Why Coffee Prices Are Rising
- 26 May 2022
There’s no denying it: the cost of coffee has been on the rise, and it’s a trend that’s affecting everyone from growers and roasters to your local café and, of course, coffee lovers across Australia.
But what’s driving these price increases? Let’s dive into the key factors behind the rising cost of coffee and why your morning cup might be costing a little more.
In this blog, we’ll explore:
- Climate Change & Droughts: How weather patterns are affecting coffee crops around the world, making it harder for growers to keep up with demand.
- Global Supply Chain Issues: Why shipping delays, labour shortages, and rising transport costs are adding to the overall price of coffee.
- Increased Demand: How the growing coffee culture, especially in Australia, is creating pressure on a limited supply of high-quality beans.
- Rising Input Costs for Roasters & Cafés: From increased energy bills to rising costs for packaging and equipment, it’s not just the growers who are feeling the pinch.
You could call it a storm in a teacup. So what does that mean for Aussies?
TLDR;
With increasing demand and Mother Nature hitting Brazil and Vietnam crops, yields are expected to be down and coffee prices are going through the roof as buyer's scramble to secure what is available.
Mother Nature and Droughts
Coffee crops are incredibly sensitive to changes in weather, and Mother Nature is wreaking havoc on coffee-growing regions around the world. Unpredictable weather patterns, such as severe droughts and unseasonal frosts, are making it harder for growers to keep up with demand.
Take Brazil, for example—the world’s largest coffee producer. In 2021, Brazil faced a severe drought followed by two sharp frosts, devastating its coffee crops. Minas Gerais, one of Brazil’s key coffee-growing regions, lost 3.45 million 60kg bags of coffee in one season. When you compare that to Brazil’s usual annual output of 49 million bags, the scale of the problem becomes clear.
The already stressed Brazil was hit again by Mother Nature this season, with crop yields expected to be down thanks to drought.
The story is similar in other coffee-producing regions like Vietnam, which has also reported lighter crops due to weather. With supply decreasing and demand continuing to grow, panicked green bean brokers are scrambling, which naturally pushes the price up.
Global Supply Chain Issues
If you’ve noticed delays in receiving packages or higher shipping costs, you’re not alone. The global supply chain has been under immense pressure since the pandemic, and coffee has not been immune.
While it has recovered a little since the pandemic, most green coffee beans arrive in Australia by sea, and international shipping has faced disruptions due to labor shortages, rising fuel costs, and inconsistent port operations. Combined with higher transportation costs on land, it’s becoming more expensive to get coffee from farm to roaster—and ultimately to your cup.
Increased Demand
Australia’s coffee culture is legendary, and it’s only growing. From specialty brews to single-origin beans, Australian coffee lovers are demanding higher quality and greater variety. But with global production struggling to keep up, this increased demand is putting additional pressure on an already limited supply.
Rising Input Costs for Roasters and Cafés
It’s not just growers feeling the pinch; coffee roasters and cafés are also dealing with rising costs. Just like your cost of living pressures at home, commercial energy bills, insurance, packaging, equipment, and labour have all become more expensive for everyone along the supply chain.
For years, many Australian businesses absorbed these increases to keep prices steady for customers, but the recent surge in green coffee bean prices — now almost triple what prices were in 2021 — has made it impossible to avoid passing at least some of these costs on.
Green coffee bean prices — now almost triple what prices were in 2021
The 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. 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 going to get worse before it gets better
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.
How much is the price of coffee increasing in Australian?
Predictions could put the price of a large latte around $8.50 by the end of 2025, but that depends on a lot of variables.
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.
Supporting local business
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 few years. But it’s not like that, coffee still loves you just as much as you love it.
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.
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.
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.
Want to do something about it? We got you.
If you got to the end of this article and thought ‘Well that was horrifyingly informative, 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.
A well-priced quality home coffee machine or office coffee machine is one obvious answer, but there’s more feel-good positives to sip on during what might seem a very dark moment for all.
We can help you out with:
- Freshly roasted coffee beans, for locals, by locals. Sign up as a club member and get save 10% off coffee beans when you order online
- Coffee machines and alternative brewing gear at awesome prices. Club members save on some of this gear, too
- Lessons on how to use your brewing gear via our blog and Youtube channels. You can always save a few bucks by becoming your own barista
- A sublime coffee in house when you need it, or simple because you want to hang out with us some more
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.
And if you're a cafe owner determined to survive; you know creativity and courage have been key these last few years – our Lockdown Survival Guide touched on these and more great ideas, and is a handy resource if you're finding it tough to stay afloat.