How much does Australia pay for coffee compared to the United States and what

impact does this have on their cafe industries?

Over the past century, coffee has evolved, and different styles and forms of coffee
have been created making it more than just a beverage, but a delicacy appreciated
all over the world. Australia and the United States of America are two of the largest
consumers of coffee in the world, yet the consumption and production of coffee is
vastly different which in turn affects the price that Americans and Australians pay for
their daily cup of coffee. Subsequently, the age demographic of coffee drinkers,
prices people pay, production costs and processes impact their café industries in a
variety of different ways.

What is the age demographic of coffee drinkers?

The age demographics of coffee drinkers in the United States and Australia are fairly
similar and both have a large impact on their
café industries, a survey conducted in 2020 on
the demographic of coffee drinkers in Australia
(MDBI) and a survey on the share of coffee
drinking consumers in the United States
(Statista as shown in figure 1.A) found that
approximately 19 million Australians and around
150 million Americans drink at least one cup of
coffee each day. With 23% of these Australians
starting their day with coffee as a way of waking
up and feeling alert for the day. The surveys Figure 1.A – Survey on the share of coffee
found that younger to middle aged generations drinkers in the United States.
aging between 18 and 55 have a greater
dependence on coffee, approximately a third of Source: Statista
them feeling as though they rely on coffee to
survive the day, around 33% of them being Gen Y and 30% being Gen X. In the
United States, around 47% of people between the ages 18 and 24 reportedly drank
coffee and 63% of people aged 25 to 59 consumed coffee. Contrastingly, the older
generations were the biggest consumers of coffee consisting of Australians and
Americans over the age of around 60 however they were found to be 45% more
likely to view coffee as a nice beverage to treat themselves and didn’t feel as though
they depended on it. Subsequently, the age demographics of these coffee
consumers in Australia and the US have been shown to significantly impact their
café industries as different businesses try to cater towards particular age
demographics which impacts the styles of coffee produced as well as the pricing,
advertisement and packaging. According to IJBMI, the demographic segmentation
by Starbucks is consumers between the ages of 18 to 30 which in turn can also be
shown by the more upmarket advertising and packaging styles and this is one of
many other examples of particular cafes that cater towards a particular demographic
in order to maximise their income.

How much do people pay?

Pricing of different types of coffee in
the United States in juxtaposition to
Australia is vastly different and the
average price for a cup of coffee in
the United States versus Australia is
fairly contrasting as the production
costs, coffee styles and hospitality
areas are extremely dissimilar.
America is considered to be one of
the cheapest places in the world to
purchase a cup of coffee, the major
coffee retailers in the US include
Starbucks, Dunkin Donuts and Tim
Hortons. These different café
businesses are greatly different to
the café businesses commonly found
in Australia which are often smaller Figure 1.B – Chart of various Australian Coffee Prices
local businesses. Although, similarly
to the United States there are also a Source: Business Insider Australia
variety of well-known restaurants
and businesses such as McCafé,
Gloria Jeans and Jack’s Cafe which also sell coffee in a similar style to the major
coffee retailers in America and even though they often don’t use the same quality
products, they’re still popular as they’re affordable and accessible. The average price
for a cup of coffee (the most common type being a latte) in the United States is
around $2.55 USD which is approximately $3.33 AUD, in comparison, the average
price for a coffee in Australia is $4.12 AUD which is a fairly significant difference
however this average varies for each type of coffee as shown in figure 1.B. The
prices of coffee in Australia vary depending on where it’s purchased along with what
type of coffee it is, the most expensive type being iced coffee (the highest price
being $5.88 in ACT and lowest being $5.25 in VIC and NT), the national average for
iced coffee being $5.42. In turn, the cost of coffee has quite a substantial impact on
their café industries as it determines the amount of business the café receives which
subsequently impacts the café’s income.
Why do they pay this much and where does this money go?
The pricing of coffee in Australia and the United
States consists of several different elements
which in turn makes up the business’ income
used to pay for their expenses. The price of
coffee in Australia is a combination of various
different elements but comes down to two main
ones, the price of the actual products such as the
coffee beans that are imported or harvested and
the cost of running the business. This is the cost
of wages, insurance and rent. The wages also
have a significant impact on the cost of the coffee
as the minimum wage is immensely different,
minimum wage for an adult in Australia being
$19.84 AUD per hour and contrastingly minimum
Figure 1.C – Table of the
wage for an adult in America being $9.35 AUD per
average cost for a cup of
hour (workers often partially rely on tips). The
coffee
price of coffee is also influenced by the industry
and the money that the customers are willing to Source: Café Coach
pay. The price of coffee is more specifically made
up of coffee cost, milk, takeaway cups and lids
and labour (see figure 1.C for more information). Correspondingly, the price of coffee
in the United States is fairly similar depending on the production process and
whether drip coffee or beans are used. Pre-ground coffee beans and coffee beans
are not usually priced too differently, and it will mostly come down to the type of bean
used, Arabica or Robusta. A typical 12-ounce (340 g) bag of coffee usually ranges
between $6 to $18. Drip coffee machines are also significantly cheaper than coffee
machines that use coffee beans and cost around $20 to $80. Contrastingly, coffee
machines are much costlier and are usually in the hundreds, sometimes in the
thousands. Most of this money goes to the businesses to pay for the resources and
wages of workers as well as local coffee bean suppliers and producers. The cost of
resources and beans has a significant impact on the cafe industries as if it increases,
the businesses will be forced to re-evaluate the price of their coffee and this can also
cause them to lose business as other coffee places may seem more appealing
creating competition.
Do the production processes vary in Australia in juxtaposition to America?

