With better quality products and equipment available, vending and OCS operators have more opportunities than ever to win their fair share of the growing coffee market. But based on recent industry data, vending and OCS operators have a long way to go to catch up with their retail competitors.
The National Coffee Association Winter Coffee Drinking Trends Report found an 11 percent jump in out----of----home coffee consumption from 2003 to 2004, back to peak 2000 levels. However, while more consumers are drinking coffee in the workplace, NCA reported they are increasingly getting their coffee from outside the workplace. That means the percentage of at----work coffee being sourced from within the workplace has, in fact, declined dramatically, NCA noted.
OCS and vending both challenged
The Automatic Merchandiser State of The Coffee Service Industry Report noted that the OCS industry has begun recapturing some of these sales, thanks in large measure to single--cup brewers. The vending industry, for its part, has been hamstrung by a long--term decline in industrial populations, which makes it hard for vending operators to invest in better quality product and equipment.
Some product and equipment suppliers have begun to offer point--of--sale materials to allow both vending and OCS operators to brand their machines with retail coffee logos. The goal here, as in other product categories, is to enable vending and OCS to capitalize on brand equity.
Brands long underutilized
While branding is only one of several factors contributing to successful merchandising, it has long been underutilized in vending and OCS.
This article will examine the potential benefits of branding coffee machines, both in vending and OCS. Readers are urged to keep in mind that it is difficult to isolate one factor contributing to success in coffee when several come into play. Other critical factors include product variety, consistency, price, quality, customer preference, alternative choices, and the quality of the service provider.
Competitors are more brand focused
Branding deserves attention given the fact that other retail competitors, such as c--stores, supermarkets and specialty stores, are aggressively marketing branded coffee.
Wyoming Research, in its 2005 “Foodservice Intelligence Tracking Study of Specialty Coffees” survey, revealed that c--stores accounted for nearly 70 percent of all foodservice specialty coffee consumed in 2004. C--stores’ share of specialty coffee has increased steadily for the past three years, the study found.
The challenge is particularly hard on the vending front, which is more capital intensive than OCS. In February of 2001, Automatic Merchandiser noted in its cover story that vending operators are largely hamstrung by the cost--based approach they use in the hot beverage segment. Advertising the brand of the coffee being sold was cited as one of several corrective actions needed.
Vendors question coffee branding
In March of 1996, Automatic Merchandiser surveyed 170 operators and found that 70 percent did not believe that branding is as important for hot beverage vending as cold beverage sales. Eighty--three percent said they did not believe customers would pay more for a national name brand coffee.
Recent operator interviews indicated sentiments have not changed. In addition, few branded vending presentations are to be noticed in the field, even though branded point--of--sale materials are available.
One reason is the simplicity of using generic equipment, in addition to lower cost. Generic fronts allow the operator to change selections and suppliers quickly and easily. A branded front ties the machine to a specific brand if not also a specific product.
Costs versus benefits
“I want to be able to change roasters, to change coffee programs,” noted Scott Guardino, director of sales at Paramount Automated Food Service Inc., based in Pompano Beach, Fla. This from an operator who has done more to promote branding than most, both private label and national brands.