When Peter Saphin buys his standard coffee at the gym near his home, north of the Brisbane River, he knows how it’s going to taste and he knows how much it will cost. But he’s also relieved about something: last year’s predictions he’d be shelling out close to twice his usual spend have not come true.
Coffee price rises have been smaller than expected. Photo: John Stephen Britten
It might not have been this way. In August last year the ABC reported the Australian Specialty Coffee Association’s Bruno Maiolo as saying that on supply and trade issues alone, and if pre-COVID-19 margins were maintained by retailers, a cup of coffee right now should be ‘closer to $7’.
Saphin’s post-workout coffee costs $4. When he visits family in the Beaudesert area the order costs the same, or $4.50, depending on the café. In the end, he says, the fact that costs haven’t risen as predicted means the price isn’t that much of an issue. Though it could become so, he says, depending on just how much he consumes. “If I was [still] cycling every day I’d be having two coffees per day, over the course of 5 or six days, then it would become a decision,” he said.
Retired professional engineer Brendan Dever is a Beaudesert local who thinks that maybe your brain adjusts to the small increases over time. He drinks a medium coffee with two shots in it, in any of Beaudesert’s four coffee shops, and he currently expects to pay $5 or $5.50. Dever also patronises two separate mobile coffee shops, one at Woodhill on the highway to Brisbane, and one which parks behind the medical centre across the road from his home. The prices, he says, are much of a muchness.
Dever, married to a woman who once owned a coffee shop with her sister, admits that these days he tends to drink capsule coffees from a machine on his kitchen bench. The cost is $0.40 to $0.80 per cup, excluding electricity and milk, depending on how many capsules he uses. He’s interested in convenience, quality and consistency, as well as price, and points out that all of these variables are satisfied by the home machine.
“Someone was round here the other day, and I made them a cup, and I thought oh well, it’s a visitor so I’d better do the right thing, so I made them a medium sized cup and I used two shots you know?,” he said.
“And they said geez that’s bloody nice coffee. How did you do that? I thought maybe I should be generous to myself and use 2 shots more often.”
Sure, the stability of the cost of coffee for the customer and economic options in home machine developments, have enabled drinkers like Saphin and Dever to make easy choices about where they get their caffeine hit, and to focus on the enjoyment of the beverage rather than how they’re going to pay for it. But does this mean that cafés are absorbing costs? Are they toughing out a reduced profit to keep prices reasonable and sales running?
The cafe owner
Beaudesert’s Kylie Peterson, owner of the Bean To? café in the town’s centre, says the price her coffees has gone up only $1 since she took over the shop three years ago, and any need to increase prices to the customer has several elements.
“The cost of the beans, yes, but also the takeaway cups have gone up in price, your syrups have gone up in price. And the milk: I’ve had four or five price rises for milk since I took over the shop nearly three years ago, so that contributed to it as well,” she said.
Peterson’s loyalty to her supplier has eased things somewhat. “I’ve stayed with the same coffee supplier that (the previous owner) started with 10, 12 years ago,” she said. “We’re their only coffee shop in Beaudesert and the surrounding area, so they’re very good to us and they try not to increase prices, as much as they can.”
According to material published on the Statista Research Department website in 2019, the average price of a flat white coffee in Australia that year was $3.99. It’s comforting to think that in Beaudesert, the closest rural town to Brisbane city, the price four years ago is still the price today.
But in 2022, drought and frost in Brazil was being touted as the reason why the cost of raw coffee out of that country almost doubled. Concerns about COVID-19 and the war in Ukraine were affecting freight availability, and thus costs, all the way around the world, for everything, coffee included.
The rise in coffee bean prices is not the major issue at Bean To?.
“Not so much the price of beans that’s contributed to the [coffee] price rise for me personally,” Peterson said. “But definitely all the other aspects. Electricity’s gone up, so making the coffee is that bit more expensive than it used to be, say five years ago. It sounds like that’s a silly reason, but everything’s gone up. My 14 staff got pay increases, so it’s all of those things that have a ripple effect.”
Peterson also said customer loyalty has played a part in allowing her to keep the price of a flat white as stable as it can be.
“We do a lot of special deals to keep people coming in, because we realise that everything’s gone up in price, like the cost of living,” she said. “So, we do our local worker coffees which start at $4, they just pay extra for extra syrups and shots and alternative milks. We have our (workers in emergency) services coffees which are $3, so again they get a $3 standard coffee and anything extra they just pay that little bit extra for.’
Peterson has no plans to increase the price of a standard coffee anytime soon. “At the moment we’re going to sit steady and see how we trot along,” she said. “I’d rather keep it at a reasonable price that people can afford so that they keep coming in and they can keep having that little special thing that they have. Put the prices up and you’ve got no-one coming in because it’s unaffordable.”
The roaster
In the middle of the supply chain for all things coffee is the coffee bean roaster. Brisbane batch-roaster Simply Beans has some specific concerns as they hand-roast small quantities. Spokesperson Deborah draws a distinction between her business and that of a ‘commodity roaster’, which is a larger, automated operation, where she says someone programs the roaster profile then “presses a button and walks away”.
“We do a batch of say 12.5kg in 20 minutes,” she said. “They can do 200kg (in that same time). So, there’s a massive difference between specialty roasting and commodity roasting.”
The scale allows for the sale of a cheaper product.
Deborah says that although customers, including retail coffee shops, may understand that the green bean price to her company has gone up, they don’t always understand the individual care taken by the batch-roaster. Those differences affect the quality and price of the final product.
“Even those people, who have come to us because they want a better product, they’ve been to a commodity roaster and now they’re looking for a better product and trying to sell upmarket, they’ll still try to squeeze us down as low as possible, or try to,” she said. “The roasters are being squashed. It’s the smaller roasters that can falter in that, constantly losing any profit margin.”
Deborah agrees with Kylie Peterson in Beaudesert, that the cost of milk is driving coffee beverage prices. “In the last six months alone, milk has gone up and is about to go up again, for the fourth time,” she said. “People are telling us (a coffee is) $7 or $8 in certain places.”
The cost of a flat white coffee at the espresso bar attached to Simply Beans’ roasting operation is $5 to $6, depending on the blend chosen by the customer.
Find your affordable
Back in Beaudesert, as Peter Saphin thinks about going out on the bike and Brendan Dever glances across the street for the coffee van before pulling a couple of capsules out of the box for a visitor, Kylie Peterson greets her customers, offers discounts and worries about the price of milk. A delicious coffee is on the cards for them all. It is still affordable.
CATHERINE ORR says:
I AGREE WITH KYLIE PETERSON. MILK IS GOING UP AND UP AND SHE WILLHAVE LOTS OF CUSTOMERS IF HER PRICES ARE GOOD
KEEP UP THE GREAT WORK KYLIE.