In the United States, most of the popular coffee

retailers such as Starbucks and Dunkin Donuts
prominently use drip coffee along with coffee
beans. Contrastingly, the different coffee
retailers in Australia avoid using drip coffee and
primarily use coffee beans and a coffee
machine (see figure 1.D). This process begins
with the barista grinding the beans using a
machine, they then use these fresh beans and
press them into a portafilter. This is then
inserted into the machine and the coffee is
made. The beans in Australia are typically Figure 1.D – Labelled Coffee Machine
sourced from places across the world such as, Source: Instructable Cooking
Indonesia, Colombia, India, Vietnam, Ethiopia
and many others. Along with this coffee is also
grown in Australia, mainly in the more tropical climates of Queensland and Northern
New South Wales, where they have richer soil. Similarly, in cafes in the United
States using coffee beans and coffee machines, the process is
fairly similar and the major coffee bean providers grow their
beans in Africa, Brazil, Colombia and Vietnam as well as locally
grown coffee beans in California. If
drip coffee is used, the production
process is significantly different as
the pre-ground coffee beans and
the water’s weighed, the ground
coffee is then placed into a filter
basket which is placed in the
brewer (shown in figure 1.E and
figure 1.F). Consequently, the
Figure 1.F – Figure 1.E – Electric drip coffee
difference between the production
Traditional drip coffee machine
of the different types of coffee in
Source: A couple the US and Australia has an impact Source: Roasty Coffee
cooks on the amount of time it takes to
make the coffee along with the
quality of the coffee and therefore the amount of money that is
made through selling the coffee may be impacted which in turn has a significant
impact on both of their café industries.

Subsequently, Australia and the United States have substantially different cafe
industries as their cost of ingredients, resources and workers are contrasting which
in turn affects the price of their product and the demographic of people who drink it. It
was made evident that the overall price of coffee in Australia is fairly higher than in
the United States as the price is made up of the price of ingredients, the
competition’s prices and the prices of wages. Consequently, the wages are much
higher in Australia in juxtaposition to the United States which has a significant impact
on the price that consumers pay for their daily cup of coffee. Coffee is a beverage
that plays an important part in most people’s daily lives and is a reason people wake
up in the morning. It’s appreciated not just in America and Australia but all over the
world in countless different cultures and is an astounding creation that should be
greatly valued.

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