The Complexity of Office Coffee
By Dan Bolton
Single-serve brewers are the most desired method of coffee preparation in the workplace. Workers say they prefer a large selection of freshly-brewed, great tasting coffee along with the ability to experiment with different types of premium beverages that they can prepare quickly with no mess.
In short office workers expect it all — and for free.
Employers who provide quality coffee, in turn, report improved productivity, greater focus, and high morale.
“Among full-time employees who are daily coffee drinkers, 35% “strongly” and 33% “somewhat” agree that ‘high-quality coffee supplied by employers is an important workplace perk,” according to an extensive consumer survey conducted by Experian (June 2011). Packaged Facts, in its Office Coffee Service in the US: Market Trends and Opportunities report found that among coffee drinking workers 83% agree that coffee keeps them productive through the workday. Respondents to a December 2014 Harris Poll (89%) said a good cup of coffee makes the workday better.
One in five office workers (19%) polled by Harris said their colleagues do their best brainstorming or collaborating around the office coffee machine. Additionally, office workers said they like to visit the office coffee machine to catch up with coworkers (37%); interact with their boss in a more casual way (16%); brainstorm or collaborate with others on a project (13%); or spark their own creativity (9%). The poll of 843 office workers was financed by Keurig Green Mountain.
Without their daily cup of coffee, respondents said they can feel a range of negative emotions -- exhausted (36%), irritable (35%), unproductive (30%), disorganized (20%), or forgetful (14%), according to Harris.
There is a clear link between office worker satisfaction and brewing equipment.
The National Coffee Association’s 2015 National Coffee Drinking Trends (NCDT) survey reveals coffee drinkers in offices with single-serve brewers are much more satisfied (90%) than those in offices with only a drip coffee maker. Workers in offices with an espresso machine were even more satisfied, at 94%. Those desiring a brewer in the office prefer (34%) single cup to all other preparations.
Only 29% of office workers prefer drip coffee makers.
Satisfaction with drip coffee makers is even lower than instant. “Satisfaction with drip has been stagnant from 2012 to 2015, while instant has gained, with 50% being “very” satisfied, according to the NCDT survey. The latter is likely due to the popularity of Starbucks VIA.
So why are there still so many drip coffee makers in offices? And why did major office coffee vendor Corporate Essentials end its 20-year relationship with Keurig Green Mountain, the nation’s dominate single-cup supplier?
It seemed so simple back in 1992. The BUNN VPR pour-over with two warming stations was the number one office brewer in those days. Office coffee service (OCS) providers offered on average 15 items: regular and decaf, sugar and creamers, and two low-calorie sweeteners, cups, stir sticks, napkins, tea, and instant cocoa. Coffee market penetration was 3% with large and efficient routes of loyal corporate customers in every major city. Single-serve brewers were in only 2% of offices.
To remain competitive an OCS business today must provide sophisticated brewing equipment, a broad offering of branded and private label beverages, multiple sweeteners, flavored creamers, and even office supplies in an inventory that can easily approach 1,000 items. Routes are fragmented, clients are distant and the number of people reporting to work (versus working from home) is in decline. Packaged Facts reported that those working from home on an average day increased to 23.6% between 2003 and 2010.
Large numbers of commuters now bring coffee to work (41%) with 71% reporting that they drink coffee (often a high quality brew) before going to work. More ominous is the fact that OCS firms resupplying capsule machines are competing with grocery, drug, big box, convenience and even kitchen stores.
Overall satisfaction with office coffee offerings is high for 46% of office coffee drinkers, up 4% compared to 2014 and up 6% since 2011 but that still that leaves 54% somewhat or less satisfied, according to NCDT.
OCS was valued at about $4.36 billion in 2014 with coffee making up 71% of the total. About 12% of the coffee Americans drink is in offices, the majority of which is purchased by employers, according to NCA. The cost of capsule coffee can be five times the per-serving expense of drip brewed coffee for OCS clients.
Companies like Corporate Essentials buy a lot of coffee. The firm serves 150,000 workers daily in 1,500 corporate offices in New York and New Jersey as well as 50,000 households through its www.shoffee.com website. In January, Corporate Essentials ended its 20-year distribution agreement with Keurig Green Mountain, switching instead to non-licensed RealCup capsules produced by Canadian-based Mother Parkers Tea & Coffee.
