The price rises that our coffee loving customers are beginning to see aren’t solely due to dramatic, catastrophic world events like natural disasters and global infectious disease pandemics.
No, the prices have been steadily rising for coffee roasters and café owners for quite a few years prior to this. They just simply absorbed those costs as long as they could, frantically finding savings in other places so they could delay passing costs on to customers. But every cost has ticked up over the last 5 years for producers and businesses, just as it has for every individual household.
Australian coffee roasters and cafes have not been passing that price rise on, cutting margins very fine to do so. When that runs into:
- - A near 85% increase for green coffee beans
- - Inconsistent quality and disrupted supply
- - Drastically more expensive transport costs - less ships on the sea, less trucks on the road
- - Increased utilities and fuel prices
Their cups spilleth over. For the industry to stay afloat, coffee lovers have to share some of the long held burden. But it won’t be as bad as you think.
How much is the price of coffee increasing in Australian?
A much touted prediction puts the price of a regular 12oz latte around $7 by the end of 2022, which isn’t particularly shocking when there are many cafes who bravely made that called-for jump to survive lockdowns during the pandemic and stay open to their loyal customers.
While it does mean a bigger adjustment than we’re used to, we’ve enjoyed relatively flat coffee prices at our local caffeine haunts for half a decade. Behind the industry scenes, the price rises aren’t a shock to seasoned coffee players.
The scale of devastation to the global coffee supply, logistics, staff availability, and a forever changed social landscape? Yep, that’s new. That’s a lot to take in.
Disruptive change is steaming the Australian coffee market and we don’t know what's gonna pour out
Unlike incremental change – a process we’re all far more familiar with, trundling along at a far more comfortable pace – disruptive change is the type which plays major havoc with the way a business model and industry operates on a fundamental level suddenly and often unexpectedly. Time to prepare often doesn’t exist, so neither do solutions or systems to manage it.
This looks like challenges, changes and re-inventions that will propel entire industries forward, backwards, or sideways like a slingshot. Who comes out on top depends on a vast number of factors, but key factors -include:
- - Financial decisions - More money, more choices
- - Willingness to embrace new ideas - letting go of the deadweight, even if it's painful. Welcoming new practices, collaborations, and processes that work in the new environment, even if it feels weird or foreign.
- - Acting quickly on making decisions - an agile pivot leaves more room for the future gains, and more toom to make the mistakes necessary to generate real solutions.
- - The balancing act of old VS new - the needs of loyal customers as well as new customers need to benefit from a changed business model, as much as possible (you can't be everything to everyone)
- - High engagement with customers and community - Having empathy and actively voicing it are different things. No one knows your story or updates if you don't tell them.
- - Frequent and consistent communication - Using social media, digital marketing, online presence, and traditional marketing methods to reach, update, and educate customers is no longer negotiable in a post-COVID world.
Of course, the list above is not exhaustive and not everyone can say they have the privilege or luck to even tick all the points above off their wish list. But for those determined to survive, creativity and courage have been key – our Lockdown Survival Guide touched on some of these ideas last year.
Quality over quantity right? Supporting local business and appreciating the little joys in life
As prices rise on what seems like everything around us, it feels both half-expected and half-scandalous that our long trusted companion would join the list. A final betrayal in a long list of sufferings over the last 2 years! But it’s not like that, coffee still loves you just as much as you love it.
The ticket to visit your pal is just a little, tiny bit more than it was a year ago. And as we know, when we really love something - we find a way. The predictions surrounding consumer behaviour in response to a coffee price rise aren’t actually too scary at all – very few predict Aussies cutting back in the face of an extra buck or two.
Not only are we one of the most dedicated coffee drinking cultures in the world, it’s hard to let go of such a small and necessary comfort when far more fundamental costs of living are sky-rocketing.
The three biggest upsides of coffee being a little more expensive
If you’re going to pay more than $2 per litre for fuel, rent is astronomical, mortgage rates are on the rise and Netflix is rudely threatening to stop people sharing passwords – we’re gonna keep our damn coffee thanks. And we’re gonna enjoy it mindfully.
We know it’s a real buzz word at the moment but there’s a good reason why: gratitude is a practice that has been scientifically proven to increase happiness in those who practice it consistently. And that practice doesn’t have to be long winded, or even include doing anything.
Increasing gratitude simply asks you to notice when something good happens to you in your day. You found a matching pair of socks, the air smells nice, and you’re holding a delicious cup of freshly made coffee – it’s a good day.
Spending more time with loved ones
Drinking coffee is a versatile activity, often enjoyed alone and often enjoyed in the company of others. If coffee gets more expensive, it’s more likely that the bean budget would be saved for the rituals shared with others, and therefore appreciated more. It’s long been a part of social culture and connection in Australia, and it won’t be disappearing quickly.
Appreciation and understanding
If you want to know why you’re paying more, you have to ask the questions and listen to the answers.
Learning more about the thing you love and becoming more aware of how it comes to be in your hand is never a bad thing. And with coffee, the more you learn the less you feel you know. It’s a complex and deeply fascinating rabbit hole to go down, and coffee professionals want to tell you about it! Strike up a conversation with your roaster or barista, do a coffee course, learn how to brew coffee a new way at home, spend 7 hours on Wikipedia. Be curious
It wasn’t the most enjoyable way to be given a lesson in priorities, but a near-total disruption of the globe has certainly put a lot into perspective for us. And the conclusion we came to wasn’t new, it was very old – it was love and quality of life.
Want to do something about it right now, immediately, today? We got you.
If you got to the end of this article and thought ‘Well that was horrifyingly informative and kind of uplifting and all that, but it doesn’t turn one cappuccino into three!’ – fair call. Most people have a set budget to work from and we’re coffee magicians over here, not financial magicians.
But we absolutely can hook you up with:
- Freshly roasted coffee beans, for locals, by locals
- Coffee machines and alternative brewing gear at awesome prices
- Lessons on how to use your brewing gear with in-house experts and coffee training courses
- Unending love, support and inspiration until your coffee brewing attempts turn from bitter to buttery
- A sublime coffee in house when you need it, or simple because you want to hang out with us some more
- A team and customer service community who nerd out and love coffee together, no egos allowed
Get ahead of your budget, set up your home coffee making practice and make the most of your visits to us when you want it made to perfection. The concepts of ‘gratitude’ and ‘treat yourself’ aren’t mutually exclusive – it all comes down to appreciation, and noticing those moments in the first place.
Come and visit the team at Crema Coffee Garage so we can appreciate you, and you can appreciate us, in a wholesomely awkward and never-ending feedback loop of coffee love. Or you could just call us or email us, if in-person visits aren’t possible for your favourite thing – we deliver nationwide!
