For richer, for pourer: average coffee price expected to hit $4

Esther Han
Steaming success: Barista Sean McManus makes a coffee at Single Origin Roasters in Surry Hills. The cost of coffee is ...
Steaming success: Barista Sean McManus makes a coffee at Single Origin Roasters in Surry Hills. The cost of coffee is predicted to reach $4 in the next few years. Photo: Brianne Makin

Savour that cup of coffee and start collecting loyalty cards. The average price for coffee could hit $4 in three years, according to industry groups and economists.

A growing customer preference for organic and sustainable coffee, demand for better wages by skilled baristas and increasing rental costs will force cafes to raise prices, said secretary of the AustralAsian Specialty Coffee Association Ross Quail.

''People are increasingly looking for high-quality, speciality coffee, where there is a uniqueness and accuracy of flavour, which is then more expensive,'' he said. ''It's changing the direction of the industry. It's also a highly competitive industry and with that comes greater investment into equipment and into new fit-outs with a good architectural firm to provide a different level of experience.''

An example is Single Origin Roasters in Surry Hills, which its owner Dion Cohen recently refurbished to create a ''quirky industry'' feel with glass and steel in a bid to enhance the coffee-drinking experience.

Mr Cohen believes the average price of coffee will lift by 50ยข within a year across both specialty and regular coffee shops, largely because of rent and labour costs. Equipment has also become more sophisticated and expensive in the speciality coffee world, he said. ''A machine that would have cost me $8000 about 10 years ago would now be $25,000.''

In Sydney, the average price for a regular cappuccino this year is $3.22, up from $2.95 five years ago, a survey involving more than 1000 coffee shops by Gilkatho coffee company showed. Economist Tim Harcourt from the University of NSW expects the price to hit $4 within three to five years. He pinned it on Australia's overall income growth.

''As Australians become richer and richer, they will tend to choose more luxury goods, and that includes our ability and willingness to buy expensive coffee. This impacts prices,'' he said.

But Mr Harcourt said the industry should not justify price rises on labour costs, calling such reasoning a ''furphy''.

''In America, [the coffee businesses] in states which cut minimum wages or didn't raise them, didn't do any better than places that raised the minimum wage,'' he said. ''So labour reasons don't stack up. I think it's an excuse to not pay them more.''

Chief economist at HSBC Paul Bloxham said while the combination of lower global coffee prices and the recent high level of the Australian dollar meant the cost of coffee beans should not be rising, there were ''other forces at work''.

''The actual coffee beans are a very small part of the total cost of producing the coffee. Milk is likely to be a larger cost,'' he said. ''There has also been greater demand for a 'quality' cup of coffee, so this might be having some bearing on the price.''