Australian coffee tipped to reach $12 amid international pressures

News.com.au

6 hours ago

Coffee may need to reach $12 a cup for Australia to compete with other countries for the sacred beans.
Benchmark prices hit an all-time high in April, and industry insiders say Chinese demand for beans is squeezing prices in Australia.
'(The) Chinese have very much converted from tea to coffee,' Essential Coffee chief executive Todd Hiscock told the ABC.
'They're buying up unprecedented levels of coffee supplies, often they're taking a whole Brazilian stock load in ways that's never been seen before.'
Median prices per cup needed to increase to between $8 to $12, he said.
'We've got to come to the party and pay in a competitive global market,' Hiscock said.
Brazil produces more than one-third of the world's coffee beans. The country battled through a drought in 2024 that was capped off with a cold snap. Combined, this slashed the overall harvests.
As investors turn away from the volatile US, the Brazilian real has also climbed, disincentivising exports out of Brazil.
Vietnam is the second-largest coffee producer. The El Nino weather pattern plunged Vietnam's coffee-growing regions into drought for the past two years, damaging the plants so badly that many will not fully recover for another two years.
These international pressures, plus general inflation, are slicing margins at Australian cafes.
A large player in the Australian coffee industry, Essential Coffee's wage bill has risen 9 per cent in two years, combined with a 29 per cent increase in rent and a 6 per cent rise in insurance.
Mr Hiscock told the ABC the price of wholesale coffee had risen 119 per cent since November 2023.
'It's hard because people are very sensitive to their beloved coffee and when you move the price up, you find not just a lot of negative reaction, you find some very terse expletives,' he said.