VendingMarketWatch Blog

The most advanced technological solutions take time to find an application. I’m pleased to say that the Starbucks “E-Cup,” a Starbucks interactive brewer with cashless capability, has found a niche, and that niche is going to become more prevalent in the future.

Automatic Merchandiser reported on the “E-Cup,” in a feature article in March 2009. The “E-Cup” has a USA Technologies’ ePort card reader that accepts both magnetic stripe and contactless cards.

I recently came across the first “E-Cup” in Cleveland, Ohio at a biomedical facility that houses a several research and development companies. The “E-Cup” was a perfect solution for this account.

This is a new building. The building wants to attract biomedical companies from all over the world to this modern medical facility.

The building, which is in the process of finding tenants, is not in a position to have a manned cafeteria. Hence, the owners realized that vending would be necessary.

The owners also understand the importance of high quality coffee for the clientele they are trying to attract. One of the decision makers was intent on having Starbucks coffee available.

They also needed a system that would allow the tenants to pay for their own coffee. Hence, the “E-Cup” was the best solution, noted Chris Terrell, general manager for Aramark Refreshment Services in Northern Ohio, which services the account.

This biomedical building represents the future for Cleveland, a one-time heavy manufacturing region that has lost most of its traditional industrial manufacturing. In its place, health care and new technology companies have gradually become dominant industries.

The employees in these types of accounts are well educated people who work irregular hours and often have a taste for the best meals and refreshments.

The owner of this account has made every effort to make the amenities attractive to the professionals they want to attract. The Starbucks “E-Cup” was part of this initiative.

The technology that our industry is developing is all going to serve its future.

Did you catch the Seattles Best Coffee (SBC) bean-to-cup vending machine in the Starbucks and Crane booths at the National Automatic Merchandising Association OneShow?

A lot of you did, judging from comments I’ve received.

Starbucks, which owns SBC, has taken a close look at the vending channel. This machine could do a lot to revive hot beverage vending, which took a beating even before the recession.

The SBC product, at 12 and 16 ounces, tastes great. The machine looks fabulous.

Vending operators have long missed the boat when it comes to branding their hot drink machines, which is one reason that segment has suffered so much.

Some vendors, such as Canteen, have branded their hot drink machines with house brand  coffee. But national brands have long been missing in action.

Some observers think Starbucks is placing SBC into vending as a way to put some distance between SBC and its flagship Starbucks brand. Those who say this aren’t familiar with Starbucks’ business philosophy.

Starbucks has done more to bring SBC to market in the last year than all of its previous owners ever did combined. The brand has been introduced to Burger King, Subway and other chains, supported by national advertising.

But the onus for maintaining SBC’s reputation for excellence in vending falls first on vending operators. They’re the ones with the most to gain or lose if that brand’s reputation suffers.

More than most other product categories, coffee has been undermined by the cost-based approach vending operators take.

Diedrich Coffee introduced a Gloria Jeans branded vending machine in 2003, but got few takers.

Hopefully, vending operators have learned some things about the importance of branded coffee.

The advances in single-cup brewing technology have already allowed national coffee brands to help revolutionize office coffee service.

Branding deserves attention given the fact that other retail competitors, such as c–stores, supermarkets and specialty stores, are aggressively marketing branded coffee.

There is no good reason that hot beverage vending can’t revitalize.

Are you an adventurous, proactive and ambitious refreshment service operator?

Enough to offer your customers Kopi Luwak?

Say what?

If you know what I’m talking about, “proactive” and “ambitious” don’t begin to describe you. “Nutty” might be the right word.

Kopi Luwak, according to my sources, is the most expensive coffee bean in the world, reportedly going for $600 a pound.

What makes this coffee so expensive? The bean is eaten, partially digested, and excreted by a rodent-like animal that looks like a monkey and is native to Indonesia.

Some customers might think you’re getting a bit carried away with your passion for coffee. But is that a bad thing?

Coffee is the healthiest segment in refreshment services today. If you aren’t having fun with it, you’re missing the boat.

There are different ways to have fun with coffee, and I’m not suggesting we all start talking about animal excretions with customers.

The Kopi Luwak is one of many topics that coffee aficionados are discovering as they look for new ways to keep the coffee buzz hot.

