Office
Coffee Should Be a Job Perk
© By Suzanne J. Brown 1997
Imagine this: You're conducting an interview with a prospective employee. You ask if he
would like a cup of coffee and his reply is, "What kind is it?" Or, you're
explaining employee benefits and he suddenly asks the question, "What brand of coffee
do you provide?"
Can't imagine such a conversation? Perhaps not exactly like this, but employees are very
aware of the degree of quality found in office coffee as well as any location where food
is sold. Now, consumers expect quality coffee in the work place.
Sipping great tasting coffee in the office is a job perk, part of the unwritten benefits
package. Weakly brewed, burned, poor quality coffee has been (hopefully) merged and purged
with corporate buyouts and acquisitions. In today's world, it's a turn-off to be subjected
to a watery, burned brew. Having great tasting coffee in the work setting communicates a
positive end quality oriented corporate image.
Like every segment of the coffee industry, the demand for better quality coffee has
spilled into offices - both small and large. Having grown accustomed to quality coffee,
workers will leave for the coffee shop within the office building, or walk next door if
they do not have it in their break room. Consequently, businesses lose valuable work time
when employees are spending too much time away from their desks. While office coffee and
other foodservice outlets offer a variety of hot brews, it seems this segment still offers
opportunity for improvement and expansion. Roasters have spent much of their time focusing
on the retail segment; now they are redirecting their efforts to other out-of-home areas.
According to the NCA's most recent "Out-of-Home Coffee Consumption Report," in
the afternoon, people are more likely to get coffee from within the workplace than from
outside.
Concerning sales volume, a recent issue of Vending Times
reports that the average OCS operation in 1996 enjoyed a sales volume of $1.4 million, a
37% increase over the average $135,000 sold a year earlier. Like other segments of the
coffee industry the article reported a number of mergers and acquisitions of smaller to
medium-sized companies.
To become more competitive, OCS operators have improved their selection of coffees,
package sizes, equipment, and methods of distribution. We talked to four companies who
roast and sell to OCS operators, or provide it directly through their sales force and
other methods of distribution. All four have been very successful in their niche, but
offer a different approach.
Publicly held Green Mountain Coffee Roasters, headquartered
in Waterbury, Vermont, has built their reputation as a provider of top notch estate and
environmentally conscious coffees. For 16 years, they have continued to stay right on
track with industry trends - first with a successful mail order catalog, then with retail
stores located throughout the northeast.
Always on the cutting edge, Green Mountain just announced a new alliance, which will
strengthen and enhance their coffee service. Poland Spring, one of the most recognized
bottled waters in the industry, has just entered into a partnership with Green Mountain.
This new alliance allows Poland Spring to distribute coffee to their customers and have
their water delivered to Green Mountain's customers. As part of the role-out, dozens of
Poland Spring field representatives are being trained at Green Mountain's headquarters.
Steve Sabol, Green Mountain, considers the office or foodservice customer of particular
importance to his business.
"When people are exposed to our coffee in foodservice environments," Sabol says,
"they are generally on an extended break enjoying one of three meals: breakfast,
lunch or dinner." Coffee, in this experience, he notes, is either a memorable start
or finish to a meal. Coffee service in the actual work area is generally consumed at a
break room or back at the employees' desk. The experience here is important because it is
the exclusive purpose of the break. The quality experience of the break serves to enhance
the entire work experience. "Some of our customers actually consider our coffee as an
employee perk, that is to say, Green Mountain Coffee in the work place is perceived as an
added employee benefit," he says.
Another innovative approach to penetrating the foodservice segments is exemplified by
Royal Cup Coffee, of Birmingham, Alabama, as they utilize their route trucks as well as
outside distributors. Selling a recognized brand name to OCS and other foodservice
channels is the philosophy of European Coffee Classics, Inc., a division of Melitta USA.
The fourth company, Heritage Coffee Cos., with their southern headquarters in St.
Petersburg, Florida, roasts and sells coffee to the entire "away-from-home"
market, which includes all non-retail applications.
"Southern," as president Stuart Daw explains, "refers to the U.S. The
'Northern' operation is headquartered in Ontario and services markets throughout Canada.
Office coffee is just one segment of the away-from-home markets served by Heritage. In
fact, Daw says the term "OCS" is a misnomer and should simply be referred to as
"Coffee Service." Coffee Service supplies the entire foodservice segment.
However, Daw, a veteran of the coffee industry since the early 1960s, is quick to point
out there should be no overlap between foodservice and coffee service. "The roaster
can only survive as a one product supplier when dealing with a large foodservice
concern," he explains. "Otherwise, he is hemmed in by two threats, one being the
wholesale grocer which can operate on far lower margins, and the coffee service operator
whose margins are high enough to assimilate even the lowest volume outlet, especially
given modem gas barrier, moisture barrier packaging material.
"Coffee service packaging has become much more varied than the stereotype depicted by
some specialty coffee people." The reputation for questionable coffee quality was
earned early on through trying to serve an acceptable cup of office coffee in the market
segment with the lowest volume business offices. Strong coffee brewed into glass decanters
would break down into a dreadful looking mess after 30 minutes. "The way to keep a
pot of coffee looking like coffee for a while was to weaken it by cutting weight. In such
a case, that meant the coffee wasn't fit to drink from the start," Daw explains. The
advent of thermal servers (airpots) over the past few years, noted Daw, has enabled us to
be as close to solving packaging and brewing, short of single-cup brewers, which by
themselves are a growing element.
