The UK, like much of continental Europe and the US, has become a nation of coffee addicts. The phenomenon of Starbucks and its rapid rise onto every street in every city (every square foot in London) has given Joe public a discerning palette. This rise in popularity has followed us to work, where the humble bean has overtaken tea as the drink of choice in the office.
That ‘must-have’ morning coffee to get us started is a major part of the so-called ‘Out Of Home’ (OOH) channel in the coffee industry. The latest figures show that our drinks consumption within a business environment accounts for 57 per cent of all coffee consumed OOH – beating the coffee shop.
Expectation
One man keeping a close eye on this market is Quentin Knowlson, commercial director of beverages at Nestlé FoodServices, who has the unenviable task of competing with the coffee behemoths on the high-street to get employees back in the office kitchen.
"What we’re seeing a lot more of is people popping out to the coffee shops – both the branded ones and the unbranded ones, so not just Starbucks, Costa and Caffè Nero. This all creates an expectation of what people want from their coffee and that’s the benchmark we have to aim for,"Knowlson says.
"What it means from a working perspective is that employers are seeing people wander off for 20 minutes – they’re losing productivity but there’s an opportunity to provide similar products in the workplace to keep people on site."
Knowlson believes consumer expectation is angled towards more of the speciality products like cappuccino or latté, or products with syrup. Nescafé is working on ways of replicating this type of product in the office kitchen.
"We’ve got the standard coffees – Nescafé original and Gold Blend – and then we’ve got speciality products like soluble instant versions of cappuccino or latté. We also do our own hot chocolate which we launched earlier this year."
Knowlson is preaching to the converted when he adds that the hot chocolate has been a success Рthe OPI office has given the bubbly drink the thumbs-up for both taste and innovation. It turns out that innovation (an issue often accused of being neglected in the OP industry) is one area where office coffee drinkers can expect to see a lot of progress from the scientists at Nescaf̩.
"We have a team that works in our beverage business and their job is all about innovation and renovation. Renovation is about taking existing products and giving them new benefits – like packaging, for example, either keeping the product fresher or easier to use," he explains. "We also spend a lot of time trying to find new ways of bringing new products to market. Aero hot chocolate is a good example. We used some proprietary technology to get bubbles into the product without you having to have a machine to whip it up, so you get this quite indulgent product, but it’s also very smooth because of the air in it."
The company is following the trend towards speciality coffee by working on new ways of creating them at home using dispensers or through ‘just-add-water’ technology. Coffee to match the extensive menus of the High Street is a strong trend which is ideal for the office. Nescafé produce sachets of latté, mocha, cappuccino and many others – all designed to meet the OOH demand. The company also offers vending machines which try and "keep up with the pace of change".
Brand
If you’ve had a coffee from a vending machine, or at a meeting with a client, chances are it was a Nescafé. As the country’s best-selling soluble coffee, Nescafé offer dealers the safe option of giving employees the coffee they’re most likely to drink at home and Knowlson maintains that the brand is just as important in the office as it is in the home environment.
Knowlson says: "Everyone knows Nescafé. It’s a very reassuring brand and we’ve done a lot of research that shows people OOH often look for reassurance as well. At work, for example, the perception that you’re drinking Nescafé rather than the cheap and cheerful product gives you a good feeling because you know you’re going to get a good cup of coffee – like you would at your own house."
Partnership
Targeting the OP market gives the company the edge over High Street retailers, and the company takes an active role in marketing its products. Sachets sent via direct mail are accompanied by office favourites like tubs of Quality Street (made by parent company Nestlé), given away with a tin of coffee and free mugs.
"We did a promotion which was like Twister where we gave out a wheel on which you could put peoples’ names and spin the dial to see whose turn it was to make the coffee," he explains.
By working with dealers on promotional activities and sales tools like this, Nescafé FoodServices has increased sales by an average of 58 per cent.
Selling into offices may only be a small part of Nescafé’s overall UK business, but it’s one that’s commanding interest because of its growth and accessible route to market via existing OP dealers.
"We’ve got a huge coffee business in the UK and it’s another channel that we work in. By working closely with the dealers we’ve found there’s an opportunity for them as well," Knowlson says. "It’s easy for the person who orders the stationery to stick a tin of coffee on that delivery. It’s another way of getting the product in and it’s a good opportunity for dealers to branch into an associated product range – and it’s good cash value for them too.
"Generally what we’re doing is working in partnerships because each dealer is slightly different in its method of operation and how it wants to go to market. We’ll talk to dealers about what’s best for their business and try and work it out on a tailored basis to give them something new."
Valuable
The worldwide picture is somewhat different with various operations running country to country depending on the specific situation. In the UK, the company also works with wholesalers, as Knowlson explains: "We try to understand their business, their customer base and what they’re looking for, and by doing this, we’ve been able to develop some tailored products that are specific to their business."
It’s an unusual way for a beverage seller to get its product to the customer, but it makes sense. It’s a prodcuct that’s needed on a regular basis and traditionally large companies have accompanied their jan/san orders with a tin. Smaller businesses, however, are often more likely to visit the supermarket at lunchtime and dealers can lose valuable profit margins this way.
Such is the popularity of the product that many dealers are now listing coffee within their top ten key sellers by value and Nescafé is aiming for a greater share of the OP market. Look out for much greater choice in your staff kitchen and wake up to the fact that the coffee market in this industry is growing stronger by the cup.
