Nation's love affair with coffee on shaky ground as cost of living bites

At a Queensland coffee-processing factory, 10 people are employed to ensure every batch tastes exactly as it should.

Each day they gather in groups of three or four around a rotating table, which has a few sinks on the side so they can spit out the samples as they go.

"We do sample up to 100 cups per day, so you don't want to be drinking that much coffee on a standard day," quality assurance manager or "chief taste-tester" for Nestlé Glenn Jones said.

The factory in Gympie, about two hours' drive north of Brisbane, has been producing instant coffee since 1997.

Mr Jones said even though drinking the beverage was part of his job description, he also enjoyed it when he was off duty. 

"I need coffee before I come to work in the morning, then I taste it all day, and I'll have coffee on the weekends — I love coffee," he said.

A national obsession

Mr Jones is not alone in his obsession, with an estimated three-quarters of Australians consuming coffee regularly.

Data shows more than five million Australians visit a cafe daily for their caffeine hit. 

But Martin Brown, general manager of Nestlé's coffee and dairy business, said the company's sales figures showed a shift back to home consumption.

"[Australia has] one of the most sophisticated coffee cultures in the world, but we also have a cost-of-living challenge at the moment," Mr Brown said.

"A lot of households are having to make choices and find smarter ways to buy things."

He said cappuccino sachets had been the "fastest-growing part of the market" in the past five years, but there was also a shift back to more "traditional" soluble instant coffee.

Coffee price pinch

The latest Australian Bureau of Statistics data showed food and non-alcoholic beverage prices rose by 3 per cent in the 12 months leading up to August this year, with meals out and takeaway prices up 4.5 per cent.  

The average price of a cafe-bought flat white in Australia is now about $6 a cup, despite warnings it could soar to double digits this year.

On Queensland's Sunshine Coast, university student Charlotte Cairns said it was even more expensive to buy a cold coffee.

"I feel like when a coffee is $5 it's like, 'Oh that's alright'," Ms Cairns said.

"Whereas when it's like $9 dollars just for an iced latte it's like, 'OK, this is strictly a treat, I can't be doing this tomorrow as well'."

Deann Mayfield said she and her partner had started to limit the amount of coffee they bought out. 

"It's very expensive. We have one special coffee a day, so we try not to double up," Ms Mayfield said.

A challenging environment

Coffee bean prices reached record highs last year, forcing importers and roasters to raise their prices, which was ultimately passed on to customers. 

While green bean prices have dropped in 2026, they remain three times higher than in 2021.

Australian Specialty Coffee Association president Bruno Maiolo said the drop had not offset the increase in "all of the other costs", including rent, electricity, milk and wages.

"We have a one-in-two failure rate [for coffee businesses]," Mr Maiolo said.

"People are going broke, not because they're necessarily bad operators; it's because they cannot keep the margins that are required to stay in business. 

"They're running on a shoestring."

He said consumers in Australia had much cheaper coffee than in European countries, despite the fact that it was more expensive to make here.

"We have a phobia of putting the price up because we're all scared that everyone will stop drinking coffee and they'll go somewhere else," he said.

"No-one can absorb price increases forever."

Simon O'Brien runs a coffee shop by the beach at Alexandra Headland and said he was able to still charge $5 for a cup due to the regular foot traffic.

"We've got coffee that people keep coming back for, and it's not so much about making a massive profit on each cup," Mr O'Brien said.

"It's the throughput over time and keeping that customer for as long as we can."