A good coffee is one of life’s little luxuries, so be prepared to splash out more. By Sophie Morris

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My £12 latte at Queens of Mayfair

I wouldn’t normally wait more than a few minutes for a latte, but in this case I’m paying £12 for the privilege and am more than happy to savour the moment. Desperate, in fact, to squeeze every last penny out of the experience. The friendly manager lets me know they are grinding the Wallenford Jamaica Blue Mountain beans, grown in rich soil and high precipitation at 2,000 metres above sea level, to the ideal consistency for my extortionate brew.

I pass the time listening to surrounding conversations. When I set out to find Britain’s most expensive cup of coffee, it was no great surprise to find it slap bang in the middle of London’s most expensive postcode at a cosy café, Queens of Mayfair, that counts the Ritz and Buckingham Palace as near neighbours. My latte isn’t even the most expensive coffee on the menu. For £28, I could have ordered the “Best Geisha of Panama speciality V60 experience”.

It sounds X-rated but seems right for the clientele here, characters in expensive suits and shoes who resemble the cast of Industry, the BBC drama about the sociopathic villains staffing Britain’s biggest banks. The men on the next table conclude their conversation about buying up ships “cheaply”, for €57m (£51m), with brief comments about a Porsche being “nothing special”.

Like pretty much everything else, the cost of a cup of coffee is on the rise. Chancellor Jeremy Hunt was widely mocked for his attempt to explain inflation on social media with a video about a flat white in late January - for which commentators dubbed him Mr Bean. He holds up an empty coffee cup marked £2.56 and another marked £2.86, saying the price has risen from “around £2.50” to “nearly £3” in a year. He attributes the hike mostly to fuel prices, explaining that the coffee has to be transported first to the UK and then around the country.

My coffee arrives, a tall glass of warm milk and espresso finished with a pretty heart design in the layer of froth. It is delicious. The full-bodied coffee blends seamlessly with the velvety milk. There are warm chocolate and light berry notes without a hint of bitterness.

Because of the cost, I take my time to enjoy the coffee ritual and appreciate the high quality ingredients and preparation. It’s not as if I’ll be back for a 12-quid coffee any time soon.

But how high can the price of coffee go before people stop buying it? As well as the £12 coffee, Queens of Mayfair has a regular latte for £4.50. An espresso is £3. I remember the first time I paid £3 for a coffee, on Leather Lane in London’s EC1, a decade ago. But it’s taken those 10 years for £3 to become the norm rather than the exception. I felt ripped off, but hated my job at the time and needed a stream of little pick-me-ups to keep me from quitting and not being able to afford any kind of coffee.

I speak to Trish Caddy, a principal analyst at market research firm Mintel and author of its recent report into the coffee shop market, which makes some predictions for the coming five years, until 2027.

Caddy tells me that items like coffee fall within the “lipstick effect” theory, which holds that sales of small treat purchases - “affordable luxuries” - tend to increase when times are hard. Perhaps when it comes to the average commuter, a willingness to indulge in the frothy treat of a pricy brew is the real barometer of the cost of living crisis.

Certainly for me, my hot drink consumption feels more like a volley of morphine shots to distract from the grimmer realities of exorbitant weekly shops, escalating mortgage rates and exploding energy bills.

Will prices continue to rise?

“We have definitely noticed that coffee prices have gone up in line with inflation, which is poised to continue,” says Caddy. “But inflation is forecast to calm down in the middle of 2023, and coffee shops are doing what they can to mitigate it, whether increasing prices, or reducing the services offered such as menu items or opening hours.”

Her research shows that over-65s are happier to pay more rather than see their coffee spots closing earlier or offering fewer cakes. Younger customers, meanwhile, prefer the cost to be absorbed elsewhere, with cheaper beans if necessary. One way for businesses to provide for both groups is tiered pricing, for example offering a 99p filter coffee or a subscription service, leaving space for up-selling to customers elsewhere on the menu.

There are rumours of the £10 pint of beer becoming routine by 2030. Will my £12 latte soon seem average? “I cannot relate to that at all,” says Caddy. “I don’t know where that would be or what would be in that drink. That’s extortionate. We’re seeing increases from around £2.50 to £3.40.”

The Project Café UK 2023 report from the World Coffee Portal finds Britain’s favourite drink is a latte. A regular 12oz cup has increased on average by 11.3 per cent to £3.25 in a year. Even in central London, most places are trying to keep drinks under £4.

M&S recently launched its £3.15 “Magic Coffee”, a short, strong latte similar to a flat white “discovered” in Melbourne. A cynic might say it’s a magic way to make us pay even more for a smaller coffee - reducing portions is another tried and tested way to fight rising costs elsewhere. But don’t forget we didn’t know what a flat white was 15 years ago.

Tereza Vertatova co-owns Curve Roasters, an independent roaster and café in Margate, Kent, with her partner Jon Cowell. They have just gone from £2.80 for a flat white and £2.90 for a latte or cappuccino to a round £3 for each. Was it a difficult decision? “No,” she says. “I know we’re not overcharging. We’re good value for money. As long as you’re providing something delicious and special for people, no one’s going to question it.”

While reducing quality would be a last resort for Curve, it already provides a much better cup than most. Vertatova is committed to paying producers better and as such operates outside the world commodity market price.

Nevertheless, her biggest significant cost increase was in the price of green coffee - the raw beans - after a major frost in Brazil in autumn 2021, the worst in half a century. Other variables are more surprising. For example, she serves marginally more non-dairy than dairy milk, which might be more expensive but doesn’t require costly refrigeration.

Mintel’s report shows the coffee shop market is still growing - it increased by an estimated 16.4 per cent, from £3bn to £3.5bn, in 2021 to 2022, and this is forecast to rise to £4.5bn by 2027. Just as bars are exploring non-alcoholic drinks, so coffee shops are recognising the value of non-caffeinated options, and Caddy predicts innovation in this area.

“Going out for coffee isn’t just about the coffee,” says Vertatova. “It’s a livelihood for a lot of people, and rather than buy more we could buy better. That’s something consumers discovered in lockdown when they were forced to learn how to make nice coffee at home.”

How to make a great cup of coffee at home

Flavour
Work out whether you like bold and full-bodied coffee with toasty and nutty flavours, or more delicate floral and berry notes. A specialist coffee shop can recommend something once you’ve decided.

Grind your own
“The best thing people can do at home to improve flavour is to grind fresh,” says Tereza Vertatova from Curve Roasters. “It’s underestimated. A lot of the aromatics disappear quite quickly.” Some people use beans the moment they’ve been ground, but they’re often best a week or so later.

Method
Without a fancy machine or complicated brewing equipment, the cafetière or stovetop espresso maker (inset) are the two most common approaches.

With stovetops you get the ritual and the Italian feel, but it’s usually higher in bitterness because the water always reaches boiling point. A slightly lower temperature of 95°C to 96°C is recommended.

Milk
“If someone prefers a really milky latte or cappuccino we would recommend something from our espresso range, roasted to have the substance to withstand the milk,” says Vertatova. “But it’s more about finding the right coffee. Some are high in acidity and might not pair well with milk. But coffee’s such a personal thing. We shouldn’t be too strict about it.”