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Reflections In A Cup: Titillating Tidbits on Brew Cups and Pods

Titillating Tidbits on Brew Cups and Pods


April 29, 2008
By Stuart Daw

Topics

The last of the remaining U.S. regional trade shows for OCS and
vending, which has traditionally attracted many Canadian operators in
the past, is the recently concluded NBPA convention in Atlantic City.

The last of the remaining U.S. regional trade shows for OCS and vending, which has traditionally attracted many Canadian operators in the past, is the recently concluded NBPA convention in Atlantic City.

The event gave an indication of the problems besetting most trade shows today. Contributing to these difficulties are the high costs of transportation and accommodation, exacerbated in the case of the coffee business by attrition in the number of operators lost through acquisition.

Another influence could be, as one NBPA attendee suggested, that operators today may think that they can glean enough information about the industry by other means, especially the Internet.

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Still there is no substitute for the hands-on type of communication offered by trade shows, and this year’s NBPA convention was no exception. One would hope that sufficient promotion would result in higher attendance of exhibitors and operators at next year’s show. Both groups have much to gain, and should do what they can to help. But in planning such promotion, a few questions need answering.

In a kind of chicken-and-egg proposition, suppliers will come if they sense that a sufficient number of operators will be in attendance to make it worthwhile, and operators will come if the supply side of the industry is well represented. On which group should the committee apply the most attention? Beyond that, the theme of the show and the educational programs offered are important, such as this year’s focus on the situation regarding single cup, and especially with respect to pods.

Philosophically, anyone who attends these shows is not doing it for altruistic reasons like wanting to support the idea of a trade show as such. They do so for properly selfish reasons, asking the classic question, “what’s in it for me?”

In the seminars, and especially in the round table group discussions, one learns not so much what people are intending to do, but the more important “what are they doing now” in pursuit of their self interest.
In that vein, the round tables produced much useful information from a rather eclectic group of people, a mixture of suppliers and operators. About half the participants had yet to venture into pods.

We heard from the “I like Keurig” types to the “I don’t like Keurig” types, from the pod lovers to the pod skeptics.

We heard one operator say that an eight cup-per-day consumer of pods is a viable customer. Here I might add that eight cups represent perhaps 72 grams of coffee per day, or 1512 grams on a 21 working day month. That computes to about 3.3 pounds of coffee, not that coffee poundage as such is an important criterion in a single cup installation.

If it comes to an even horse race, don’t bet on the pod

But in fairness, this raises a very important point that I have yet to hear anyone acknowledge. We hear of the positive comments on quality regarding both cup brewers and pods.

This obviously is in comparison to what a given customer was drinking in his or her batch brew service.

But we have to remember the context; that gram weights in single cup, take nine grams for example, are the equivalent of around 3.2 ounces of coffee in a half gallon brewer, about twice as much as many coffee services were giving their customers. And assuming the same location using eight pods used to make two pots of coffee every day, 6.5 ounces daily over a 21-day month would mean 136.5 ounces, or 8.53 pounds.

So a proper “cup test” on quality would necessitate brewing side-by-side one pod containing nine grams, and one bowl of coffee made at golden cup strength of 3.2 ounces.

The 3.2-ounce batch brew would likely, all other things being equal, win hands down if you drank it now. But if it sits on a burner for more than 20 minutes, it will have lost its glory. So coffee that strong can be beautiful or terrible, depending on when it’s consumed.

As Shakespeare might say, “ah, strong coffee; ’tis the knell that summons thee to heaven, or to hell.”
And that is what has mitigated toward the reputation coffee service has gained over the years, when cutting weight seemed the best way to also cut complaints while enhancing profit margins. Air pots seemed to present an answer, but they are fraught with problems too.

As was suspected at last year’s meeting, the key to which application would be more successful, brew cups or pods, was again the difference in price between them: i.e. the narrower the difference, the higher the relative penetration of pods. As to what happens to sales dollars when single cup replaces batch brewers, as much as a quadrupling of revenue was cited, albeit at narrower gross profit margins. The wide array of flavoured coffee choices in single cup is one big reason for this.

This brought to mind a potential problem. If the office staff likes the single cup machine, but the cost for the service is four times as high, how does the boss feel? Could it be possible that the staff loves it, but the boss hates it because of the cost? Well, apparently it’s not been a big problem, and the bosses won’t feel they are being blackmailed if they are the benevolent type or, more importantly, they love it too.

The general consensus on the whole issue of pods seemed to be a continued uncertainty about their future, not that they will disappear, but just how successful they will be. One thing that seems apparent is that because of the lack of standardization of pod sizes and other specs, as well as the uncertainty about the best brewers to place on location, and further, because of the very large investments by many roasters in the machines necessary to produce pods, there is now a huge unused capacity at the production end. Will this cause stress for manufacturers in their pricing to operators?

On another aspect of the issue, if the retail market represents the largest share of pod sales, how can the operator get a share of it? One suggestion at the convention was that domestic brewers could be sold to office workers along with pods for home consumption. Repeat orders can be placed for delivery to the office or though the Internet for direct shipment (here read: “new transactional overhead.”)

And so, as is usual every few years when some new item or idea arrives on the scene, confusion and uncertainty abound. Time will tell, as it did with honour snacks, air pots, and the bottled or in-line water craze, what the final lineup will be in coffee brewing. o

For any questions on the above, email Stuart Daw at stuartdaw@aol.com