Will your daily cup of coffee get more expensive in 2025? One industry figure recently predicted the cost of a single cup could rocket to $10-$12 in the next year – and some kind of rise is likely, experts say, after the wholesale price of beans hit a record high in December, with prices showing no indication of dipping any time soon.
So what’s behind the spike? And will a cup of coffee really go up by that much?
Your single origin’s origin
Most of the coffee Australians consume comes from Brazil and Vietnam, the world’s largest producers. Cafes tend to favour the arabica variety: it is commonly considered more flavoursome than robusta coffee, which is used for instant coffee products. Arabica is also more expensive than robusta, but taste aside, robusta still has a huge market share: in 1990-91, robusta accounted for 28% of global coffee production; in 2021-22, that share had increased to 44%.
Australia is not the only area seeing price hikes. The United States, much of the European Union and New Zealand are also finding coffee more expensive.
Last year, the price of coffee beans went up noticeably. On 10 December, the price per pound of arabica peaked at US$3.47 (AU$5.44 at the time) – the highest it has been since 1977. The price of robusta almost doubled in 2024, in part due to retailers trying to source more affordable options to arabica. At the time of writing, the price for a pound of arabica was hovering around US$3.20 (AU$5.14).
Heavy weather for suppliers
At a basic level, the price increase is a consequence of demand outstripping supply. Coffee consumption has grown globally over past decades and the industry is struggling to keep up. One increasingly prevailing reason for that is the weather.
Coffee plants require defined wet and dry seasons, but the climate crisis is upsetting weather patterns in coffee-growing regions, as it is everywhere else. Drought in high-altitude areas of Brazil and Vietnam last year resulted in a lower-than-expected yield, and there’s no guarantee this year will be any easier.
“The global supply of coffee has consolidated into just a few countries,” says Tania Humphrey, director of research and development at World Coffee Research, an industry-funded agricultural development association. “And the consolidation of supply is increasing risk … when a single country experiences an event, and that country is a big supplier, like Brazil, it really impacts the global supply.”
Supply chain woes
Most coffee consumed in Australia is imported. Coffee is grown here – mainly in New South Wales and Queensland – but it makes up less than 1% of the market, and is more expensive, mainly due to labour costs.
Prof Vinh Thai, a professor of logistics and supply chain management at RMIT, says in addition to the weather affecting overseas crops, there are also ongoing issues affecting the supply chain, particularly the costs of container freight.
“The price of transporting coffee beans in containers has been affected by several geopolitical factors in the past year,” Thai says. “Then, when the coffee bean is imported into Australia, sometimes we face our domestic supply chain issues.”
These issues, such as congestion at the ports or industrial action, can add to importation costs. The cost of labour and other local cost-of-living factors at the retail end also add to the price the consumer ends up paying.
What’s to be done?
The majority of the world’s coffee supply is hand-picked, produced by smallhold farmers in lower-income countries – the people most likely to be affected first by geopolitical ructions or climate catastrophes.
Both Thai and Humphrey say one of the keys to preventing coffee supply shortages is diversifying its origin: investing in the coffee industries in places like Indonesia, Kenya, and India, and making them sustainable.
Thai says he does not expect the price of coffee beans to come down much in the next six months. “It is not a simple matter. It needs action from every layer in the coffee supply chain,” he says.
Humphrey, though, sees reason for long-term optimism. “Agricultural science can really help coffee farmers and the global coffee supply. We know it can be done. It’s been done in every other crop. It’s on the way for coffee, and it’s happening on a global scale,” she says.
“So that provides me, certainly, with tremendous hope.”
Am I really going to be paying $10 for a flat white this year?
That’s unlikely, but you can expect a small increase. Ned, proprietor of bustling inner-city Melbourne cafe Fiord, says prices will probably go up but “eventually, and gradually”.
“I honestly think it’s so marginal, and there’s a lot of sensationalism about this price increase, but it won’t be that dramatic that quick,” Ned says.
He says over the past four years he’s had to increase prices per cup by about 5% every 18 months, but says “it’s all relative” to other costs, and expects this will be the same. “I’m not going to turn around one day and say, yeah, $10 a cup.”
