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$7 coffee: Why you’ll be paying more for your daily dose of caffeine

Five dollar notes and barista pouring milk into coffee.
Cafe owners have been absorbing higher costs of coffee production but now have no choice but to raise prices. (Source: Getty)

People may soon be paying upwards of $5 for a cup of coffee in the city and as much as $7 in remote areas due to ballooning expenses for cafe owners.

Cafe owners now have no choice but to increase their prices in response to rising overheads, David Parnham, president of the Café Owners & Barista’s Association of Australia told Yahoo Finance.

He said cafe owners have been absorbing higher costs for months but are now approaching a breaking point.

“Everything is just compounding into the cup,” he said.

Part of the problem is coffee bean prices are rising, partly driven by massive crop failures in one of the largest producing nations, Brazil.

Parnham said around one-third of all coffee blends in Australia have Brazilian coffee beans in them.

Other major coffee-producing regions have also experienced issues, which have been contributing to overall higher prices.

Last year, according to IBISWorld, the world price of coffee surged 21.6 per cent to $3.65 a kilogram.

Gone are the days of $2 milk

Parnham also said the cost of shipping had risen sharply, as had the price of milk and milk alternatives that go into 95 per cent of all Australian coffees.

“I’ve talked to lots of cafe owners and most of them are saying the days of the $2 milk is over,” Parnham said.

He also said the cost of the paper cup was playing a role, as well as the high costs of labour.

He said the supply chain issues affecting coffee prices preceded the war in Ukraine, although said the increase in petrol prices may add to the financial pressures in the short term.

In combination, increasing production costs would likely lead to the first major increase in coffee prices in years.

He’s expecting around the $5 mark for suburban areas, and as much as $7 a coffee in regional areas where prices are always higher due to the distances goods have to travel and other factors.

Parnham said Australians have grown accustomed to cheap, high-quality coffee, with prices remaining below the $4 mark for a long time.

He said supporting cafes will help them keep prices low.

Other ways people can keep their coffee costs down is to bring their own cup so cafes don't have to use paper cups, which is also a win for the environment.

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