Canadian Vending

Features Coffee Service
Reflections In A Cup: The Changing Marketplace

The Changing Marketplace


March 31, 2008
By Stuart Daw

Topics

“Everything flows. Nothing abides” (Heraclitus, Sixth Century BC)
Now who am I to argue with old Heraclitus? If he was referring to the
future of the coffee service business, he was certainly right. In the
evolution of coffee service over the period of its existence, from
roughly the mid-1960s to today, one thing we have to recognize is the
changed culture in which it now exists, how people perceive and pursue
values in their coffee break.

“Everything flows. Nothing abides” (Heraclitus, Sixth Century BC)

Now who am I to argue with old Heraclitus? If he was referring to the future of the coffee service business, he was certainly right. In the evolution of coffee service over the period of its existence, from roughly the mid-1960s to today, one thing we have to recognize is the changed culture in which it now exists, how people perceive and pursue values in their coffee break.

In those earlier days when offices had traditionally percolated their own brew at perhaps two cents per cup, most people in the coffee roasting business were aghast when they saw that offices were actually willing to pay five cents a cup before it was even brewed. Then we morphed through the arrival of the cup-by-cup automatic brewers to perhaps 10 cents per cup.

Advertisment

But who would have guessed that with the arrival of the new century, offices would pay maybe 10 times the original coffee service price of five cents.

Depending on a few variables such as office population, time allowed for coffee breaks, along with the degree of informality in how employees are allowed to “partake of their break,” single cup does not necessarily represent more convenience, and in fact is much, if not impossibly, slower in many situations. But although still a relatively small percentage of the overall industry, it is growing.
Viewed from the perspective of the operator, single cup can give a tremendous boost to the bottom line, indeed even rescuing some companies from serious financial trouble. However the capital requirements to actuate these improved numbers has mitigated toward the polarization of the industry into fewer and fewer operators.

The demise of the annual NBPA Atlantic City convention is but one reflection of these times in the away-from-home coffee business. Computerized information on the Internet, consolidation into a smaller number of companies, maturing of the market in terms of untapped potential locations, and aging of the original generation of entrepreneurs are among the reasons.

But these conditions are now the given, and coffee services still have to change; they still have to replace attrition; they still have to grow while facing an uncertain future.

As Peter Drucker once wisely said, “It is impossible to predict the future. It is only possible to predict the future results of things that have already happened.”

So what has happened already, and what does it portend for the future? One thing that has happened for certain is the new complexity of coffee product codes. It used to be that roasters would carry
perhaps eight types of coffee, allowing for blending to any possible taste. But now it could be 20 or even more in order to satisfy the needs of the modern consumer, especially the young.
 
Consider just one such green coffee entry: Colom­bian Fair Trade Organic Swiss Water Process De­caffeinated. Just change one word and we have another product code, as in Guatemala Fair Trade Organic Swiss Water Process Decaffeinated. And of course we could add: Bird Friendly, Shade Grown, picked by 15-year-old-virgins at 1,500 metres, etc.
 
Then the coffee could go to a specialty store in which a client might step up to the counter and order: one Colombian Fair Trade Organic Swiss Water Process Iced Decaffeinated Venti Soy Caramel Macchiato. Could this be the future in office coffee, single cup or otherwise?

And imagine the plight of the poor business administrator who is having trouble with his bottom line. He calls in the auditor to look for problems and to make suggestions. The auditor reviews the profit and loss statement and immediately sees a glaring change. The coffee break that used to cost $150 monthly now runs $2,200. And looking at the balance sheet, the auditor shouts, “The inventory used to be $200, now it’s $2,000. Have you gone insane?”

“No, I’m still sane,” says the harried manager, “but I had to do this to keep my employees from scooting out to the local Starbucks every morning for some screwball coffee concoction.”

So those are but one of the signs of the changing times. Another is the birth of what is sometimes called “The New Church of the Warming Globe.” Combine the hype of this development along with governments’ insatiable desire for: a) more revenue, and b) more control over our lives, and it becomes a case not of if, but of when some enlightened bureaucrat will identify coffee as having been wrongly categorized as a “food,” when ob-viously it is a “luxury.”

The possible result? A tax, the alleged beneficiaries of which will be the usual suspects.
And of course the green shade of the warming globe issue will hit at packaging material, anything that is not biodegradable. This may seem weird to the logical mind, but don’t count on rationality when government revenues are at stake. All in all, it looks like a challenging future, the kind of a future that of course the Canadian coffee service operator has proven adept at conquering.


Print this page

Related



Leave a Reply

Your email address will not be published. Required fields are marked *

*