There are two types of OCS operators when it comes to water systems: those who are selling 5-gallon or point-of-use (POU) water service and those who should be. With the OCS market saturated and costs rising, operators need to maximize sales to existing accounts. Adding water service is one of the easiest ways to do this.
Adding water service has another strategic advantage as well: it protects the OCS operator from competitors who offer it, including water service specialists who are expanding into the coffee business.
Competition Forces Addition of Water Service
Although most operators still don't believe they have to offer water systems to defend their business from water companies, a few are seeing the threat.
Tom Meehan, owner of Coffee Systems Hawaii, Honolulu, Hawaii, who sells single-serve bottles of water, hasn't seen an urgent desire by locations for POU water systems, but he knows it's coming. When asked whether he feels he has to provide water systems to defend against water company competition, he said "not yet."
Randy Smith, president of Georgia Vending Services, Alpharetta, Ga., said, "yes" in his area.
Water companies are trying to keep water service business at corporate locations by adding OCS, said Robin Householder, vice president of Purlogix, and vice president of PHSI, suppliers of POU water coolers.
With manufacturing locations disappearing, people are getting jobs at smaller companies which may not qualify for vending, but do use OCS and water service, a benefit employers use for recruiting employees. Also, with the advent of coffee houses on every corner, OCS operators are fighting back with gourmet, branded coffee, and with that, filtered water is part of the process, according to Householder.
Randy Parks, president of Prostar Services, Carrollton, Texas, said, "The opportunity for the average operator to tap into the water market is huge." As an example of the current business model operators can use for POU systems, Parks said a machine costing $300 would be paid off in a matter of months with a rental fee to the location of $25 a month. And the consumer pays for the filter changes.
Reluctant operators are leaving money on the table, Parks said.
"More and more OCS operators are turning to water. It is a natural addition with little to no requirements for additional sales and service," said Stephen Messinger, director, sales and marketing, Pure 1 Systems, which offers POU systems. "Our dealer in Puerto Rico, who offers coffee and water only, plans to put a water system next to each coffee machine. (The) growth potential is substantial."
Gus Kroustalis, gourmet coffee manager of Gallins Vending, Winston Salem, N.C., said many of his customers have approached him about water because they want to have one vendor for multiple services.
Stronger Push of Water Systems
Lester Lail, vice president of Hav-A-Cup, Hickory, N.C., gets two to three calls a day about just water service. It's a popular commodity, but he is not content with waiting for customers to call, rating himself a 5 on a 1 to 5 scale for how aggressively he sells his water services. "On every call, after we discuss their interest in coffee, I say, ‘If you have time, I'd like to talk to you about our water systems,'" said Lail.
Hav-A-Cup has a salesperson dedicated to new 5-gallon water and POU business. For selling to existing customers, Lail gives himself a 2 on a 1 to 5 scale, admitting, "We don't do it enough — as much as we should."
Lail said in retrospect, he was fortunate to have expanded into water service early in his market. "It's just something we decided to get into. It went with our business," observed Lail. "We're a strong coffee company in this town. We've been selling coffee for 25 years. We've been in the water business for 11." For Lail, water is a niche market he uses only mildly to raise profits, but more so to win accounts and keep existing ones.
"The average consumer is more educated about quality water," Parks said. And he's noticing a push for a higher quality product because of that.