Guardino noticed a 28 percent jump in sales when he branded his hot beverage machines. While he also raised prices and improved the quality of the coffee, he insisted that 75 percent of the gain was due to the branding.
The branding brought another benefit: It helped sell the program to decision makers. Many decision makers like seeing recognizable brands, he noted, and in some cases, the branding convinced the customer to have a hot drink machine. “The accounts identified with it,” Guardino said.
But these benefits weren’t enough in the long--term. Guardino felt he needed to keep shopping for better deals, in addition to providing the extra maintenance that was needed for the branded machine fronts.
More than a selling tool?
Dave Mandella, vice president at Full Service Vending Inc., Rockaway, N.J., believes based on several years of experience that branded fronts are more useful as selling tools than in driving consumption. “The performance with the branded front didn’t make a difference,” he said. “As long as it gives a good cup of coffee, they (customers) don’t care.”
Mandella acknowledged, however, that all of the national players— Aramark, Canteen and Sodexho—use branded fronts on virtually all of their coffee machines.
“Those brands present a great value to the clients and the employees,” argued Brian Zaslow, vice president of marketing at Aramark Refreshment Services Inc., which has been using Folgers branded machines for years.
Nestlé test proves benefits
In 2000, Nestle Beverages Inc. tested Nescafe branded machines in three markets and found the branded machines did make a difference. Vending industry consultant Brad Bachtelle, who conducted the tests, said the Nescafe machines, using water soluble coffee, were better able to maintain a consistent taste than machines using whole beans or preground coffee.
The success of the test was due to higher quality and the brand, Bachtelle said. “It’s the brand that draws the people to the machine,” he said. “The operators have to be willing to pay more.”
Are vendors meeting needs?
Bachtelle said it is noteworthy that coffee is the single most frequently purchased vend product bought at an alternative source. Hence, vendors are missing out on what consumers want. “The question is not are they (consumers) buying it cheaper some place else; they’re buying it better some place else,” he said.
The success of the Nescafe program convinced Devin Zelman, president of Proformance Vend USA, Phoenix, Ariz., to switch all of his machines to Nescafe. “All of our machines did better,” he said.
Stan Ledbetter, president of RE Services Inc., Lafayette, Ga., said branding did improve his coffee sales, but not enough to reverse the long--term decline in hot beverage sales. His company serves an industrial customer base. As a Canteen franchise, he has switched to Maxwell House branded machines and Ritazza branded machines. Ritazza is Canteen’s signature coffee brand.
“It was received very positively,” Ledbetter said of the Maxwell House machines. “People really believed we were giving them what they were getting in the supermarket.”
Are the right brands available?
Given the fact that specialty coffee is what has been driving most of the growth at retail, one might argue that most of the brands that have been available to vending operators will not deliver the right message to today’s quality conscious consumer.
Specialty coffee brands have not been readily available to vending since vending is such a small part of the total coffee market and specialty roasters are not confident in their ability to control product quality.
In one case where a specialty roaster did sanction a vending program, the cost proved prohibitive for most operators. Dietrich Coffee Inc. launched a vending program for its Gloria Jeans brand, complete with machine graphics, two years ago.
Steven Heyman, vice president of sales at Dietrich Coffee, said very few operators were interested in paying extra for the graphics and being tied to one brand. “It takes the right operator to take a bit of a risk,” he said. “There is an opportunity. It’s going to cost more.”