Nick Connellan

“Can you believe I paid $6 for a small flat white the other day?”

If you’ve heard yourself saying something like this, I invite you to consider the price of a small flat white in other wealthy cities around the world. London: $7. San Francisco and Singapore: $8. Dubai and Athens: $9.50. Basel: $10. These prices, compiled in 2024 (i.e. slightly outdated now) and adjusted for local purchasing power parity, don’t lie. If we’re comparing ourselves with affluent countries (which we should) Australia enjoys something very close to the cheapest coffee in the world.

Competition is extraordinarily fierce here. A coffee monopoly or duopoly is yet to emerge in the country with one major airline, one telecom provider, two supermarkets, two media conglomerates and four banks. Our largest specialty coffee chains are still relatively small: Axil (16 stores), Toby’s Estate (16) and Market Lane (10).

“Ah”, I hear some of you thinking, “But what about Gloria Jeans?” The $5 flat whites there and at similar scale chains are made with commodity coffee, not specialty coffee. There’s a meaningful difference. (On a similar note, the ridiculously cheap coffee found at 7/11, Coles Express and other petrol stations is a loss leader, something given away below cost price to entice customers to buy petrol and other more lucrative products.)

While words like “artisanal” are vague and easily abused by marketers, “specialty” has an actual definition – it’s green, unroasted coffee beans an accredited grader has scored more than 80 out of 100, using industry standard criteria. Beans get marked down for damage from fungi and insects, contamination with dirt or other foreign matter, being under-ripe or over-fermented, and other factors that dramatically affect the taste of your final cup. Over 80 effectively means “free from obvious defects”. This coffee naturally commands higher prices on the open market.

Comparing commodity coffee to specialty coffee is like pitting a rank brown avocado against a lovely ripe one. Yes, they’re both avocadoes, but you’d rather bin the brown one than spread it on toast.

Ignore the dills who trumpet about Italy’s $2 espressos. Our coffee could be that cheap too, if our roasters were prepared to overlook defects like mould. Axil, Market Lane and their peers care, and take expensive steps like paying for climate-controlled shipping from Africa or the Americas to reduce spoilage.

Still, the idea persists that our specialty roasters and cafes – overwhelmingly tiny businesses with one or two locations and a handful of staff – are somehow profiteering. It’s absurd.

The local specialty coffee industry has been in crisis for some time. In the past 20 years the cost of green beans has roughly tripled due to climate change and increased global demand. Meanwhile, a flat white has only doubled in price.

In 2019 I attended an evening roundtable titled “Can an honest cafe make money?” where industry leaders fretted about the number of operators forgoing staff superannuation and going back to paying cash-in-hand to stay afloat. Businesses resort to this because they can’t put prices up meaningfully, nor skip paying rent, electricity or insurance.

My colleague Dan Cunningham has done some excellent reporting on one possible solution: pre-making espresso ahead of service and adding milk to order. Increasingly, this involves a new class of coffee machines, super-automatics, that can weigh, grind, tamp and brew espresso to the same standard as an experienced barista, but with a single button-press. New Melbourne cafe Atelier Enso, for example, has installed an Eversys, the Swiss brand that dominates the market. The team’s using it to batch long blacks and some other brews. For better or worse, I think this is the future of our coffee shops.

Critics of super-automatics bemoan the loss of craft and/or the loss of jobs – both actual and potential. The craft thing is fine, but coffee has been steadily marching away from it for decades with automatic tampers, milk dispensers and milk frothers – machines now found in all good cafes. I’d also argue the people who really care about craft are the ones making the coffee, not the ones drinking it.

The job question is knottier. It’s a bit like the trolley problem. I’m not a philosopher, but I know there’s already a shortage of experienced baristas in Australia, and that a cafe that doesn’t make money will eventually shut. If somewhere like Atelier Enso can open today with 25 per cent fewer staff and still be around in 10 years, surely that’s better than closing in three years, or worse, never opening in the first place?

All this might be immaterial to you. Perhaps you can’t afford a daily $6 coffee, or the price just seems wrong when you can remember paying $3 at some point many years ago. That’s fine. But don’t let your own situation or sense of nostalgia cloud your assessment of our roasters and cafes, who are at the mercy of a global market and providing an objectively cheaper product than their international peers.

“But I can make better coffee at home” is a refrain we see over and over in the comments. You can also put on a movie or pour your own beer, but it’s not the same experience as going to the cinema or the pub. If you prefer having a more affordable coffee at home, go for it. And if you want one at a cafe, remember those big-picture numbers and be thankful you don’t live in Basel.