Australia, it looks like your sacred morning ritual (aka the daily coffee run) is safe for now. After years of painful price increases, the global coffee market is showing signs of slowing down, with economists predicting that prices will plateau – or even fall – by the end of 2026.
Ten years ago, a regular flat white or latte in Australia would’ve set you back about $3.50 to $4. These days, finding a cuppa for less than $5 is almost impossible. So, why has Australia’s coffee scene become so expensive? It’s due to a combination of domestic and international pressures, according to Gemma Thompson, a global procurement expert and principal consultant at Proxima.
“Extreme weather slashed exports from Brazil and Vietnam, which are the world’s two largest producers, by around 30 per cent, pushing global coffee stocks to their lowest level in two decades. At the same time, freight and energy costs spiked during and after the pandemic, and Australia’s reliance on imports (we source around 90 per cent of our beans from overseas) made local prices especially vulnerable,” Thompson explains.
Combined with rising wages, rent and utilities for cafés, the average cup of coffee in Australia has climbed to around $5.50 – up 37 per cent since before the pandemic. Prices vary across the states: Western Australia saw a ten per cent increase over the past year, while Victoria’s crowded café scene keeps prices closer to $5 per cup. Elsewhere, local market dynamics, like competition, rent, and labour costs, play a bigger role than the beans themselves in setting the price.
The market is still expected to grow by five to seven per cent over the coming years, but with the global supply situation stabilising, the worst of the price hikes appears to be behind us.
Thompson predicts, “With improved crop forecasts, freight costs normalising and global inventories gradually recovering, we expect prices to plateau or even fall slightly by year’s end. Simply put, supply is finally catching up with demand after a prolonged squeeze.”
Aussie coffee lovers have more to get excited about, with four new arabica varieties courtesy of non-profit World Coffee Research. They’re testing the beans at trial sites in northern NSW and Far North Queensland, as part of their mission to find profitable alternatives to Australia’s favoured coffee varietals. Rest assured, big things are coming – just not for your coffee bill!