From Coffee To Cola: Single Serve In The OCS Industry

Dec. 16, 2015

Single-cup coffee has revolutionized the OCS industry. Now with the emergence of single serve cold beverage systems, many operators are waiting to see if the demand for these cold beverage units will hit the OCS industry with the same fervor as the hot beverage units.

A high cost option

Single-cup hot brewers have allowed consumers to enjoy the personalization and customization of single-cup options from gourmet coffees and teas to hot chocolate, mochas, lattes and even soups. For single-cup cold beverage machines, that customization could come in the form of cola, energy drinks, sparkling water, juices, iced teas and more.

“The consumer loves options and I do think this type of machine would be well-received by employees,” said Charles Brunson, CEO of NC-based Capitol Coffee Systems. “The removal of the water from all our canned and bottled products would allow us to carry a lot more on our trucks and deliver to more locations in the same amount of time.”

The issue, he says, is cost per serving. “Single serve coffee changed the world from $.15 and $.20 cent per cup to $.50 cents per cup of coffee,” he said. “The issue would be getting this new single serve cold beverage item in the marketplace and accepted [by the employer] at a profitable price point.”

Before operators jump on board, there has to be consumer interest and the right price. “We would love to offer [single serve cold beverage options],” said Sandy Thornton, co-owner of GA-based VendEdge. “But only if the demand is there,” she added. “We are taking a ‘wait and see’ approach,” she explained. Thornton believes the price may hold some consumers back from embracing the cold beverage machine in the office right away. “We think that having multiple flavors readily available is a positive, however, early indications are that the price points may be cost prohibitive. We are hearing $1.25 for a 12-ounce drink,” said Thornton.

Some systems also require CO2 tanks, which raise more issues of transportation, storage and tank replacement. Despite these concerns, Pete Tullio is keeping an open mind about the machines. “We would definitely consider adding a single serve cold beverage machine to our OCS offerings,” said the CFO of CA-based Gourmet Coffee Service. “A track record would be helpful, however, to gauge the required maintenance and service responsibilities. I can certainly see this as a viable offering in the OCS environment and I do believe it would be readily accepted by the consumer in the office,” he said. “In the right setting and with a sufficient office population, we would be interested in offering the product,” Tullio said.

Not an option for some

For some operators, single serve cold beverage machines do not have much allure. Jim Carbone, COO of IL-based Workwell and Truebrew Coffee & Tea Outfitters, revealed that his company has no interest in the machines, as more consumers are turning away from soda. “With the water system we offer, we try selling natural flavors for handcrafted sodas, like root beer, cream soda, etc. and get very little requests. We will get whatever a customer wants but I do not expect to offer [single cup cold beverage machines] in our portfolio,” he said.

WI-based Joel Sather, CEO of Capital Coffee, agrees. “The cost is too high and the technology is unreliable right now,” he said.

Jeff Lieder, president of CA-based Tri-R Coffee and Vending, prefers to see where the demand is headed. “Drinks are so expensive that these ‘make your own soda on demand’ machines are surfacing,” he said. “The idea is an operator I haven’t seen the value yet. I’m not sure how this is going to play out but we’re open to any possibilities that come available.”

There is certainly potential for the single-cup cold beverage system in the OCS business, but only if consumers drive demand to a point where employers are willing to pay the higher price per cup. For now, it is a waiting game.