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Opening Doors

Flavia Develops A New Canadian Distribution Strategy


June 13, 2008
By Karen Hall

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Flavia is opening the door for small, independent OCS operators with the advent of its new Canadian distribution strategy.

Flavia is opening the door for small, independent OCS operators with the advent of its new Canadian distribution strategy.
 
According to David Pitschner, Toronto-based national sales manager, the traditional approach for Flavia, and many others, has been to penetrate the market with large OCS companies, which distribute their products directly to customers.

“We use Imperial Coffee and Services Inc. and Aramark Office Coffee … and they have been a big part of our success,” he said.
 
“However, now we feel there are opportunities for operators in areas other than in Ontario to enjoy the same success they have. Canada is a very fragmented country as far as office coffee service and vending goes, and there are a lot of small independent players … who get left out. So we said, ‘How can we include these companies, because together they have quite a significant impact in the industry, and how can we help get consumers what they want?’”

To achieve this, Flavia has arranged distribution channels through Laniel Canada Inc. (from Quebec east) and Brokerhouse Distributors Inc. (from Manitoba west).

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“They will sell our products and our services to OCS companies,” said Pitschner. “We are keeping our same distribution strategy in Ontario and selling directly to Imperial and Aramark, but in other provinces smaller OCS companies and even larger food service companies will be able to access our products through Brokerhouse Distributors or Laniel Canada.”

Michael Trieu, distribution rep for Western Canada at Flavia in Vancouver, added that because there is a higher concentration of larger operators in metropolitan areas, like Toronto, it made it very efficient for Flavia to develop its move-to-market strategy via Imperial and Aramark.

“But when you move into certain markets, like Montreal and Vancouver, we find the market is not as concentrated,” he said.
 
“It’s actually a little bit more fragmented with more operators, and in terms of efficiency and the ability to deal with all of them, it becomes much more of a juggling act. So when it comes to choosing operators like Laniel and Brokerhouse, it allows us to have a central point of contact where we can develop business mutually and very efficiently.”

According to Jean-Marc Laniel, president of Laniel Canada in Montreal, the partnership with Flavia is a logical fit.

“We’re natural together and I think it’s the best synergetic association,” he said.
“Choice is the key for the future because that’s what customers like. And that’s what Flavia offers – a total solution for the workplace.”

Flavia offers a unique brew-by-pack technology, which the company invented in 1983, where each filter pack brews directly from pack to cup so there is no flavour transfer. They offer 27 drinks, including a number of different coffees, teas, wellbeing drinks, and indulgent drinks (like cappuccinos and mochaccinos).

And it’s these choices, Pitschner said, that can increase OCS providers’ sales and revenues significantly.
“Instead of just selling three or four different kinds of coffees, they can now offer 27 Flavia drinks at a workplace,” he said.
 
“If you have two ladies in the office who like Irish cream coffee, for example, and somebody else wants a Japanese green tea, they can all have exactly what they want. People want to create a state at work that allows them to either relax and unwind or gear up and get charged up for a big meeting, so you find people in the workplace today using these drinks to…try to achieve different moods. In the past, OCS providers were very limited in how they could provide solutions to those kinds of taste requirements.”

As well, Trieu said, because they have found that 25 per cent of the drinks produced out of Flavia’s machines are specialty drinks like cappuccinos, and many operators are still currently serving a traditional cup of coffee, this also helps to increase revenues.

“We feel with this system everybody wins,” Pitschner said. “The operator increases his revenue by selling these drinks for $1 rather than 50 cents, and the consumer now gets a specialty drink for a very good price.”
According to Trieu, OCS operators can also expect profitability to increase in part due to the reliability of Flavia’s machines (the SB100 for an office with less than 20 people and the S350 for an office of more than 20 people).
 
“The mean time to report failure, which is the reliability rating, is 108 weeks at this point,” he said. “So you are looking at two years plus before the machine needs any servicing. From a flavour standpoint and any operational costs that are involved, the operators’ overall expenses drop dramatically.”
In addition, Trieu said, customer retention is very important.

“We have found that the retention is over 90 per cent plus with Flavia,” he said. “It is basically something you implement, the end-user enjoys, and we continue to develop new products to keep it exciting. Losing an account because of having Flavia in there becomes a very miniscule …concern for any operator.”

So what are the benefits for Flavia when it comes to partnering with distributors? According to Laniel, where this new partnership with Laniel will benefit Flavia is in terms of securing customers.

“We know our customers and we are very close to them, so I think that will help a lot,” Laniel said. “They know us for the service we give, for the responsibility we take when we sell a piece of equipment, and for our flexibility. We have long-term relationships with our customers…so the penetration is quicker.”

Laniel Canada likes to offer different solutions to its customers Laniel said, so Flavia’s solution is beneficial today, it will continue to be so in the future, and therefore will help Laniel to stay ahead of the competition.
“I was at a seminar one day and the speaker said it’s important to get some ‘wow’ from your customers,” he said. “And by getting Flavia’s equipment into different locations, people do say ‘Wow, this (product) is great.’ So it’s perfect.”