In today's business environment, a successful office coffee service provider needs more than a love of coffee. "Business people have to be informed," commented Bill Levine, the president of American Coffee Services, based in Cleveland, OH. "You can't just show up. Otherwise, it's a recipe for disaster." This is a mantra he uses in his own business, an OCS operation in Cleveland, OH. It has helped him grow for the past 60 years, and also ride the internet wave, successfully engaging internet marketing consultants to take advantage of the best the web has to offer OCS operations.
Levine didn't always have a coffee service business. He started out running Atlas Vending, which serviced vending machines in Ohio, as well as game rooms in various other states. That was when a friend with a small coffee distributing company asked him for a favor.
"He was going bankrupt and begged me to take the business and just put it in my warehouse," said Levine. Because it was a friend and the business had a small group of dedicated customers, Levine ultimately said yes. Fast forward a few years and Levine got a surprise phone call from his accountant.
"He said, you know that small coffee distributing business you run, but don't put much attention into? It's making more money for you than the rest of your segments," recalled Levine. That was a turning point. Levine bought a much larger coffee distributing company and sold his vending and gaming businesses. That was nearly 30 years ago.
Through the years, as president of Amercian Coffee Services, Levine developed a strategy of eliminating as much unpredictability as he could. One way he does it is by purchasing green coffee. "That's one of the ways we remain competitive," said Levine. "There's too many other extraneous costs that we don't have control of – bank interest rates, increases in packaging costs, etc." In his market, consumers are still price sensitive. He can be competitive on price, and still have control of his profit margins, by purchasing and then warehousing green coffee.
While Levine buys green coffee to manage volatility, green coffee prices can themselves be volatile. "Many things can happen that affect the price," said Levine. "You need to know where there's rust on plants. Weather patterns are important – an El Nino is a big deal." He adds that even more can affect the price, such as money market and hedge fund traders. These groups affect the commodities market with speculation, shorting it, longing it, nano trading and more.
Levine ensures he is paying attention to news and events that will affect his business. "The internet gives you the opportunity to be close to the ground," he said. "It informs. Use the internet to your advantage." He recommends trader forums for those looking to educate themselves on buying a commodity, green coffee.
Private label and sustainability
Because Levine purchased green coffee, he can have it roasted and packaged into a number of private label coffees. The OCS division of American Coffee Services alone has 10 different private label coffee varieties with different blends and weights. "We are big believers in private label," Levine said. "We'll even be coming out with our own pod soon."
Going to a prefiltered pod gives Levine the ability to offer his private label coffee for single-cup brewers, an area he sees increasing. "Consumers really like the convenience of single cup," he said. "Keurig created a whole new idea of coffee consumption, much like Starbucks did with coffee awareness. We have to give those brands a lot of credit."
Using a pod not only allows him to offer his own coffee, but it is also an ecologically sound option for which customers are asking. "Today's pods can have a corn-based package around the pod, so it's all sustainable," explained Levine. "More and more, 'green' is something people look at. If you can get it in a cost comparable to others, they will opt for that choice," he added.
Internet marketing is paramount
Another business strategy Levine employees is diversification. His operation has three segments: OCS, an extensive in-room coffee segment for hospitality and strong coffee retail business. That last segment showed him how important the internet was and how much he should really invest in it. "A lot of internet marketing is essential in the retail space," said Levine. "To succeed it takes money for qualified consultants who optimize your presence and start a pay per click program." Levine said it really doesn't matter if the operation is just selling to a local area or is state-wide, internet management is a necessity to survive. He has been enlisting experts in the digital marketing realm for more than 15 years. He makes time to go through web analytics with them and understand what's important. "You think you're getting a lot of traffic, but sometimes it's not the right kind that will lead to a sale," he said. This is the information a true expert can help uncover and optimize a program to create. "You can't ignore the internet intellect," added Levine. "You need high level people with knowledge and background. That is costly, but still not as capital intensive as buying equipment such as games for game rooms."
As the founder and president of American Coffee Services for more than 30 years, Levine has watched the industry change. Now more than ever he says it's important to balance offering affordable coffee options with service and invest in professional marketing knowledge that includes digital and social consultants. It's a winning strategy he plans to continue using in the future.