For a more level-headed discussion, check in with Howard Schultz, CEO of Starbucks. The company continues to test new ideas. Last Friday, ABC-TV featured an interview with Schultz, who speaks honestly about the challenges he faces in keeping the company strong. If you missed the interview, go to http://abcnews.go.com/Nightline/starbucks-ceo-howard-schultz-gun-controversy/story?id=10270193

Think you know a lot about coffee? Try the online CNN 10-question coffee quiz at http://www.cnn.com/2010/LIVING/04/07/specialty.quality.coffee/index.html?section=cnn_latest

Challenge your customers to take the quiz.

As for offering your customers Kopi Luwak, make sure you do your homework.

According to one report, the Australian government requires coffee importers to apply for a special permit for anything that has been partially digested through the alimentary tract of an animal.

Who killed Juan Valdez? Las Vegas police have a suspect, according to the news media.
Whoops! That’s the wrong Juan Valdez.

The Juan Valdez that VendingMarketWatch is interested in was never party to a street drug deal like the Juan killed Sunday in Las Vegas. We’re concerned about the guy with the mule whose image stands for 100 percent Colombian coffee, the one-time gold coffee standard.

Where are you, Senor Valdez? You and your mule got lost in the mountains while Starbucks, Peet’s, Caribou, Green Mountain, Seattle’s Best Coffee, McDonald’s, Dunkin’ Donuts, Folgers, Millstone, Maxwell House, and others changed America’s relationship with coffee. One hundred percent Colombian coffee is no longer the mark of excellence it was!

Dow Jones News recently reported that the money-losing Juan Valdez chain of Colombian coffee shops closed its Times Square branch in New York City on Feb. 28. To understand how out of touch the iconic Juan Valdez has become with the consumer, a spokesman for Colombia’s National Federation of Coffee Growers, which owns the Juan Valdez brand, said the closure was due to changing consumption patterns because of the ailing economy, and consumers buying more coffee from supermarkets to brew at home and fewer coffee drinks prepared in shops. Talk about being lost in the mountains!

Most of the big coffee chains have reported strong growth despite the sluggish economy. That’s because they, along with some of the leading convenience foodservice chains and coffee service operators, have delivered the value consumers are looking for. Coffee retailers are winning despite the recession because they are committed to quality and constantly reminding the consumer they are giving them what they want.

Juan Valdez offers a lesson in failed marketing and advertising. Brands mean everything in refreshment services. To sustain their strength, operators and manufacturers have to continue to support their brands with marketing and advertising. The responsibility rests with both parties; manufacturers must provide the creative messaging, and operators have to use the communication programs that marketing initiatives provide.

Otherwise, grab your mule, pack a lunch and give our best to Juan.

The recession has driven the nation’s fast food chains to new strategies to win consumers. Their actions are instructive to refreshment service operators who face the same cost pressures in this recession.
One immediate lesson is that the big players have recognized the importance of good quality coffee.
Yesterday, Burger King announced it will add Starbucks Corp.’s Seattle’s Best Coffee to all its U.S. restaurants in a phased roll-out that begins this summer. The nation’s number two fast feeder is responding, belatedly, to McDonald’s McCafe offering, launched almost a year ago.
Chick-fil-A, Hardee’s and Subway have also switched to better coffees in recent months. Hardee’s and Chick-fil-A developed their own premium coffee blends, while Subway, like Burger King, is transitioning to Seattle’s Best Coffee.
Meanwhile, the fast food giants have struggled with one of their core offerings, their double cheeseburgers.
The price of a McDonald’s Double Cheeseburger recently went above $1 in many markets after the company replaced the item on its Dollar Menu with a double burger with just one slice of cheese.
Burger King also decided to raise the price of its $1 double cheeseburger to $1.19 starting in April. The chain’s franchisee association filed a lawsuit alleging that the company can’t require restaurant operators to sell the sandwich for $1 and that they are losing money at that price.
The big fast feeders have struggled to convince consumers to pay premium dollar for one of their core sandwiches. But they can win higher prices for premium coffee.
Refreshment service operators should know by now that high quality coffee is one core product for which they can charge a premium price.
McDonald’s has consistently delivered strong financial results during the recession. It has done so by providing and marketing value, consistently and aggressively.