Coffee farm at Koonorigan (NSW). Photo provided by ASTCA
I’d had a coffee brewing machine at home for about a year before realising the increasingly brackish taste was due to a long overdue need to purge the machine of accumulated mineral deposits. Along the way I also learned that it is a good idea to clean the milk frothing wand after every cappuccino.
A barista at our local café looked over her spectacles when I told her I’d just de-scaled our machine for the first time.
“We do that every day!” she said… “Long black, is it?”
Long black’s my choice and I’ve got the home blend down to a fine art. Most days I have two cups in the morning, but rarely more and it is a hard-learned lesson not to consume coffee after 2pm. Despite the science that tells you that the caffeine in coffee departs the system within four to six hours, coffee at 4pm or later will keep me wide-eyed and twitching until 2am.
Now I don’t know about you, but in my experience not every coffee shop has the right idea about how to make a good long black. It can’t be tepid, it can’t be thin and watery, and it must not have that acrid burnt-bean taste. Not at $4+ a cup.
They’re everywhere
Our little village has 13 places in the main street alone where you can sit and sip your coffee and watch the passing parade, or read their newspapers. Names and faces change all the time. One door closes and another opens. Over the years I’ve probably tried them all but come back to the same one or two.
Australians consumed 16.3 million coffees every day, according to an Australian Bureau of Statistics (ABS) study in 2011-2012, but about two thirds were made with (shudder) instant powdered coffee.
The ABS says coffee (including coffee substitutes), was consumed by nearly half the population (46%). Consumption was closely associated with age, with one in three (34%) people aged 19-30 years and two in three (66%) aged 51-70 years partaking of coffee. Only 4.5% of people aged 2-18 were labelled coffee drinkers.
Aussies spend $16 a week on their brew
A survey by Canstar Blue reveals that more than half of Aussies drink more than two cups of coffee each day. One in three claims they are unable to function properly without their cuppa. The average Australian will spend $16 per week on coffee – $832 per year.
For that for that kind of money you could buy yourself an old Corolla that smells of wet dog and has 300k on the clock. Or you could buy a deadly new coffee brewing machine along with the finest set of Italian cups, a grinder and a month’s worth of beans. After that, your only expense would be electricity, milk and sugar.
Coffee is big business in Australia. Ibisworld’s latest survey estimates revenue at $5.4 billion and profits at $208 million, with a five-year annual growth rate of 7.4%. Ibisworld says there are 7,623 businesses involved in the coffee trade, employing 70,694 people. The industry’s collective wages bill is $1.3 billion.
The key reasons people get involved in this business is that they believe the profit margins are lucrative – (yeah, provided you can snare the right staff and train them to put a perfect latte in front of someone, complete with art, just as they are sitting down). Cafes that get a reputation for slow service and mixing up orders just don’t last.
Small trader says coffee is ‘hard, hot work’
Although the big franchise chains are increasing their market share, the heart of the trade in Australia is independent traders like my Brisbane coffee consultant, Mr Talkfast (TF). He says the average place selling coffee makes 100 cups a day. But with inner city cafes making many hundreds, and his suburban shop making 300 a day, it seems a lot of places make significantly less. TF says the high profit margin is a myth, unless you are roasting your own beans, but even then you need the volume.
“The average margin is about 10% once you take wages into account. New café operators spend too much on fit-outs and things like top-line commercial fridges and brand-new, expensive coffee machines.
“They often don’t have a realistic view of the business and don’t realise that it is hard, hot work.”
Meanwhile the big chains keep expanding
The key to growth is to control the coffee bean roasting businesses that supply cafes. While the majority of Australia’s 120,000 coffee destinations are owned and operated by sole traders, the big chains are getting bigger, with more than 200 coffee franchise and café chain brands, according to listed company Retail Food Group (RFG).
In Australia RFG owns the Gloria Jeans franchise and other outlets. RFG signalled a growth strategy in late 2014 when buying the national roasting and distribution company Di Bella Coffee, founded in 2002 by Phillip Di Bella.
The big chains dominate in the US and Canada, where coffee-to-go is the preference. Last year US-based Burger King fast food giant bought out the Canadian chain founded by ice hockey star Tim Horton in 1964. Tim Hortons is ubiquitous in Canada, with 3,665 outlets selling coffee and donuts, outranking McDonald’s in that country for fast food service outlets.
US coffee giant Starbucks expanded into the Australian market in 2000, but probably left its run too late, as Australian coffee drinkers were already habituated to their local, boutique cafés. Starbucks closed most of its 85 stores in 2008, with the remaining 24 stores since taken over by the 7-Eleven franchise.
Locally grown coffee a small part of the market
In case you’ve never been to Mareeba on the Atherton Tablelands or visited a coffee farm around the northern rivers of NSW, Australians do grow coffee. President of the Australian Sub Tropical Coffee Association, Jan Fadeli, says the total amount of coffee grown in Australia is 600 tonnes per year.
“In 2014 Australia imported 72,000 tonnes. Roughly, Australia produces less than 1% of what is consumed.” ASTCA’s members promote their product as “clean and green”, that is, free of pesticides and processed free of chemicals.
Australia imports beans from countries including Brazil, Columbia, Ethiopia, El Salvador, Guatemala, Indonesia and Papua New Guinea.
One thing is clear: bad coffee should not be tolerated, at home or away. If you complain to a café that your coffee isn’t hot and they put it in the microwave, it’s time to leave.
Coffee industry lore is that new entrants typically last six months before closing their doors. Risings labour costs and rents are the major impediments.
TF, who also has a day job, has been in the coffee business with his partner for eight years and says the key to the business is quality, consistency and customer service.
“It (the shop) won’t be there forever, but we actually find it quite rewarding in terms of customer feedback.”
He has this advice for anyone thinking they can make a fortune from coffee.
“I would tell them to work out exactly what they’re prepared to lose before going into business. They should work out the maximum they are prepared to lose and make that their budget for the first year. And be prepared for hard work.”
Meanwhile She Who Makes Shopping Lists (While Hubby Swans About Writing Columns) wants to know what we need.
“Coffee, sugar, milk and vinegar.”
“Vinegar?”
“It’s time to de-scale the coffee machine.”