“When some of the Keurig K-Cup patents expired in 2012 and rogue K-Cups flooded the market, our clients inquired about them,” said Corporate Essentials c.e.o. Judson Kleinman. “And even though our clients regularly requested these products for their homes and offices, we only offered Keurig licensed products.”
“I have to be honest, when one of our clients now asks for a new coffee with the name of a TV chef or other coffee celebrity, it will feel good to say: ‘Sure we can get that for you,’” Kleinman said.
Tom Martin, co-founder of PodPack, a coffee co-packer in Baton Rouge, La., that makes both pods and recently began filling capsules, predicts that other OCS firms will respond to client requests for brands not offered by Keurig.
Providing excellent service is the cornerstone of the OCS business and that’s expensive, he said.
Twenty years ago the OCS brand or regional brand carried by an OCS supplier was important to them, Martin explains. Keurig forced these businesses to offer national brands in capsules, excluding familiar local roasters, restaurants and hotel brands.
Revenue from private label brands fell from 40% in 2010 to 28% in 2011 while revenue from national brands grew 6% for OCS operators. Unfortunately margins did not keep pace.
Corporate Essentials will offer 60 brands in RealCup capsules including Martinson, a brand that dates to 1898 when Joe Martinson (known as The Real Joe) began roasting coffee in his mother’s New York kitchen.
Private label capsules that make great tasting coffee can be manufactured for 10 to 15 cents less per capsule and in smaller quantities than by Keurig. They can also be made more sustainable.
Corporate Essentials switched to the environmentally friendly EcoCup capsule which makes it easy for users to recycle. “Our office clients are looking for coffee and tea solutions that are better for the environment and that make their employees feel better about their daily beverage consumption,” writes Kleinman.
Many OCS operators have stayed away from the single serve market due to the environmental impact, according to Keith Wright, v.p. sales, Intelligent Blends, a custom co-packer in San Diego, Calif. “Intelligent Blends has a great solution to this issue: recyclable polypropylene #5. Our Keurig-compatible capsules were the first oxygen barrier on the marketplace that requires no extra exterior packaging and also features a filter paper that is up to 88% biodegradable along with recyclable aluminum base lids,” said Wright.
Corporate Essentials is not only switching brands, it is offering new and existing clients an upgrade to a commercial capsule brewer manufactured by Grindmaster. The RC400 features a large reservoir, and plumbed capabilities, and is designed to be serviced on location, a trait shared by single-serve equipment supplied by Flavia/Mars Drinks.
In addition to single-serve machines, Keurig now offers the Bolt Carafe Brewer, a commercial grade system that brews 64 ounces of coffee in two minutes. The sealed and pre-measured Bolt portion packs are recyclable.
Martin is optimistic that new generation brewers will surpass Keurig’s own equipment with refinements that enhance the office brewing experience such as variable cup strength. At the recent National Coffee Association conference PodPack demonstrated several next generation machines including the latest BUNN capsule brewers.
Co-packer Robert Melikian, c.e.o. at Automatic Brewers and Coffee Devices, Inc. (ABCD) closely monitors the latest brewers on behalf of his copacking roaster and brand holder clients.
ABCD is using the fully recyclable UpShot filter with its unique design to produces a richer cup of coffee in the cup, he said. “Pairing expertise in grinding coffee with this new filter design and technological improvements to brewers enables office coffee suppliers to provide workers a superior tasting cup of coffee,” he said.
Paying for coffee at-work does not meaningfully affect satisfaction with workplace coffee.
The NCA survey revealed that 48% of respondents who pay for coffee in the workplace are very satisfied. Among those who get their coffee free at the office almost the same percentage (46%) said they are very satisfied, suggesting that “employers who offer a less satisfactory brewing system might benefit from upgrading to a more preferred brewing system and asking employees to cover at least part of the cost.”
“This represents an opportunity for food-service coffee providers to increase use of single-cup systems in office and, through this, to increase employee satisfaction with at-work coffee,” according to NCA.