As a coffee roaster deeply connected to Australia's coffee community, we've been following the discussions about coffee pricing with great interest. Recent speculation about dramatic price increases has prompted us to share some insights about the real factors affecting your daily cup.
Industry leaders Kirk Pearson, Co-Founder of Project Zero Coffee in Melbourne, and Andrew Low, Supreme Coffee CEO, have provided valuable perspective on why predictions of $12 coffee are more fiction than forecast.
Understanding True Coffee Costs
The price of your favourite coffee involves multiple components beyond just beans. While coffee commodity prices have indeed reached historic highs, it's crucial to understand that beans typically represent only 12-15% of a cup's total cost – approximately 50 to 65 cents.
"Even if coffee prices doubled, this would add only about $1 per cup to the sell price to recover the cost increases," Andrew Low explains. Other essential elements include:
Realistic Price Projections
According to industry analysis, a more realistic pricing scenario by year-end would look like:
- A base price increase to about $5 for a small coffee (covering historical non-coffee cost increases)
- An additional 50 cents to address current bean price increases
- A potential further 50-cent increase if commodity prices remain high
This suggests a more realistic price range of $6-7 for a small coffee in the short term – significantly below the speculated $12 mark.
The Specialty Coffee Perspective
In the specialty coffee sector, pricing often follows a different logic. Many roasters, including ourselves, maintain direct relationships with producers, paying premium rates regardless of market fluctuations. This relationship-based pricing model helps maintain quality and ensures fair compensation for farmers while providing more stable pricing for consumers.
Kirk Pearson highlights this practice with an example: "Market Lane sources a coffee called Santa Isabel from Guatemala every year. They've had a relationship with the producer for years, and stick by each other through hardships so are likely to pay above market price to maintain the relationship."
Supporting Local Coffee Culture
The Australian coffee industry recognises the current cost-of-living challenges facing consumers. As Andrew Low notes, your local café experience represents more than just the sum of ingredients – it's an investment in craftsmanship and community.
The solution lies in measured, transparent price adjustments that support sustainability across the supply chain while maintaining the special relationship between cafés and their customers. This approach ensures that quality coffee remains accessible while supporting everyone involved in bringing that perfect cup to your table.
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*This article has been adapted from original reporting by BeanScene Magazine, with additional industry insights from Bay Beans Coffee Roasters.*
Industry leaders Kirk Pearson, Co-Founder of Project Zero Coffee in Melbourne, and Andrew Low, Supreme Coffee CEO, have provided valuable perspective on why predictions of $12 coffee are more fiction than forecast.
Understanding True Coffee Costs
The price of your favourite coffee involves multiple components beyond just beans. While coffee commodity prices have indeed reached historic highs, it's crucial to understand that beans typically represent only 12-15% of a cup's total cost – approximately 50 to 65 cents.
"Even if coffee prices doubled, this would add only about $1 per cup to the sell price to recover the cost increases," Andrew Low explains. Other essential elements include:
- Packaging and milk costs
- Labour expenses
- Rent and utilities
- Insurance and taxes
- Equipment maintenance
Realistic Price Projections
According to industry analysis, a more realistic pricing scenario by year-end would look like:
- A base price increase to about $5 for a small coffee (covering historical non-coffee cost increases)
- An additional 50 cents to address current bean price increases
- A potential further 50-cent increase if commodity prices remain high
This suggests a more realistic price range of $6-7 for a small coffee in the short term – significantly below the speculated $12 mark.
The Specialty Coffee Perspective
In the specialty coffee sector, pricing often follows a different logic. Many roasters, including ourselves, maintain direct relationships with producers, paying premium rates regardless of market fluctuations. This relationship-based pricing model helps maintain quality and ensures fair compensation for farmers while providing more stable pricing for consumers.
Kirk Pearson highlights this practice with an example: "Market Lane sources a coffee called Santa Isabel from Guatemala every year. They've had a relationship with the producer for years, and stick by each other through hardships so are likely to pay above market price to maintain the relationship."
Supporting Local Coffee Culture
The Australian coffee industry recognises the current cost-of-living challenges facing consumers. As Andrew Low notes, your local café experience represents more than just the sum of ingredients – it's an investment in craftsmanship and community.
The solution lies in measured, transparent price adjustments that support sustainability across the supply chain while maintaining the special relationship between cafés and their customers. This approach ensures that quality coffee remains accessible while supporting everyone involved in bringing that perfect cup to your table.
---
*This article has been adapted from original reporting by BeanScene Magazine, with additional industry insights from Bay Beans Coffee Roasters.*