Would you pay $7 for a coffee? Ona Coffee and RedBrick have faced major import price hikes driving the cup price up

Ona Coffee will increase the price of a small coffee by $1 in coming weeks, to $5.50 for a small cup.

The home-grown icon follows fellow Canberra favourite Redbrick, which increased prices by 50 cents in December.

David Leaney, a lecturer at the Australian National University's college of business and economics, said a "perfect storm" was driving the price hike, with the price of a cup likely to keep going up.

Mr Leaney said the storm was fuelled by adverse weather in major producing countries, COVID-19, global stockpile depletion and surging demand.

"The good news is there will still be coffee available, we're not going to run out. The bad news is it is almost definitely going to increase quite significantly in price," he said.

"We could see coffee prices of $7 a cup before the end of this year," he said.

A freak frost in Brazil, which produces a third of the global coffee supply, coupled with heavy rainfall and political unrest in another major producer, Colombia, has meant stocks are low.

On top of that, the same supply-chain issues delaying many essential imports has affected coffee.

Mr Leaney said, like cafes in Australia, all parts of the chain had been hit with staff shortages due to the pandemic.

"From coffee growing, to processing, to transport, to warehousing, to distribution, and retail," Mr Leaney said.

"So you've got shortages of raw materials and you've got shortages of humans to work."

Mr Leaney said the International Coffee Organisation's composite indicator - the equivalent of the share price of coffee - had doubled in two years, with 17 consecutive months of rising prices.

He said it would be a year or two before supply-chain bottlenecks and COVID complications disappeared, removing that price pressure.

"Supply and demand? I don't think we're going to sort that out," Mr Leaner said.

"Unless you can convince people to not like good coffee or not want more coffee, then that's not going away.

"What do you need to do? You need to ramp up the supply to match the demand."

Ona has recently begun working with a coffee grower near Cairns to improve the quality of what's being produced in Queensland and north-east NSW.

Mr Sestic said once they get the recipe right there, they plan to work with neighbouring farms to better their product. It's a model they've used around the world to improve the specialty coffee coming into Australia.

He said there was potential to increase Australia's output, however, it would take time before a substantial quantity could be produced that matched overseas standards.

The price of importing coffee from overseas has increased, on average, by 40 per cent over the last two years, Mr Sestic said.

In response, Ona, which supplies coffee to 80 cafes in Canberra, will increase its wholesale price between 10 to 15 per cent in coming weeks.

Mr Sestic - who is involved in almost each link in the chain - said a price drop on imports would be more concerning to him right now than a further increase.

"Our prices that we have, they're not very sustainable for coffee farmers," he said.

Mr Sestic said since the pandemic the price of fertiliser had doubled in Nicaragua, where Ona has a farm.

He said paying farmers what they considered a fair wage meant that farm barely turned a profit prior to the increase.

"Being a coffee producer, I'm looking at what happened last year and it can happen easily in the future," he said.

"If it happens in the future, as a coffee producer, do you wanna continue growing this crop?

"If this is your only source of income that answer is very simple, you're going to be looking at what else can you do."

Mr Sestic said online sales of speciality coffee had increased dramatically since COVID and remained that way with people returning to work.

On top of that, patronage at Ona's Canberra cafes were almost back to pre-COVID levels, he said.

Mr Sestic said he didn't expect people to start reaching for the instant coffee tin when Ona's prices went up.

"This is the question for customers, once you start drinking a beautiful coffee, can you go back to something different?" he said. "Possibly not."

With the World Barista Championships being held in Melbourne in September, the global coffee event will likely strengthen the Australian industry and its reputation for producing some of the best coffee.

Canberra's Redbrick has recently started exporting coffee to China, as well as Korea and around Australia.

Redbrick increased its price per kilogram by $5 towards the end of last year, with a 50 cent increase on coffee in their five Canberra cafes.

It is now $5 for a cup of coffee at Redbrick in Fyshwick and Curtin, ARC, Makeshift and Clay.

Owner Tim Manning said the price of shipping went through the roof over the last 12 months, with containers in short supply.

Mr Manning said wages, insurance, fuel, rent and produce had all increased too, leading to the decision to increase prices for the first time in four years.

READ ALSO:

He said early indicators was for a hike on their raw coffee from Brazil and Colombia of up to 30 per cent in the next six to 12 months.

"We don't like to jump and change the price of coffee too much," Mr Manning said.

"The morning coffee is part of the Australian way of life now. When we make a price change, we make it so that it's sustainable for the foreseeable future."

He said he hoped they could maintain the current cost per cup for another long stretch, however, import costs were too unpredictable to know for certain.

"It's hard to know exactly what will come through over the next 12 months," Mr Manning said.

"We just need to manage how that's absorbed into the business and whether it can be or not."

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: