On April 1st this year the minimum wage in New Zealand will be increased by $1.20 to $18.90, this could be the catalyst that pushes coffee prices through the psychological $5 barrier.
Hospitality expert Mark Collins said that while consumers were unlikely to stop buying coffee at $5, they might respond by having one less coffee per week instead.
Collins added that distribution companies who supply cafes with milk and coffee beans would also pass on the wage increase, adding to the pressure on prices.
Most cafes have already put their prices up in preparation for the wage increase, conceding that a $5 coffee was inevitable.
Owner of iconic Wellington café, Midnight Espresso (which has been in business since 1988), Hamish McIntyre said he was choosing to spread the wage increase across the whole menu, increasing prices by 50c on both coffee and food. A flat white is now $4 at Midnight Espresso, one of the cheapest in town, despite using high-quality coffee beans and organic milk. McIntyre said that prices would not go up again until at least next year.
In Dunedin Tim Milmine, owner of The Fix said $5 for a coffee was a sticking point for a lot of people.
“It’s going to be very hard to get people across that $5 mark,” he said.