Cafe Owners Face Impossible Choice As Cost Of Coffee Forces Them To Pass Increased Costs Onto Increasingly Frustrated Consumers – CoffeeTalk

Australian cafes are facing increased pressure from the cost-of-living crisis and weakened consumer spending, as their main ingredient, Arabica, has exploded in price. The coffee industry has seen a record high of Arabica, surpassing its all-time peak set in 1977. Melbourne cafe owner Dan Dick warns that cafes across the country will likely have to pass on this increase to consumers. “Cafes can’t really absorb increases to coffee and most cafes will spend triple what they do annually on rent in coffee,” he says.

A small increase in coffee prices has a significant effect on a small business’s bottom line, and it will have to be passed on down again. Arabica futures have jumped as high as $US3.48 ($5.45) per pound in New York just before Christmas. Brazil, one of the biggest producers of coffee beans, has been hit with higher-than-average rainfall in October, followed by drought-like conditions and high temperatures. Vietnam, another major coffee bean producer, has also been hit with a severe drought that has impacted supply.

According to the Australian Financial Review, Arabica futures could shoot between $US4.00 and $US5.00 in the coming months. Pilates instructor Phoebe Parsons was shocked when she visited a cafe on New Year’s Day to get two coffees, even though she knew she would pay a premium for a hit of caffeine on a public holiday like January 1.

Read More @ Yahoo