Coffee prices stir up concern, but will Shepparton really see $12 per cup?

Now, the question on many locals’ lips is whether Shepparton can expect a rise in the price of their daily caffeine fix.

Daniel Shadbolt, head of coffee and production at Evolve North, believes there will be an increase to keep pace with inflation, but “how far that goes is very dependent on the cafés themselves and other factors”.

“Australia has been very lucky in terms of the prices we pay for coffee and the quality we receive,” he said.

“Globally, you would certainly be paying more for just a cup of coffee than we have been for a long time.”

The price of coffee commodities has risen by over 70 per cent since 2023, according to Mr Shadbolt.

This surge is attributed to a blend of challenges affecting every level of the supply chain — from the fields of farmers to the cups of coffee drinkers.

The most popular coffee choice for Australians and across the world is the Arabica beans, which make up 60 per cent of the world’s coffee production.

Robusta beans, the next tier of bean quality, comprise the remainder of the commercial coffee market.

Extreme weather patterns have wreaked havoc on coffee plantations that grow Arabica and Robusta, leaving them vulnerable to floods, droughts and cyclones.

Brazil, the leading producer of Arabica beans, faced a record-breaking drought last year, which has raised concerns for incoming crops amid already tight supplies.

Meanwhile, Vietnam, home to a 40 per cent share of the world’s Robusta beans, fell prey to a severe drought in early 2024, only to be followed by an unusual bout of heavy rains from October onwards.

A chain reaction of climate change impacts, along with logistical issues and legislative changes such as the EU deforestation laws, has led to a significant price increase worldwide.

And that’s not even filtering in the ongoing cost-of-living crisis.

“Electricity, gas, groceries — it’s all been inflated over the past 12 months-plus, and that all contributes to having to raise the price of coffee as well,” Mr Shadbolt said.

“It’s a really hard period for us as roasters to navigate, and there currently are no winners.

“We’re all feeling it — importers, roasters, cafés — and nobody is benefiting from this whole situation.”

Price forecasts suggest a cup of coffee could peak at $12 by the end of 2025.

Kristofer Bech Howley, owner and head chef of Milestone Café and Bistro, believes that the cost in Shepparton will not need to increase to $12.

However, if it does, there is only a limited amount that cafés can charge without risking a loss of business.

“Businesses will undoubtedly absorb some of this cost to keep customer turnover,” he said.

Alaina Tuckett, functions, administration and accounts manager at Elsewhere at SAM, shared similar sentiments, noting that their business has already incurred many costs associated with coffee.

“The price has remained about the same for a really long time, and it’s unrealistic,” she said.

“No business owner, particularly no café owner, wants to contribute to the cost of living, but we are all feeling the pinch.

“To keep the doors open, cafés will have to increase their coffee prices.

“I hope that customers keep in mind that a lot of work goes into making that cup of coffee that they don’t see and appreciate that hospitality is a tough industry.

“We work really, really hard to ensure that we provide a good experience for them but we also need to cover our costs... it’s hard to find that good balance.”

Mr Shadbolt said all specialty coffee roasters and cafés in the region had been discussing prices and unanimously agreed that they must increase.

In a manner reminiscent of musketeers — though perhaps more like mocha-teers — it’s all for one and one for all.

“Part of what we are doing as a roasting company is supporting our cafés to ride out this current spike,” Mr Shadbolt said.

“From lower-grade specialty to commercial-grade coffee to high-end coffee, everybody in the industry is going to have to raise their prices otherwise it’s just not going to be a viable business model.

“Realistically, we need to establish a pricing model that will not just cope with what is currently happening in the market but thrive.”