Abdullah Ramay, CEO of Pablo & Rusty’s Coffee Roasters, shares an update on the green coffee market and what could be in store for Australian café owners.
The global coffee industry is facing an unprecedented crisis and Australia is not immune. Since the start of February, green coffee prices have surged past US$4 per pound with no signs of returning to previous levels. This is the new reality, driven by multiple years of poor harvests, supply chain challenges, and global economic shifts. Let me break down what this means for the Australian coffee scene.
Putting things in perspective
Even if the price of beans went up by $10 per kilogram that’s only 10 to 11 cents per shot. To recover this increase the price of a cup of coffee needs to increase by around 30 cents for a small and 60 cents for a large coffee.
Therefore, while no one likes price rises, the incremental increase at a cup level is small in comparison to the risk of bad or no coffee at all.
A perfect storm for coffee prices
The challenges facing the coffee industry have intensified. Brazil, the world’s largest Arabica producer, has recorded yet another disappointing harvest. Bean sizes within cherries were smaller than expected, reducing yields further. Colombia and Vietnam have faced similar struggles, with persistent adverse weather, including prolonged droughts and erratic rainfall patterns.
For perspective, Brazil’s Arabica harvest in 2020 hit nearly 50 million bags. In 2024, it barely reached 42 million and this year is looking even worse. Vietnam’s Robusta output, which indirectly affects Arabica markets, has been significantly reduced, pushing Robusta prices to record highs and dragging Arabica along with it.
The currency factor
The Australian Dollar has remained stubbornly weak, sitting well below its historical average of 75 US cents. With coffee traded in US dollars, this currency weakness compounds the cost pressures for Australian roasters and cafés. Freight rates and energy costs have also surged, creating a perfect storm of rising input costs.
The impact on specialty coffee
Specialty coffee is also feeling the heat. Green coffee for specialty roasters like us is often purchased well above commodity benchmarks to ensure quality, sustainability, and fair farmer compensation. With commodity Arabica prices hitting US$4 per pound, specialty coffee prices have risen proportionally.
As of this writing, the commodity index is at around AU$15.10 per kilogram for green (unroasted) coffee. After adding sea freight, weight loss during roasting, and packaging, the cost of just the materials for commodity Arabica rises to approximately AU$20.00+ per kilogram. This figure doesn’t include wages, utilities, overheads, financing, freight to the customer, equipment, or servicing among many other costs, let alone a sustainable margin.
This is for commodity Arabica. Specialty coffee is naturally more expensive (often $5 to $30+ per kilogram more expensive). This impacts pricing at every stage: from the roaster to the café, and ultimately to the consumer.
What does this mean for Aussie cafés?
Cafés across Australia need to embrace the new market reality. Coffee prices, particularly for high-quality specialty coffee, must rise to remain sustainable. Both due to coffee bean increases but also as Australia is still under global benchmarks for coffee cup prices. Here’s our guidance:
- Adjust prices gradually: If your small flat white is still below $5.50, it’s time to increase it. Incremental increases of 25 cents per quarter can help ease the transition.
- Prioritise quality: Dropping quality to cut costs is a short-term fix that rarely works. Customers return for exceptional coffee, not for slightly cheaper, mediocre coffee. Life is too short for bad coffee.
- Communicate with customers: Explain why prices are rising. Transparency fosters understanding, especially when customers see the global factors at play.
Forget the past, embrace the new normal
To navigate this new reality, we must let go of past expectations and embrace the current market conditions. Clinging to hopes of returning to historical price levels will only hinder our ability to adapt effectively. By acknowledging the permanence of these changes, we can take proactive steps to adjust and thrive in this environment.
No one likes rising prices. However, the alternative is unpalatable: settling for inferior coffee that is still costly or facing the prospect of no coffee at all. Investing a little more ensures we continue to enjoy the high-quality brews we’ve come to love.
Looking forward to a bright future
Unlike past price spikes, this is not a temporary blip. The supply-demand imbalance, combined with climate volatility and structural cost increases, signals a long-term shift. Prices are unlikely to return to pre-2020 levels. Yet, there is a silver lining: farmers are finally being compensated more fairly for their work, laying the groundwork for a more sustainable global coffee industry.
At Pablo & Rusty’s, we remain committed to securing top-quality delicious coffee, roasting and brewing it to perfection, investing in sustainable practices and supporting our partners along the supply chain. This is a defining moment for our industry. By adapting together, we can ensure Australia continues to enjoy exceptional coffee for generations to come.
Stay caffeinated, stay informed and support your local cafe. The future of our coffee culture depends on it.
Article written by Abdullah Ramay, CEO of Pablo & Rusty’s Coffee Roasters. Abdullah is a purpose-driven leader and technology enthusiast, uniting business strategy, leadership, and innovation to create meaningful impact in the specialty coffee industry.
Article originally published on the Pablo & Rusty’s website. For more information, click here.
