Recent research from RMIT University explores why coffee prices are increasing in Australia.
According to the research led by a team of professors at the Melbourne-based university, the rise in coffee prices is attributed to a number of factors, including the lack of availability due to extreme weather events in coffee growing regions.
“There are several factors contributing to the rising cost of coffee beans. First is the havoc wreaked by extreme weather on key supply markets such as Brazil and Vietnam,” says Professor of Logistics and Supply Chain Management Vinh Thai.
“The continuing increase of container shipping rates and other supply chain issues, by which the lion’s share of coffee bean shipments are transported, also greatly contribute to the cost of coffee. Roasters may need to pass these costs onto cafés who, in turn, may do the same to customers.”
The researchers predict these supply chain issues will negatively affect the lifestyles of those who are already struggling with the cost of living. It also suggests several strategies that could be implemented by key coffee players to alleviate the issue.
“If customers choose to change their coffee habits, this might threaten the Australian coffee industry, which employs almost 70,000 people, as of 2023,” says Vinh.
“In the meantime, coffee importers and roasters could look to alternative markets to alleviate cost pressures. They could also increase their purchasing power by and bulk-buy coffee, by working with peak bodies such as the Australian Coffee Traders Association.”
Associate Professor of Marketing and Consumer Culture Bernardo Figueiredo, who contributed to the research, comments on the impact this will have on the everyday lives of the average coffee drinker in Australia.
“The increasing cost of coffee may strain consumers who see it as part of their daily rituals. Coffee is particularly popular among younger consumers, who view it as trendy, refreshing, and beneficial for energy and focus,” says Bernardo.
“Even countries historically not known for coffee consumption are experiencing a surge in demand as consumers are drawn to coffee’s aspirational image and functional benefits, leading to innovative product offerings tailored to local tastes.
“For Australians, the rising coffee prices mean that their daily cup of coffee may become more expensive, impacting both casual drinkers and dedicated coffee enthusiasts. This could lead to changes in consumer behaviour, such as opting for cheaper alternatives, reducing consumption, or switching to home brewing.”
Despite the financial strains, Figueiredo believes the cultural importance of the beverage will ultimately triumph and that the demand for coffee will continue.
“Given the cultural importance of coffee as a social and lifestyle symbol and its growth among the younger segments, it is unlikely that this would decrease the demand for coffee.”
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