Australians drinking more instant coffee as cost of living pressures mount for customers and cafes

Australians drinking more instant coffee as cost of living pressures mount for customers and cafes
  • PublishedMay 14, 2024

How much is your morning coffee worth to you? 

As more Australians find themselves under increasing cost of living pressure, many are cutting back on expenses like eating out or drinking at pubs and bars. 

Marketing Focus lead researcher Barry Urquhart has been looking into how Australians’ coffee habits are changing as the public tightens their budgets. 

He said coffee was resilient and Australians were still heading to local cafes for their morning coffee fix. 

As the day wears on though, consumers are moving away from cafes and toward cheaper alternatives like instant coffee for a caffeine hit. 

“When you ask someone about their coffee consumption and they want to rein it in, they’re not reducing the size of the cup, or changing the outlet, brand or going to the cheaper options like service stations or fast food outlets,” Mr Urquhart said. 

“They’re saying, ‘No, it’s still important for me to have the good branded coffee I enjoy, made by the barista I know and trust’. 

“All of those experiences are there, but they’re cutting back to the extent the supermarkets are now declaring instant coffee brands are booming.” 

Cafe costs adding up

Peter Lauring opened his own coffee shop in Mount Gambier, South Australia’s second-largest city, five years ago. 

He has counted 14 similar new businesses in town since he first opened his doors — all part of a quick growth in coffee shops in the town. 

These businesses are now facing rising business costs, as well as fewer people buying a coffee. 

A man standing behind a coffee machine with coffee cups in the foreground.
Mr Lauring says Mount Gambier locals love their coffee. (ABC South East SA: Sam Bradbrook)

Mr Lauring said cafes were hesitant to increase their prices though, fearing it could drive customers away. 

“It takes a very unique … independent and strong cafe to just go, ‘We’re just going to charge whatever we want’,” he said. 

“If you compared it to other industries like fast food or wine, the margins in cafes like ours are drastically different.

“Their prices rise, but everyone wants their coffee to stay five dollars.”

Australian Coffee Traders Association chair Joe Taweel said costs for cafes would only increase as adverse weather conditions in coffee-growing regions kept the price of beans high. 

“Along the supply chain everybody has to absorb a bit so when it gets to the consumer the pain isn’t felt so much,” he said. 

“If cafes haven’t put up their prices yet, I’m sure they’re thinking about it, particularly with these prices staying where they are.”

‘I don’t think we are actually essential’ 

A person holding a milk jug at a coffee machine.
Mr Lauring says the cost of all components of a coffee, from beans to milk and wages, have increased.  (ABC South East SA: Sam Bradbrook)

While business has stayed strong throughout his five years of operation, Mr Lauring says times are tougher for his customers than ever.

“We were called an essential service for a long time during COVID, but I don’t think we are actually essential,” he said.

“Some people disagree with me on that but, yes, you can go without your coffee.

“I’m in the business of selling coffee, but when people need to put food on the table, and put the heater on for their kids and buy school shoes, that needs to come first.”

SOURCE: ABCNEWS

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