By Dan Bolton
Bob Melikian is a coffee industry veteran with more than 40 years experience. He is president of Automatic Brewers and Coffee Devices, Inc. located in suburban Philadelphia, Penn. A pioneer in coffee vending, ABCD’s founder invented coffee pods in the US in 1959. ABCD was the first espresso co-packer in the US and the first UpShot co-packer. A past president of Keystone Coffee Association and an espresso lab trainer certified by the Specialty Coffee Association (formerly known as SCAA) and a Barista Guild of America trainer. Melikian advises several Wall Street firms as a consultant and industry expert on the fast-growing single-cup coffee segment. Melikian holds an MBA in marketing and finance from St. Joseph’s University and is a member of MENSA International, The High IQ Society.
STiR: Last year’s National Coffee Drinking Trends survey, conducted by the National Coffee Association, showed there are a lot of single-serve machines installed in offices and they remain popular with coffee drinkers.
Robert Melikian: The rate of growth has slowed. But there are many more competitors in the marketplace. Machine manufacturers and single cup brands – whether they be packed by the roaster or a co-packer. Keurig growth rate may have slowed but they are still recruiting new clients converting them from unlicensed co-packers. And the format choices have increased – Nestle has four different formats.
JAB owns Senseo (strong in Europe), Keurig, Tassimo, and offers Nespresso clones; Mars (Flavia) is rolling out yet another new machine. Don’t forget about Lavazza (at least four different single cup formats), IllyCaffe, Espresso 1,2,3 (Rhombouts), Cafeitally, Bodecker, etc.
STiR: The rush to achieve sustainable single-serve options in packaging sometimes overlooks the challenges in qualifying these new packaging materials as compostable under real-world conditions. Are sustainability solutions suspect? Are “eco-containers” really meeting their promise?
Melikian: In the US, there appears to only be one plant that can process compostable k-cups – Cedar Grove in Seattle. It is far different in Canada where Club Coffee co-packs for roasters and brand holders who choose to promote their product as being compostable. These capsules are not compostable in one’s backyard. So the whole compostable story is “greenwash” – an expensive marketing story.
Many local communities (contracting with firms such as Waste Management, Inc.) offer recycling bins so that single cup filters identified with the number 5 (visible next to the recyclable symbol) can be recycled.
No one consciously wants to harm the environment by consuming and dumping (billions of) spent plastic capsules, cartridges, filters, k-cups, etc. But are they willing to pay any more – NO! Keurig and Nestle to their credit have sold millions of simple-to-use, inexpensive single cup brewers. Wouldn’t the world be better off if they were producing paper pods – which even cost less money to make?
STiR: Cashless is now becoming commonplace as consumers depend on digital transactions and millennials comfortably transition into decision-making roles in business where they will introduce machine learning and expand their use of mobile.
Melikian: Cashless is now, it is not the future. Millennials don’t want to use cash. Mobile options widely used include Google Wallet, Apple Pay, Samsung Pay, PayPal.
Mobile wallets such as SquareCash, Venmo, and Circle are peer-to-peer payments between friends and family. Cryptocurrency (bitcoin and altcoin) are gaining traction as are other hybrid wallets.” Smartphones have enabled all of us to carry a computer in our pocket and explore the world. And social media is spreading the word virally.
STiR: Some fill and pack machine vendors say there is no need to displace oxygen in the process since the capsules will be consumed in a few days... the appeal is too small roasters.
Melikian: There is nothing like the smell and taste of fresh coffee. As all coffee people know, there is a very short window to preserve that smell and taste without a nitrogen flushed packaging environment. Yet roaster retailers, who have always preached the fresh roast and fresh ground mantra, are being convinced by machine sellers that they don’t need to flush. Why? Because their k-cup product is being consumed within days of being sold. This is simply Not true! Coffee freshness significantly vanishes in hours, not days. Stale coffee is simply that – stale coffee.
STiR: Coffee comprises the majority of office coffee sales, generating $3.61 billion, about 80% of total revenue in 2014. How has the popularity of specialty and premium coffee impacted the office coffee segment? Describe what it takes to garner praise from the office workers for a segment that continues to grow (4.5% in 2016).
Melikian: I see more employers installing bean-to-cup super automatics that grind and brew on demand and froth and steam fresh (or powdered) milk. The urban office (especially) is competing with the coffee shop or café down the elevator and down the street. I witness first-hand how companies in their endeavor to keep their employees close at hand prove they are willing to spend more money on the beverages they provide.