As a roaster, Heritage's operating philosophy is to not compete with their customers who
act as independent coffee service people. Private labeling is a large part of Heritage's
business. Realizing the potential in this segment, Heritage has invested in the necessary
equipment to service any size client - from the small independent operators to large,
national distributors. Being able to service accounts with an eclectic mix of weights is
another specialty of Heritage. "We are now packing weight from 1 V4 oz. to 3 1/5 oz.
for coffee service," reports Daw.
Daw views his business as a "kind of vertical integration, wherein they conduct the
procurement and production function while their customers do the sales, marketing, and
distribution." While Colombian is still the most popular among their customers,
quality has been improving as coffee service people are responding to the impetus provided
by the specialty business - especially to the challenge presented by chain specialty
people trying to sell coffee service.
Daw is still leery of the accountant who surveys an expense print out and notes the
increasing prices for coffee. Our salvation lies in the wisdom of the business
administrator who knows what coffee does for production. "My hope is that some day we
will be able to quantify objectively the actual increase in worker efficiency in
proportion to the coffee consumer. Then, even those strange people who say they don't like
coffee will be asked by management to ingest it! Wouldn't that be great as a condition of
employment, where a worker is required to drink at least four cups of coffee daily at a
98.75% coffee solids content?"
Marketing the Melitta brand name gives European Coffee Classics, ., a division of Melitta,
a sales advantage. Selling their concept of "coffee perfection," Melitta is now
distributing their line of quality coffees, filter paper, and coffee makers through
distributors to both foodservice and offices around the country. Due to Melitta's
international brand recognition, Spencer Turer, manager of coffee development, reports
that Sysco Corp., a leading national wholesale food distributor, markets Melitta products
as their specially coffee. Having entered the U.S. market in the 1960s, Melitta was one of
the first gourmet coffees on the shelves of supermarkets. Naturally, Melitta is a product
fit for the wholesale grocer distributor market. For office coffee, Melitta utilizes
regional distributors who specialize in that segment throughout the country. To emphasize
the Melitta brand, Turer reports that European Coffee Classics offers a variety of support
materials to display their branded coffee service. These materials, he notes, allow
customers to demonstrate their commitment to providing fine food and beverage service.
In an effort to be a leader in the away-from-home market, Royal Cup Coffee roasts and
distributes to this segment with their own territory managers in company owned trucks, as
well as through a national distribution network. While Royal Cup's primary service area is
from Baltimore to west Texas, down to Key West, the company is also a member of Dinemor
Foods. The advantage of this affiliation, says Ben Pitts, vice president and division
manager, OCS, is to offer customers a national program that enables distribution outside
their immediate service areas. Large hotel groups and national chain restaurants would be
examples of customers that fall into the Dine-more category. Along with coffee, Royal Cup
offers a variety of products including creamers, tea, stir sticks, napkins, cups, and
fountain service. With a beverage for everyone, one might assume that such a diverse
product line gives Royal Cup the competitive edge. Additionally, Royal Cup offers
equipment that must be installed and serviced on a periodic basis. Their territory
managers, who are route sales personnel, are trained in specialty coffees as well as
equipment maintenance. "Our customers really have one-stop shopping when it comes to
beverage service," says Pitts. With the increasing demand for bottled water, Royal
Cup also delivers Evian water and recently formed a partnership with Crystal Springs water
company.
When asked whether their companies distributed espresso pods, everyone interviewed
responded affirmatively. While espresso is not a primary item in the office, it is
definitely part of the foodservice business. All companies offer a variety of regular
coffees in straights, blends, flavors, and decaffeinated. Consumer demand for variety and
package size has created a need for producing several weights and case sizes that include
a variety of coffees. Large wholesale foodservice distributors such as Sysco and Ara have
strict guidelines, and specific price points, that are best met by larger companies such
as European Coffee Classics. The Heritage Coffee Cos., with their years of expertise, have
perfected a niche for private label coffees, selling to any size company.
A regional company like Royal Cup has the ability to offer a diverse line of products
through their own route sales or with the Dine-mor network. With bottled water being the
trendy leader in the beverage industry, companies like Green Mountain and Royal Cup have
seized an opportunity to partner in an effort to increase market share while providing
quality products and service.
There seems to be opportunities for selling coffee locally in small, independent delis,
businesses, and shopping centers. Even small roasters and retail coffee chains are
participating in marketing away-from-home coffee. Often, a national company with a related
food product -such as yogurt, bagels, or donuts -has corporate guidelines for coffee and
allows branch offices to select the vendor. If the local roaster has the ability to comply
with these specifications, there is an opportunity for a ready sale. And freshly roasted
coffee to a hot out-of-the-oven bagel is an attractive sales incentive. It's an
opportunity to produce a private label coffee and bring the name of the local roaster to
the attention of the corporate office, perhaps leading to additional business.
As for retail stores, even the smallest business can order airpots of their favorite
flavor on a daily basis. Often, in shopping malls, retail coffee shops will supply airpots
of coffee to sandwich shops or businesses in the area.
Finally, there is the question of marketing espresso in the out-of home arena. All
companies interviewed are selling espresso in pots to their foodservice accounts. Some
offer espresso equipment, too. All companies interviewed have divisions that specialize in
meeting the needs of their away-from-home customers. Their production of products directed
to this segment of the industry indicates that there is opportunity for creative growth
and healthy competition.
Suzanne J. Brown is president/owner of SJB
Associates, a marketing consulting business based in Atlanta, Georgia. She specializes in
projects for the coffee/tea industry, and can be reached at Tel: (770)988-8811; Fax:
(770)988-0087, email:
brownsuz@woldnet.att.net .
