Operators have been diversifying the type of account they provide OCS for as well, see chart 9. The percentage of office and business/industry accounts served dropped slightly in 2012, as OCS operators increased their deliveries to restaurants, government locations and even c-stores. The largest jump was in the “other” category, nearly 4 percentage points. This is where many full-line operators placed their micro market OCS sales, which grew especially well in hospitals. Many operators reported an increase in healthcare OCS as well as small businesses.
Plumbed-in and pourover brewers rebounded in 2012, closer to previous years as many locations were and still are more cost conscious. Operators have done a good job of educating locations about the benefits and quality these brewers can offer, despite heavy requests for single cup, which is driving the resurrgence.
Single-cup remains strong
In 2012, single cup also experienced a lift to 20.1 percent, see chart 7a. In the population as a whole, 13 percent of people drink coffee made in a single-cup brewer daily, according to NCA data. And ownership of these brewers grew to 12 percent in 2012, increasing from 10 percent the year before showing just how popular single cup has become.
However, single cup presents a dilemma for operators. Not only is the cost per cup high, which means a higher cost for the location, but the most well-known of these brewers, at least to the consumer, is available in multiple channels. Keurig has become a well-known brand name in most of the U.S. and its K-Cups® are available for competitive prices in nearly every retail channel, including wholesale on the internet. Operators report difficulty policing their single cup locations and preventing them from buying K-Cups elsewhere.
As a result, OCS operators are experimenting with both generic K-Cups and other, similar cartridges that work in the same brewer. They are also experimenting with alternative single cup machines that discourage pilfering by employees, as this is still a concern among many locations. Pods are seeing a resurgence as equipment manufacturers show the equipment is more reliable than in the past and the pods themselves are considered a “green” alternative to K-Cups. Chart 8 shows how marketshare has shifted over the past 5 years for single cup brewers, with Keurig and Mars Drinks (Flavia) brewers leading.
Another driver behind single cup growth is the popularity of specialty drinks, which have increased sales of machines able to brew cappuccinos and lattes. This is shown in chart 6. Espresso/cappuccino drinks, as a part of the OCS sales, grew almost 2 percent in 2012, while private label and even national brand sales percentages fell. Operators also reported a rise in flavored coffee and varietals (coffee grown in a specific region). Resurgence of bean-to-cup machines have increased whole bean sales.
Chart 6 also shows the shift in the typical OCS customer. While coffee remains strong, its sales share has shrunk in the past 12 months. The product category with the largest gain was bottled and filtered water. Both the drive for healthy products, noted by vending operators, as well as the day part met by bottled and filtered water is contributing to this segments’ growth.
NAMA sponsored research on the OCS consumer revealed that water is consumed all day, as compared to coffee and tea, which were mostly consumed in the morning. The OCS consumer research also showed that among those employees who did not have any coffee service at their location, 60 percent named filtered water as their top request.
Environmental concerns flat
While locations have been asking about sustainable products for a number of years now, operators haven’t reported a lot of movement in this area as far as sales. Therefore, operators haven’t invested heavily in green OCS products, leaving the percentage of operators offering these items practically unchanged since 2010, see chart 13a. For operators who did add eco-products to their OCS line-ups, most added coffee with sustainable features, 53.3 percent, followed by products made from recycled material, 30.4 percent. See chart 13 b.
The number of OCS companies allowing customers to order online increased slightly in 2012, from 35.29 to 40.2 percent, see chart 14. Many operators who added this feature viewed it as having potential for consumer sales with products shipped via UPS as well.