The coffee test: cutting back on coffee signalling a bigger consumer shift

Consumers are sending a clear signal in 2026: while household spending remains volatile, a growing sense of caution is reshaping everyday purchasing decisions. Chris Petzoldt, CEO of Pretian Squared, explores the shift towards greater financial discipline – and why the morning coffee may be an early indicator of a broader change in consumer behaviour.

Household spending has experienced significant swings this year. April recorded the largest monthly decline since October 2023, with spending falling 1.1%1. Spending has since recovered, rising for three consecutive months from May through July, including a 1.1% uptick in July. The rebound appears positive, but consumer behaviour tells a more complex story.

Small purchases now under the microscope

Particularly noteworthy is the growing reluctance consumers say they feel to spend on small discretionary items. Recent consumer research shows close to a third of Australians intend to cut back on their morning coffee or a snack – purchases that are traditionally among the last expenses cut, given how affordable they are and how deeply embedded they are in daily routines2.

When households start scrutinising transactions worth only a few dollars, it suggests cost-of-living pressures are influencing decision-making at every level of the budget. Skipping a coffee or passing on a small treat may seem inconsequential in isolation, but collectively these actions reflect a broader mindset of financial restraint.

Consumers are becoming more selective

So why has spending increased in recent months? The answer is that consumers haven’t stopped spending; they’ve become more selective.

While everyday discretionary purchases are being cut back, spending on travel and experiences continues to hold up. This reflects that some consumers are willing to allocate funds towards purchases they perceive as meaningful, memorable or high value, while actively looking for savings in their everyday routines.

This isn’t simply about fluctuations in headline spending figures. It’s about the emergence of a more intentional and value-conscious consumer.

Australians are increasingly weighing up value and necessity before making even the smallest discretionary purchase, demonstrating a level of financial discipline that wasn’t as evident in previous economic cycles.

What this means for businesses

For businesses, this presents both a challenge and an opportunity. Traditional marketing approaches focused on attracting attention may no longer be sufficient. Consumers increasingly want clear evidence of value before they part with their money.

Affordability, relevance, convenience and trust have become critical factors in purchasing decisions. Brands can no longer assume loyalty or habitual purchases will continue unchanged. Businesses that clearly articulate their value proposition and align with evolving consumer priorities will be in a stronger position to maintain customer engagement and market share.

Behaviour may be a stronger signal than spending data

Importantly, organisations should focus on behavioural indicators. Changes in purchase frequency, basket size, product choice and trade-down behaviour often provide an earlier signal of shifts in consumer confidence than overall spending data alone.

Understanding these shifts requires looking beyond sales data. By uncovering the attitudes, motivations and behaviours driving purchasing decisions, organisations can better understand how consumer priorities and perceptions of value are evolving, helping inform decisions around pricing, customer experience and growth strategies.

Temporary reaction or lasting behavioural shift?

A key question is whether these changes are temporary or structural. History suggests that once consumers develop habits around budgeting more carefully, comparing alternatives and scrutinising discretionary purchases, many of those behaviours persist even when economic conditions improve.

What we’re potentially witnessing is the emergence of a more financially disciplined Australian consumer. Spending may continue to fluctuate from month to month, but the underlying mindset appears to be shifting towards greater intentionality, creating both challenges and opportunities for businesses.

About the author: Chris Petzoldt is the CEO of Pretian Squared, a value monetisation and pricing consulting firm.