[ Up ] [ Stuart's Newest Article ] [ Coffee Market Update ] [ Stuart Daw's Article Archives ] [ Continuum to Contentment ]
Stuart Daw's
Newest Coffee Article on Coffee and the Coffee Business...
The Changing Marketplace
Stuart Daw
©2007
“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 1960’s 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 ten cents per cup.”
But who would have guessed that with
the arrival of the new century, offices would pay maybe ten 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 over all 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 have 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 meters, 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 P & L 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” (see my last article in this magazine).
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
obviously 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 coffee service
operator has proven adept at conquering.
