18th March, 2014

Australia’s love of coffee knows no bounds

Cafes across Australia are riding a wave of growth fuelled by the country’s natural love of coffee.

This is according to a new report by IBISWorld, which said the nation’s affinity for the hot beverage can be traced back to World War II and the emergence of European-style cafes.

The popularity of coffee enabled the cafe industry to enjoy solid demand during the global economic downturn and is expected to drive annualised growth of approximately 5.3 per cent over the next five years.

However, cafes should be warned that the Australian love affair with coffee means consumers are becoming extremely discerning. IBISWorld said the quality of coffee is vital, with consumers keeping a watchful eye on brand, texture, temperature and even milk levels.

Stephen Gargano, IBISWorld analyst, said: “An establishment’s success can often be determined by the level of customer service, the price and quality of produce and the overall cafe experience.”

The report claimed Australia’s coffee culture indicates a preference for small specialty cafes, resulting in high levels of competition but low barriers to entry.

Any operators hoping to enter the coffee business will require comprehensive cafe insurance to ensure they are protected against a range of issues, including building damage, equipment breakdown or employee fraud.

After all, with such intense competition in the industry, owners will want to ensure peace of mind while they concentrate on growing their business. IBISWorld highlighted several opportunities open to cafes looking to gain an edge over their rivals.

For example, gourmet cafe-style meals and a focus on premium ingredients are predicted to boost sales on higher-margin products. Improved economic conditions are also likely to encourage more interest in health and ethical issues.

“Consumers are expected to drive the trend towards smaller operators and niche providers, continuing to choose independent cafes and coffee shops over chain stores,” the report concluded.

Author: Murray Bruce