The June Quarter Gilkatho Cappuccino Price Index™[1] shows that higher coffee bean prices and business costs has led to a sharp increase in the price of takeaway and dine-in coffee for Australian consumers. [See Table 1 – 2011 Q2]

The June Quarter Gilkatho Cappuccino Price Index™ shows the more dramatic price increases occurring in Adelaide, Brisbane, Canberra and Perth, with the more mature consumer markets of Sydney and Melbourne remaining relatively stable. [See Table 1 – 2011 Q2]

Gilkatho managing director Wayne Fowler said the June quarter price increases reflected the higher price of coffee beans, increased business costs for café operators and general inflationary pressures.

“This quarter we saw prices for takeaway coffee increase almost universally across the country, except for Perth and Melbourne, reflecting the impact of more competition in the Perth market and the mature nature of the Melbourne market respectively.

“The dine-in market saw significant price increases this quarter, but for the notable exceptions of Sydney and Melbourne remaining steady.

 “Overall this quarter, we have seen more of the price rises that were expected earlier in the year, although the increases are not as dramatic as many predicted. Nationally, this has equated to a 3 cent per cup increase for take-away coffee and a 4 cent per cup increase for dine-in coffee drinkers.” [See Table 2 - National Gilkatho Cappuccino Price Index™ for all takeaway and dine-in venues] 

“Back in January we predicted that the 77% rise in coffee futures in 2010 (their highest level since 1997[2]) would outstrip any gains made by the Aussie dollar.

“As such, we expected that many café operators would be forced to pass these higher wholesale prices on to their retail customers. The March quarter results indicated that many café operators were choosing to absorb these increasing costs. The June quarter results, however, point to less capacity in this regard with consumers now being asked to pay more.” [See Table 2 - National Gilkatho Cappuccino Price Index™ for all takeaway and dine-in venues]

Mr Fowler also said the increased number of and competition among café operators had somewhat paradoxically contributed to increased prices during the June quarter, with quality increasingly becoming a key area of consumer focus.

“We know that increased competition has led many café operators to focus more on improving quality to drive sales. This increased focus on quality has put pressure on the so-called hidden costs in the price of a cup of coffee such as what operators pay for good baristas, premises, as well as other ingredients like milk, sugar and chocolate, which operators need to recoup.”

Mr Fowler said Australia’s high workforce participation rate, with the current unemployment rate sitting at just 5%,[3] also impacted on pricing pressures for café operators as more employers were providing high quality coffee machines in the workplace as an incentive to attract employees.

“There is no question that in a competitive employment market, employers are more likely to provide cost effective incentives for employees in the workplace. An employee may pay up to $3.70 for a takeaway coffee, but many employers are moving to provide a high quality coffee machine in the office at a cost of about 35 cents per cup. You do the math!”


[1] The Gilkatho Cappuccino Price Index™ surveys more than 200 venues in the larger capitals and 120 in the smaller capitals, totaling more than 1,000 venues across the country.
[2] ‘Tight Markets Seen for Coffee, Sugar, Cotton’, Wall Street Journal (1 January 2011) <http://online.wsj.com/article/SB10001424052748704543604576054041626394096.html>

[3] http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0