If you order your takeaway coffee with oat, almond, soy or lactose-free milk, you’re likely used to getting charged extra.
But as alternative milks become more popular, you might be wondering why your favourite beverage costs more than if it was made with regular dairy.
Professor Nitika Garg, a consumer behaviour researcher at UNSW Sydney’s School of Marketing, says extra charges for alternative milks are often a source of frustration for cafe customers.
“[When alternative milks were first introduced] … people expected a little bit of price premium, and they were willing to pay it,” she says.
“Where consumers get a little upset is when the mark-up is unreasonable.”
Why your cafe might charge extra when you ask for alternative milk
One issue for cafe owners is that alternative milks are typically more expensive than regular dairy.
Many cafes are also now using premium alternative milks designed for coffee, which attract a higher price tag.
In a video posted to TikTok in June this year, Melbourne/Naarm cafe owner and coffee roaster Daniel Dick said that alternative milks cost “almost double” the price of regular dairy.
He says that offering a range of different milks is also disruptive for a cafe’s coffee workflow.
“One of my biggest issues with the rise in popularity of alt milks isn’t the additional cost, which we surcharge for,” he says in the video.
“It’s the complications to workflow that having up to six different milks introduces … it slows down service.”
Sam Demelis, a coffee expert and barista trainer based in Melbourne/Naarm, agrees.
“As soon as you provide an alternative, it costs more to do,” he says.
Starbucks is ditching surcharges, but cafes might not follow suit
Some cafes don’t charge extra for alternative milks, but instead choose to absorb the costs or raise prices.
In October, global coffee giant Starbucks announced it would stop charging extra for non-dairy milk, and said some customers could see price reductions of more than 10 per cent.Almond, soy or coconut? How plant-based milks compare to regular dairy
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At his four cafes in Melbourne, Mr Dick charges an extra 50 cents for oat, soy or lactose-free milk and $1 for almond, which he says costs “significantly more”.
He considered incorporating the extra costs of alternative milks into the price of each cup as an alternative to surcharging, but he ultimately decided against it.
“The feedback we got was that most consumers who consume alternate dairy beverages do so from a preference or dietary requirement and are aware of the additional cost that … [puts] on the business,” he told the ABC.
“We didn’t make any changes, but it was interesting to engage … with consumers about what was important about that decision.”
The rising cost of coffee is another factor that makes it harder for cafes to absorb extra costs, including from alternative milks, Mr Dick says.
“As of last week, [coffee prices were] at record highs again,” he says.
“From a coffee roasting perspective, my cost of goods for my green coffee sourcing is going up a minimum of 20 per cent … for the next 12 months.”
Why some alternative milks are more expensive than others
Mr Dick says increased competition has meant there are much better alternative milk products on the market than there were previously.
“From a consumer perspective, people form their allegiances [to different brands] fairly militantly,” he says.
“As competition has grown, there’s a lot more parity in the brands.”
Michael Perich is the chief executive of Noumi, which sells plant-based and other alternative milks under the Milklab and Australia’s Own brands.
He says that barista alternative milks are designed to produce better froth and foam and prevent drinks from splitting or curdling.
“There’s investment there … on our side, which does come at a cost. It’s important that we continue to develop [products] to ensure they perform well, and that’s where different price points come into it,” he says.
Competition could bring prices down — but it might not be reflected at cafes
Mr Dick says modern barista alternative milks do tend to be better for coffee, and he uses them at home, too.
“My wife and I drink a lot of coffee at home, and we now have almond milk in our fridge,” he says.
“I used to think it tasted like sunscreen, but now it’s quite pleasant.”
Professor Garg, the marketing expert we heard from earlier on, says continued competition could bring prices of alternative milks down over time.
But that might not mean you end up paying less at the cafe.
“[Buying coffee at a cafe] is not something we need to do, it’s something we want to do — and cafes are capitalising on that. It’s not just a demand and supply issue here,” she says.
“Even though you might see retail prices drop for these [alternative] milk products, you might not see a commensurate drop in cafe prices.”
