The saying “Think Global, Act Local” now relates to coffee. Last year in our State of the Coffee Service Industry report we introduced a new OCS sales product category for local coffee brands, based on early indicators that this was a growing category.
Of the operators who submitted responses in the report, 30 percent said at least 5 percent of their net coffee service sales are made up of local brands, and13.5 percent of those respondents said that local coffee brands are their top-selling OCS product. Locations like local coffee brands because they have a loyal following, are fresher and oftentimes support a location’s community directly.
If the price is right
Local coffee brands made up 12.5 percent of 2013/2014 coffee service sales, and that could be contributed in part to changing consumer preferences, brought on by third wave coffee roasters.
The current third wave coffee movement compares the act of drinking coffee to wine tasting and coffee roasting to microbrewing. Third wave coffee roasters oftentimes operate their own coffee shops and sell their coffee wholesale.
Operators reported seeing more requests from locations—most oftentimes in metropolitan areas— to provide local coffees rather than the national brands, even though the roasters are much more expensive. In these cases, the location is paying for the quality and the variety to give a perk to their employees and these locations don’t mind paying the extra price.
“People who give the local brand to their employees are very generous, I don’t know how else to put it,” Dan Zell of Petteys Full Line Vending Service in Novato, CA told me. “It’s always a pleasure to go into those accounts because they treat you better and employees are happy. The customers treat us like we’re paying for this great coffee they’re getting, when really the location is paying and it’s quite a bit more. They aren’t concerned with the price, just the quality.”
Buy local, stay loyal
Supporting the local community is one additional reason why local brands are gaining sales. Locations like the personal aspect of knowing their coffee roaster and where the coffee is coming from. In addition, they are willing to pay more money for a local brand if they know that roaster is creating jobs in their community. “When I was promoting our local brand I would mention that it was local and the jobs and money would all stay in the area,” said Sam Thomas of L.T. Vending Inc. located in Orchard Park, NY. “Many locations supported that.”
Thomas did note that companies who were not interested in moving to local roasters had headquarters in other states or were part of a larger entity that preferred national coffee brands.
Playing the game
Operators partnering with local brands in order to offer third wave coffee is a relatively new phenomenon, but it is not a trend that appears to be going away anytime soon. Local roasters are looking to grow into new markets, according to Zell. More locations are dedicated, loyal and happy to pay a higher price for a local brand they know, which means that operators have the opportunity to offer something the competition doesn’t. While this is not a trend seen in all regions, it will be interesting to see if/how much local coffee brands continue to gain when this year’s State of the Coffee Service report comes out in September.
