The city’s most expensive coffees aren’t being sipped on in the exclusive enclaves of Toorak or Brighton but instead in Melbourne’s eastern suburbs, where you’ll have to hand over a fiver for your morning caffeine hit.
The average price of a cup of coffee varies wildly depending on which suburb you order it in, but Vermont makes the most expensive cappuccino at $5.33, with a latte setting you back $5.49.
Competition brings the price down in the CBD, where a latte costs an average $4.87, a flat white $4.89 and a cappuccino $4.86.
Jade Morgan is the manager at Leeroy cafe in Vermont. The suburb has the highest median coffee price in Melbourne. Credit: Luis Enrique Ascui
Data from Square, which provides technology to cafes, restaurants and coffee shops, collated by The Age, shows the price rises and falls depending on what direction you head. The data is based on tens of millions of cups of coffee sold in the greater Melbourne area by postcode.
Coffee prices spike in Vermont
Natasha Moussi opened her cafe, Leeroy, in Vermont a year ago and says she keeps prices low despite coffee prices in the suburb being the most expensive in Melbourne.
“We really focus on customer service, making everyone feel welcome and just making it the local hub and meeting spot and also reasonably priced with the cost of living going up,” she says.
A small latte at Leeroy is $4.50 and Moussi says most cafes in the area charge $4.70 or $5, with the price increasing for larger sizes and different milk.
Moussi has sympathy for her fellow cafe operators battling to maintain low prices with the cost of coffee beans increasing, along with milk and labour.
“It’s getting increasingly hard to find really good baristas, you have to pay them well and it takes time to train them,” she says. “It’s not only making a good cup of coffee, but they have to engage well with customers and really love what they do. You can find a good barista sometimes, but they don’t have the social skills.”
Economist and self-confessed coffee addict Chris Richardson says the price of coffee tends to be higher where incomes are higher.
“Sometimes prices are higher because costs are higher,” he says. “Some of your inner-city areas have higher rents, in some cases wages are going to be higher. But the standout is ability to pay.”
Most Vermont residents have the ability to pay a higher price for their coffee, as Australian Bureau of Statistics data for the suburb shows the median weekly household income is $2402 compared to $1746 for the general population.
John Lourens and his labrador Marley stop for a coffee in the CBD.Credit: Eddie Jim
Cheap coffees out west
For the cheapest coffees in Melbourne head to the outer western suburbs, where a cup costs an average of $2.13 in Hillside, Calder Park, Sydenham and Taylors Lakes.
Coffees are not quite that cheap at Carbone Coffee in Taylors Lakes Shopping Centre, but co-owner Suzie Carbone says the family business sells some of the best-priced coffees in the neighbourhood at $4.30 a cup.
“We probably should have increased the prices a few months ago, but being a small family business we try to look out for the local customer,” Carbone says.
“If we were just a franchise and put our prices up the customers might not be happy, but they probably wouldn’t say anything. With us, they give us a bit of a hard time.”
Richardson says when consumers buy coffee they are not just buying the drink, they are buying the experience.
“You’re paying for the time with friends and a comfortable chair and a warm room in winter or a covered spot in summer,” he says.
“Then there are places where people are getting coffee that’s from a machine that’s next to the till in a service station. The price is lower not merely because quality is less but arguably because everything else is less.”
Richardson suggests it is these cheap and convenient places that have contributed to the $2.13 average coffee price across the west.
Claudia and Vas Stavrou enjoy a coffee at Brunetti in the CBD. Credit: Eddie Jim
Paying more in Sydney
Consumers pay more for a coffee in Sydney than they do in Melbourne, but only just. The average price in Melbourne is $4.68 compared to $4.72 in Sydney.
Richardson says higher wages and rents for Sydney cafes provide the “push” and higher incomes the “pull” for the increased price.
“This doesn’t challenge the stereotype that coffee is better in Melbourne; this is not a story of quality, it’s a story of everything else,” he says.
Colin Birney, the head of business development at Square, says Melbourne is fortunate to have some of the world’s best coffee while retaining a relatively modest price.
“Talking to hospo owners, they constantly tell me that increasing prices for their customers is the last resort,” he says.
“Instead, they’ve looked at how they can make their operations more cost-efficient, or have built new revenue streams – like selling merchandise, opening a retail arm or hosting events – as a way to avoid increasing the price of a cup of coffee.”
Paying more around the world
By international standards Australian coffee prices are low.
The average price of a cup in Australia last year was $4.83, in comparison with $5.73 in Canada for the equivalent, $6.31 in the UK and an eye-watering $7.41 in the United States (all figures are in Australian dollars).
However, the cost in Australia is creeping up, having risen 5.41 per cent from last year, compared to 5.24 per cent in Canada and 5.02 per cent in the US.
Coffee prices in Melbourne are low in comparison to the rest of the world. Credit: Eddie Jim
Dr Emma Felton, an adjunct senior researcher at the University of South Australia, says coffee prices around the world hinge on bean quality. Arabica is the best and most expensive, used for good quality specialty coffee, while Robusta is cheaper but used in instant coffee.
“Climate change is impacting local producers, plantations are small and some have been wiped out due to drought or flooding,” Felton says. “Inflation has risen a lot in the last few years, as have wages; they needed to.”
Felton’s research with cafe owners shows customers regard their cup of coffee as a daily ritual and a right, and therefore would be reluctant to cut back or stop buying it.
“I suspect people wouldn’t begrudge a small increase in price,” she says.
Richardson says there is a certain price tolerance among consumers when it comes to coffee, and it may ring true to many Melburnians.
“Let’s not forget we are talking about something that is addictive,” he says. “I’m not merely an addict, I’m also a snob, which is a dangerous combination.”
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