What's behind the increase in coffee prices in New Zealand?

Sharon Brettkelly for RNZ

New Zealanders love their coffee and as The Detail finds out, they might need to get used to paying a bit more for it.

Next time you pay for your daily caffeine fix and wince at the price, spare a thought for how much goes into making that cuppa. 

A lot of hands have touched it by the time it's served up by the barista, says general manager of Ozone Coffee Roasters, Steph Noble. 

Steph Noble (left) and Roz Cattell in Ozone's Roastery, Grey Lynn.
Steph Noble (left) and Roz Cattell in Ozone's Roastery, Grey Lynn. Photo credit: RNZ/Sharon Brettkelly

She's taking The Detail on a tour of her Grey Lynn eatery and roastery to explain why coffee costs so much and why café owners are taking the "scary" step of putting up prices.

"You don't want to lose customers and you don't want them to turn away or go to the café next door," she says. 

"But you have to have confidence in the product and the services you give."

Hospitality businesses have been through the "worst nightmare" with Covid-19 and they're still grappling with staff shortages and rising costs. 

Noble says they'd be lucky to be making any profit on a cup of coffee right now, especially with the New Zealand dollar tumbling against the US - the currency they use to pay for the beans and other imported products.

Your cup of coffee starts with the farmer far away in Africa, South America or the Pacific who picks the beans. The green beans are poured into big sacks and shipped to New Zealand. 

Those coffee beans might have been on the sea for a few months before they're delivered to roasteries all over the country, where they are roasted, cooled, de-stoned and packaged for sending out to cafes and individual customers.

War, drought and floods also affect supplies and every step of the coffee beans' journey will add to the taste, says Noble.

"There's nowhere to hide," she says. And coffee-loving Kiwis with "great tastebuds" will soon let the barista know if they don't like what they're served. 

But the coffee customer isn't just paying for the picking, packaging and shipping. 

"Let's talk about labour costs," says Roz Cattell, head of the Specialty Coffee Roasters Association. "We've had phenomenal increases in labour costs in the last few years.

"You'll have a very highly skilled barista these days. They need to be able to work on equipment that is worth a significant amount of money behind the bar."

The milk, the cup, the overheads like power and rent also take a share of the $5.50 flat white. 

While Covid-19 has been hard on hospitality, the industry was talking about high costs before the pandemic hit.

"We've been absorbing it, absorbing it, absorbing it but now its been so significant and happened so quickly that there is no choice but to have to pass some of that on," Noble says.

The Detail also visits Forage café on Dominion Road, where partners Keita Powley and Siza Avakh didn't put coffee prices up for eight years.

But earlier this year they relented, when even customers were telling them they were too cheap.

Keita Powley (left) and Siza Avakh own Forage Cafe in Mount Eden.
Keita Powley (left) and Siza Avakh own Forage Cafe in Mount Eden. Photo credit: RNZ/Sharon Brettkelly

Avakh says some customers cut back on their coffees in response to the price hike, but the business has attracted new customers to boost revenues. 

Forage pays extra for compostable packaging and Powley and Avakh are paying even more now because they haven't been able to replace a kitchen hand who left after getting sick with Covid-19.

That means they have to serve the coffee and food in takeaway packaging.

Powley says they are both working for less than minimum wage.

"We don't just come in to make money," she says. "It's got to be out of love."

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