2011

NAMA Coffee and Water Service – Looking Toward the Future

At the recent annual conference of the National Automatic Merchandisers Association Coffee and Water Service (Office Coffee Service – OCS) held in Las Vegas on October 18,19, and 20th, the group continued to track future scenarios for their evolving business model. Once considered an extension of the commercial coffee industry, OCS is rapidly moving toward specialty coffee and beverages.

Reacting to the changing demands of their customers, and their customers’ employees, OCS operators are exploring ways to translate the specialty coffee experience into the office.

Drinking trends are shifting as the workplace environment changes. Bottled and filtered water is experiencing a substantial uptick in consumption as the market moves toward healthy and functional beverages. Also rising is alternative caffeine delivery methods – Red Bull and others. As these trends continue, the fundamental elements of the OCS business model changes.

Consumers are more educated about coffee quality and specialty coffee. Especially in some venues, specialty brewed coffee is essential. At the conference, one operator explained that his customers no longer have low expectations but demand high quality coffees from very specific roasters. He no longer has a private label ‘frac-pack’ business. He delivers specialty coffees roasted by local roasters, along with other upscale products and equipment to a very discerning group of customers. He reports that he does not have to prospect. His company markets by word of mouth and referrals.

OCS operators are under increasing pressure from both the specialty coffee café culture and the single serve phenomenon. Additionally, new and powerful players are entering the marketplace such as Staples, as well as other office product retailers. As a response to the entry of the ‘self-service’ competitors, operators are emphasizing and expanding the key element that drives their businesses – great service. Many operators said that the thing that differentiated their company from the down-market alternatives presented by the Keurig and big-box coffee programs was the face time spent with the customer and the regular maintenance and servicing of brewing equipment and water filtration systems.

The take-away from the show is that the OCS operator can no longer think that their business model is ironclad. Innovation is the name of the game now in OCS. Decide what your true strengths are and build them up. Look at the resources you currently have and think how they could be put to other uses.

In one conversation, the suggestion was made that OCS operators are fundamentally coffee product distributors; possibly, they could look for other venues to do related deliveries. As we all know in the specialty café world, there are very few regional distributors that provide bi-weekly service to coffeehouses and cafes for their “everything but coffee” needs. This is a big problem for café owners. The drops are usually too small for the food distributors. OCS operators make small drops to individual locations everyday. You have delivery vans, why not put syrups, cups, paper products, pastries, milk, smoothie mixes, and other things necessary for the small café operator and then deliver to them, too. What a cool idea! Instead of blaming Specialty Cafes for causing your problems, why not embrace them and make them part of your business model.

The point here is that the OCS industry has great reach and penetration throughout all America. Operators should take a careful inventory of their skills, resources, and abilities and then think about different business models these abilities can work in. It is the old lemon and lemonade chestnut – but it works.

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