Single Cup - What Should We Do Now?

The single cup issue, so much the topic of conversation in coffee service and vending these days, was bound to dominate the recent NBPA show in Atlantic City. And so it did. Asked to deliver the keynote speech at the opening luncheon, I tried to avoid venturing opinions in favor of tossing out questions, the answers to which, coming from our peers, might serve as a guide to those operators tormented by the prospect of rapid change.

Viewing the past history of coffee service, buyer preferences have always hung in the balance between three main issues: quality, convenience, and price. Every innovation is an attempt to improve one, two, or all three. Where do the new cups and pods stand with respect to these things?

Most people at the show obviously knew the business very well, and many also have had experience with one or more types of single cup units. But on the principle that no one can be omniscient and know everything, asking enough of the right questions can often elicit some important new insights. Here is a rundown of those questions I put to the audience at the convention.

First, does an operator not yet in cups or pods have to delve in immediately to avoid being left behind, or would a period of observation and caution be wise? After all, one or two machines are likely to become dominant, and do we want to run the risk of warehouses full of obsolete equipment?

Are pods somewhat of a fad, and not likely to make the deep inroads that most are predicting today?

Should we wait until pod and holder sizes have finally been standardized?

In the quality/convenience/price issue, where do pods and cups stand relative to batch brew? They are much more expensive by the cup, and hardly much handier, but they do offer wider choices. Their main value likely has to rest in their consistency (As a personal aside, don’t underestimate consistency as a virtue to customers. As one cynical old roaster put it to me many years ago in rather vulgar terms, “It’s okay to sell ----, as long as you keep it consistent.” And observing national brand dominance in the retail business, the old guy might have been justified in saying, “I rest my case.”).

The batch brew cycle can better ensure a full extraction of the coffee than the pod or cup, where a much greater degree of grind precision is required. But the pod brew never sits around. It’s already in the drinking cup, so can’t become stale. Batch brew glass decanters were a very poor method of holding brewed coffee. The air-pots that supplanted them are far better, but on one condition: they must be kept clean. Many are not, giving us the taste of yesterday’s or last week’s coffee as an unwanted addition to today’s. And fresh coffee even in a clean air-pot has a breakdown curve, though of course much slower than in a glass decanter.

Many single cup advocates are pushing what they call “The Coffee House Effect” that pods and cups may engender in the business office. They are referring to the multiple choices offered more easily by single cup. But that effect also has much to do with aroma, the Starbuckian ambiance one gets on entering a coffee house. Aroma of coffee is what I call “coffee foreplay, leading to the main event, which is drinking it.” If that is what we want, batch brew imparts a far better aroma in the office, strictly as a function of the amount of floral stimulation hitting the olfactory nerves (That is assuming a high quality coffee; low grade coffee might have the opposite effect).

Has anyone done a competitive trial to determine customer preference of pods Vs cups Vs flexible pods, regardless of price?

Out of all pod installations, what percentage of batch brewers and even grinders will remain on location? Early indications are that once a decision is made in any office, it will be one or the other, and locations may not be shared after all. One reason may be that specific times for office coffee breaks with a rush of people to the coffee area are a thing of the past, so lineups waiting for single cup coffee are not a problem. The exception may be with offices holding large meetings and not wanting to go through the waiting time needed for individualized servings.

But where an office does consider pods and/or cups too slow for a fast employee coffee break, will that mean multiple machines? And speaking of machines, will leasing these units become obsolete?

Will automatic ejection of pods be imperative, and will the additional cost be justified?

Will packaging materials have to be biodegradable?

Will operators know how to set prices to ensure profitability? At one table before the NBPA luncheon, an experienced operator held that small accounts with large percentage markups are preferable to large accounts with low markups as a way to begin placing pod machines (See my article on Transactional Cost Analysis).

How service-free will the various types and makes of machines be, relative to each other?

What about the question of sanitation with respect to multiple handlers of pods and pod holders?

How far below cups will pods prices have to be to swing the office buyer their way?

Have any definitive tests been done to assess customer preference between the various applications; pods, cups, or soft plastic pods (Flavia), regardless of price?

Is there a coin op issue in single cup?

Will the advent of pods in serious numbers persuade cup suppliers to slash prices, making pod installations harder to locate and to hold?

In the old battle between private label and national brands, which will win out? Will it be the same result as we found with batch brew machines? And will operators make the same mistake as many did in batch brew, pricing the lower quality national brand above their own private label?

Pods will be very easy to demo. Will sales people with pockets full of standardized pods be roaming the streets ducking in and out of offices to brew on whatever machines are being used?

What about the cross fertilization of flavors brewing through the same holder?

Will over-all coffee quality suffer when every operator has access to various types of machines? When no one company can control the product, and as the market matures, will serious price cutting begin?

Will strength variation come from the usual elongation of extraction times, or by bypassing water into a standardized, strongly brewed cup?

What about “stealability?” Are pods and cups easy to take home? While this may seem to be a plus to the unethical operator, it’s bound to be a negative in the long run. Some years ago an operator in Oxnard, California, working out of a house trailer and on seeing a 20 ounce complementary tin of iced tea that I handed him, told me he would never handle a product that couldn’t be stolen. He said that one third of all coffee service coffee was spirited away in men’s suit pockets, lady’s purses, or by other means (He went bankrupt sometime later).

Will all operators have to go to pre-write, as vans will be hard put to stock the plethora of product codes involved in single cup? And by the same token, will customers be ticked off by the space required to store the multiplicity of boxes, and will staleness be a problem when the whim buyer orders something, only one pod or cup of which gets consumed?

Will unwrapped bulk pods in one over-wrap run too big a risk of staleness?

When a business manager asks his accountant to run down the expense categories on his income statement, looking for possible candidates for elimination, will the accountant’s eyes bulge out as they did in days of yore at the money flowing out for coffee? Or has the coffee break as an institution become so important that no manager would dare remove it? As one operator at the NBPA show said, “The coffee break is maybe only 10% of the health care expense, so why cut it?” Would anyone dare suggest that, given coffee’s positive health effects, maybe the whole health care plan could be dumped in favor of the coffee?

All kidding aside, single cup is firmly planted in the coffee service world. Only the choice of direction remains. As Sixth Century BC Greek philosopher Heraclitus said in two aphorisms: “Everything flows; nothing abides,” and, “Nothing is. Everything is becoming.” In other words, for old Heraclitus as for us in the coffee business, change is inevitable. May we face it with confidence.

The Heritage Coffee Company, Ltd. Coffee Roasters for Office Coffee, Vending, Foodservice and Specialty

Single Cup - What Should We Do Now?

View the entire archives of Stuart Daw articles going back to the 1980's Stuart Daw's Article Archives

The Heritage Coffee Company, Ltd.
Coffee Roasters for Office Coffee, Vending, Foodservice and Specialty

View the entire archives of Stuart Daw articles going back to the 1980's
Stuart Daw's Article Archives