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From the Editor: Grinding Economics

Grinding economics


April 7, 2008
By Cam Wood

Tired of hearing that dreaded “R” word yet?

Tired of hearing that dreaded “R” word yet?

No, we’re not talking about that fanatical marketing gimmick that results in an endless supply of mangled brown cups along the curbsides and shopping mall parking lots.

As an industry, we’ve seen this recessionary reality before – whether or not the politicians living below our thriving nation want to admit it exists right now. They can keep their heads firmly entrenched in their Texas soil, but the truth is in the numbers and on the stock markets.

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America is in a recession – and the coffee industry is poised to be one of the few strapping on the rocket blasters. Yes, while homeland manufacturing suffers, the consumer retail experience remains strong. They are still spending – and coffee is one of their indulgences.

To the point where, as we heard last fall, food giant McDonald’s is installing some 14,000 coffee bars across the U.S.

Our friends in the OCS sector south of the border see wonderful growth in this, despite a new competitor in the coffee ring. Why? Because it will introduce a whole new demographic to the beverage category, as more and more consumers shy away from carbonated soft drinks.

Canada’s shadow-effect economics may not be as dramatically impacted by the same level of uncertainty – given our strong natural resources base – which means this remains good news for operators in our nation.

Coffee has been a leading beverage in Canada for a number of years. And in these uncertain times, OCS operators have a ripe opportunity to push their offerings one step higher.

As a result of poor foreign policy and a floundering U.S. economy, we’ve seen fuel costs push to record heights. We watched through teary eyes as the gas-pump numbers roll like a Vegas slot machine while we fill our route trucks. And we’ve felt the sting on the invoice from our suppliers as they look to maintain their own margins.

But guess what – these factors are no different from the average consumer. Fuel costs are going to hurt them, just as they have hurt us. And that makes leaving the office even more costly.

Reading between the lines yet?

It will also make office coffee more attractive, based solely on economics.

The message we need to take to our OCS locations is simple: it will cost you even more to have workers out of the office for coffee breaks. From manufacturing production staff through to white-collar workers, leaving the work environment just got more costly – and risky from an economic-paranoia perspective.

Roll up your sleeves, or roll up that stinkin’ rim … there’s two fiscal choices at stake. Which one does your customer want to take?
   


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