Cappuccino prices froth up
Kevin Andrusiak and Cath Hart
May 06, 2005

SOARING global commodity prices that are already making drivers wince at the petrol pump, are now making that morning caffeine fix dearer.

Baristas say the cost of a latte could increase as much as 30c a cup at cafes across the country - if it hasnt already - because of world coffee supply shortages.

Brazil and Vietnam, the worlds biggest coffee producers, are both battling unseasonal weather conditions that have cut harvests by as much as 25 per cent.

Coffee futures, the worlds second-most traded commodity after crude oil, have risen almost 80 per cent in the past 12 months.

Stocks are now so low that the International Coffee Organisation has predicted a global coffee supply shortfall of 8 per cent this year.

Australias biggest coffee retailer Gloria Jeans said yesterday it had been able to beat the price rise by signing long-term supply contracts with growers - but others had not.

Managing director Peter Irvine said coffee on supermarket shelves had risen between 15 and 17 per cent, while some cafes had been forced to add about 10 per cent - up to 30c on a flat white - to the cost of a cup of coffee.

"Most definitely you will see more price rises," Mr Irvine said. "And I guarantee, once it has gone up, the price will never come down again."

Coffee consumption has doubled in the past 30 years, according to the Australian Bureau of Statistics.

Instant coffee comprises about 80 per cent of sales, but sales of roast and ground coffee have risen by almost 30 per cent in the past five years.

Australian Coffee Traders Association president John Symon said Australians bought $523 million worth of coffee from supermarkets in the past 12 months and an equivalent amount from cafes and restaurants.

He said local roasters could not keep absorbing soaring costs.

"There will probably be about a 5per cent mark-up on the shelves and in cafes within three months," he said.

Brisbane coffee drinkers Justinn De Beer and Bee Berry, who regularly pay $3 for a cup of coffee, said yesterday the price rise would not alter their coffee consumption but might change their drinking habits.

"Rather than going out Id make it at home, or instead of having two with breakfast Id only have one," Mr De Beer said.

Wells Trenfield, director of Melbourne-based independent wholesaler Jasper Coffee said the price of a cup of coffee in Australia was too cheap.

He said the price of coffee bought by cafes would rise by between $2 and $4 a kilogram.

"What that really should represent is a 4c to 5c increase in a cost of a cup," he said. "The price rise will have to kick in at some stage - if it hasnt come through yet."