Coffee Trends: Spring 2016
Missing (or making) the mark
By Brian Martell
The North American office coffee service (OCS) industry has been rocked by a standard that has had a profound effect on the way we make coffee. Cup by cup in a cartridge has shifted the paradigm of coffee brewing where even the smallest of offices now have choice in what consumers drink.
This convenience has far outweighed the cost increases borne by the office where the harried admin or HR manager at least has coffee peace. OCS operators fulfilling a desire for these systems were slow to start and cautious about how the cost would be perceived, but once it was established that consumers wanted this product, and wanted it now, there was no turning back for the operators.
As with all systems that become popular, there are unintended side effects not considered as part of the “master plan.” With the advent of K-Cups, et al., operators also embraced a re-branding of how their companies were perceived by the coffee-drinking business community. What was this progression and how did it happen? Well, let’s step back about 15 years or so to the beginning of the millennium, just as cartridge systems started to hit their stride.
A typical Canadian OCS operator would be promoting thermal brew servers, cup by cup countertop brewers and might have a smattering of glass bowls left on the street (with retirement plans for these right around the corner). These machines were the OCS’s marketing points to their customers, often decorated with the provider’s logos through wraps on the thermoses and facings on the brewers. They were a constant reminder to the office as to who was providing the service and, if the service was excellent, gave the operator a chance to win new business when office staff moved from one company to another. If the OCS operator was of a certain size, it was also common to have their products branded with their name and logo, yet again reinforcing their image, name and brand. In the grand scheme of an integrated marketing strategy, the promotion of product, service and value excellence are tied in together with the very human trait of remembering the experience through the singular marketing mnemonic of that OCS’s brand – the logo. Mass-market companies like P&G or Apple get this in spades. They know their brand has value if the mere sight of it elicits a positive feeling amongst their target market consumers. That is why they retain a stable of lawyers ready to pounce on any infringement, obfuscation or vandalism of their trademarks. And like the major corporations playing in the billionaire sandbox, the independent OCS providers also have their markets to influence using the same psychological methods that have worked throughout the millennia.
As we moved deeper into the 21st century, cartridge systems became more popular with offices. By 2008, most Canadian offices had been exposed to the system, if not outright embraced it. OCS providers were astounded that their clients were willing to pay twice and thrice what they used to pay per cup for coffee in the office, based solely on a guaranteed fresh cup every time and the convenience of choosing from over a dozen different blends. Profit for the providers dropped on a percentage of sales, but in the way it matters most, increased in the amount earned per cup sold. Those who lived through these times might consider this the saving of the industry, hoisting OCS up through the novelty and profitability of the new system.
The look in the offices started to change too. Some larger and expensive cup-by-cup machines that may have been branded with the OCS’s logo were replaced with machines branded with the new system. Thermal servers branded with the provider’s wraps started to disappear. The cartridges were branded not with the OCS’s name, but with the system’s own brands. Subtly, if not too suddenly, the touchstone logo that tied the OCS with the office was being crowded out by other, non-proprietary brands. Invoicing, uniforms and remaining traditional coffee systems still bore the name of the OCS, but the branding in the office went from fiercely independent to broad line brands, some of which started to become ubiquitous on retail shelves.
Savvy operators took note of this change and how the end-user was now identifying more with the mass-market brand than their own name. The weakening of this bond with the OCS provider was one of the unintended prices paid in moving to this system. For those less inclined to examine this effect, it had the doubling cost of weakening their overall ability to market their private label brand though atrophy.
Recognizing this effect has created its own market, with OCS providers re-embracing the power of their own brands. As with the life cycle of any dominant product, the ebb creates a vacuum, allowing for new or reinvented systems to gain popularity. In recent years, the resurgence of bean-to-cup machines, pods and other systems now make it possible for OCS operators to re-establish their brands either through equipment decoration or through private label branding of their products. It strengthens the discipline to promote their own brand, making their efforts more impactful, and gives focus to the organization internally – all benefits to the OCS provider, and also to that line item on the balance sheet known as goodwill.
Brian Martell works at Heritage Coffee as vice-president of sales and has 21 years of industry experience. Brian has also been the recipient of three prestigious awards: the Don Storey, Stuart Daw and Albert DeNovelus Customer Service awards. Questions, comments, feedback, start a dialogue? Email him at firstname.lastname@example.org.