Research conducted by a team at RMIT University has identified a range of factors behind the escalating coffee prices, particularly highlighting the impact of extreme weather conditions on key coffee-producing regions.
The study, led by Professor Vinh Thai, a specialist in Logistics and Supply Chain Management, reveals that severe weather events in critical markets like Brazil and Vietnam have significantly disrupted coffee production. “The damage caused by extreme weather in major coffee-growing regions has been a primary driver of rising coffee costs,” Professor Thai explained.
In addition to weather-related disruptions, the research points to escalating container shipping costs and broader supply chain challenges as substantial contributors to the price increase. Since a significant portion of coffee bean shipments relies on container transport, these increased costs are likely to be passed down through the supply chain, ultimately reaching consumers.
Professor Thai warned that these ongoing supply chain issues could exacerbate financial difficulties for individuals already grappling with the rising cost of living. The research also offers potential strategies for coffee industry stakeholders to mitigate these challenges. “Exploring alternative markets and increasing bulk purchases through collaboration with organizations like the Australian Coffee Traders Association could help relieve some of the cost pressures,” he suggested.
The study also touches on the potential broader implications for Australia’s coffee culture, which employs nearly 70,000 people as of 2023. Associate Professor of Marketing and Consumer Culture, Bernardo Figueiredo, highlighted the potential impact on daily coffee drinkers in Australia. “The rising cost of coffee could strain consumers, particularly younger ones who see coffee as integral to their daily routines,” Figueiredo noted.
He also remarked on the growing global demand for coffee, even in countries not traditionally known for high consumption. This trend is driven by coffee’s evolving image as a trendy and energizing beverage, which has led to new products catering to local preferences.
For Australians, the increasing prices could lead to a shift in consumer behavior, with some opting for cheaper alternatives, reducing their coffee intake, or transitioning to home brewing methods. However, despite these financial pressures, Figueiredo remains optimistic about the enduring demand for coffee. “Given coffee’s cultural significance and its popularity among younger consumers, it’s unlikely that the rising prices will significantly diminish demand,” he concluded.