What rising energy costs mean for Australian coffee – BeanScene

The ongoing fuel and energy crisis are hitting all parts of Australian life. Pablo & Rusty’s CEO Abdullah Ramay details how he thinks cafés around the country should tackle the issue.

The coffee industry has spent the last few years dealing with higher green bean prices, freight increases and a weaker Australian dollar.

Now there is another layer building underneath it all. Energy.

While it may not be as visible as green coffee prices, it plays a role at every stage of the supply chain. And when it moves, it moves quickly.

Why this matters

Coffee is not produced in the Middle East, but it is heavily dependent on energy. Fuel, gas and electricity sit behind almost everything we do:

• Farming relies on diesel and fertiliser
• Shipping depends on global fuel and stable routes
• Roasting uses gas or electricity
• Packaging is energy-intensive
• Distribution runs on diesel

This is why even when coffee prices appear stable, underlying costs can still rise.

We have already seen how freight, energy and currency have compounded costs over the past two years, pushing up the landed price of coffee in Australia.

This is a continuation of that trend.

What we are seeing in the short term

At the moment, this is primarily a cost issue rather than a supply issue. Coffee is still moving through the system, orders are still being fulfilled, but the cost of moving goods is increasing quickly.

Over the next one to three months, you are likely to see:

• Freight costs increase or become more volatile
• Temporary fuel or energy surcharges introduced by suppliers
• Delivery costs rise, especially for smaller or more frequent orders
• Utility costs begin to trend upwards

These changes tend to appear gradually. Typically, not as one large increase, but as a series of smaller adjustments across multiple inputs.

This reflects broader movements we are seeing across Australia, where fuel prices have risen sharply in response to global events and are now under active monitoring by regulators.

The challenge for cafés

The difficulty is that many of these costs are already sitting on top of previous increases.

Over the past 12 to 24 months, a significant portion of cost increases has not yet been fully passed on to cafés or customers.

This means new pressure does not start from a neutral base. It compounds. In the short term, many businesses may consider absorbing these increases. But that is not sustainable.

What happens next

If energy prices remain elevated, this becomes a structural shift rather than a temporary spike. Over the next three to twelve months, we expect:

• A higher baseline for freight and logistics
• Increased roasting and production costs
• Ongoing pressure on packaging costs
• Gradual (or quick, depending on the level of the crisis) price adjustments across the supply chain

This is similar to what we have seen with green coffee. What initially looks like temporary volatility often settles into a new normal.

What to look out for

Rather than focusing on headlines, it is more useful to watch how costs behave across the system. Key signals include:

• Whether freight surcharges become permanent
• Changes in delivery minimums or frequency
• Supplier pricing behaviour and communication
• Movement in energy contracts and utility bills

These indicators provide a clearer view of whether conditions are stabilising or becoming more entrenched.

Pricing and the reality at a cup level

At a per cup level, even meaningful increases in costs often translate to relatively small amounts. However, the issue is cumulative.

Green coffee, labour, rent and energy all move together. When combined, they create real pressure on margins.

This is why gradual and consistent price adjustments tend to be more sustainable than delayed and significant increases.

This is on top of Australia already having one of the lowest cup prices in the OECD countries as well as café margins being at all time lows of under three per cent.

Coupled with more than one in 10 cafés likely to close in the next 12 months, this trend needs consideration and action for survival.

Our approach

As a roaster, partner and café operator, we are seeing these pressures build across freight, energy and production. Our focus is on managing this responsibly:

• Maintaining transparency
• Avoiding sudden or unnecessary increases (where possible)
• Using temporary measures where appropriate
• Continuing to prioritise quality, consistency and reliability of service

We are considering temporary surcharges or levies to manage short-term volatility (such as $5 per invoice). This includes our own cafés.

The intention is not to permanently reset pricing, but to navigate periods of uncertainty in a measured way.

What cafés should be doing

There is no need to overreact, but it is important to stay ahead of it.

A few practical steps:

• Review your cost base. Look at utilities, delivery costs and cost per cup. Small changes are already flowing through. Might be time to remove menu items that don’t have healthy margins.
• Adjust early and gradually. Small, steady price movements are easier for customers to accept than large jumps later.
• Consider a temporary levy. The Australian Restaurants and Cafés Association has recommended a five per cent temporary surcharge
• Stay close to your suppliers. Ask questions. Understand what is temporary and what is likely to stick.
• Manage ordering and delivery. Fewer, more efficient orders can help reduce freight exposure. Bearing in mind that some suppliers will increase their minimum order quantity (MOQ) to ensure their deliveries are cost-efficient.
• Make sure you keep your staff informed of any changes you need to make. They are often the ones who’ll have to communicate the changes to your customers. Make sure they understand why you’re making changes.
• Protect quality. Cutting quality rarely solves the problem and often creates a bigger one.
• Innovate. Signature beverages, Matcha, cold drinks, automation, batch brew. These all offer a higher price point and better margins. And most importantly, differentiation.

Most importantly, do not fall behind. And do not worry or be alarmed. Fear paralyses. Be alert, have meaningful conversations and prioritise action. We are all in this together, and we have done it before.

The bigger picture

Energy is not a standalone issue. It sits alongside climate, global demand, trade and currency as part of a broader shift in the coffee industry. Over time, these factors are reshaping the cost base of coffee.

What we are seeing now is another step in that process.

In the short term, expect gradual increases and temporary measures as costs move through the system. In the medium term, expect a higher baseline across freight, energy and production. The key is to stay informed, communicate clearly and adjust early rather than late.

Because in coffee, the biggest risk is rarely the increase itself. It is falling behind it.

Article written by Abdullah Ramay, CEO of Pablo & Rusty’s Coffee Roasters. Abdullah is a purpose-driven leader and technology enthusiast, uniting business strategy, leadership, and innovation to create meaningful impact in the specialty coffee industry.