Ross Colbert of Rabobank says OCS facing some major challenges during the CoffeeTea&Water event in Las Vegas.
Ross Colbert, global beverage strategist for Rabobank, an international bank, a keynote speaker at the CoffeeTea&Water event in Las Vegas, cited key challenges the OCS industry faces during his presentation:
- Margin pressure
- Single-serve technology
- Shrinking customer base
- Changing market structure
- Alternative suppliers (new competitors)
- Emergence and strength of consumer brands
Among these challenges, he cited the influx of single-serve systems as the biggest change in the industry, for better and for worse.
He then referenced a report released earlier this year from the National Coffee Association, “The Single Serve Format: Changing Perspectives Growing Opportunities,” which noted that single-cup penetration is rising. Among report findings, awareness of single-cup brewing systems has increased to 73 percent in 2011 from 55 percent in 2007. Ownership has jumped to 7 percent of consumers in 2011 from just 1 percent when first polled in 2005. Those who have bought a system within the last six months grew to 35 percent this year from 29 percent in 2007.
“The influx of single-serve has been very disruptive,” Colbert said. In markets such as New York City where single cup commands as much as 60 percent of all OCS machines, he said the dominance has favored the larger OCS operators at the expense of the smaller operators.
In addition, he said the popularity of single-cup invites competition from other channels.
“It opens the door for the do-it-yourselfer,” Colbert said.
Colbert assessed the pros and cons of single-cup in the accompanying chart.