Automatic Merchandiser - 18

CHART 5A: % OCS sales

by Supplier Type

SUPPLIER TYPE
Private label coffee
Local coffee (known to
consumer)
National brand specialty
National brand - value

2018/19
48.1%
21.3
15.3
9.8

Espresso coffee

5.5

CHART 5B: % OCS sales by product

category

PRODUCT CATEGORY
Frac pack
Whole bean coffee

2018/19
43.7%
28.1

K-cups

14.3

Single cup (non K-cup)

13.9

CHART 5C: Top-selling OCS products
for past 12 Months, by volume
TOP PRODUCT

2018/19

Private label coffee

48.0%

Local coffee brands

16.0

Whole bean coffee

12.0

National coffee brands

8.0

Single-cup

8.0

K-cups

4.0

Value frac packs

0

Specialty drinks

0

Tea

0

Pantry

0

Water filtration service

0

Other

4.0

CHART 5D: OCS product category,

% of Sales

PRODUCT CATEGORY
Coffee
Bottled water (5 gallon)
Cups/plates/paper
products
Creamers/sweeteners
Water filtration service
(non-bottled)
Non-coffee hot beverage

2018/19
49.3%
8.0
7.6
6.9
6.7

GREEN COFFEE PRICES
CONTINUE TO DROP

The International Coffee Organization reported that green coffee prices
are at their lowest level in the past five
years, dipping below 100 cents per
pound (chart 3A), averaging 96 cents
by August 2019. The low cost of coffee
continues to offset the cost increases
in other areas of OCS, such as the
increasing popularity of specialty
single-serve options, supporting
customer requests to provide more
upscale options, salary increases to
retain key staff, investments in equipment and technology, and the overall
high demand for quality coffee.
When asked what strategies were
used to respond to rising costs, most
operators said they approached this
challenge through a combination of
raising prices and absorbing costs, in

6.0

Soft drinks/juices

5.1

Tea
Pantry service/micro
kitchen (paid by employer
offered to employees)
Ice

4.8
3.9

18

Several OCS operators reported
that they're sourcing a greater variety
of new products - particularly upscale
and local brands - and expanding
their offerings with enough options to
keep clients (and their clients' employees) happy. Several survey respondents
credited growth to their strong sales
force, who proactively offered additional services, enabling clients to consolidate services under one provider.
As in the previous year, the continued low unemployment rate affected
the number of people served at each
location, with the majority of OCS providers reporting more locations with
over 20 employees, particularly in the
30 to 49, 50 to 74, and 75 to 99 range
(20 percent each). It's worth noting that
only 4 percent served locations with
more than 100 employees, down from
15.8 (chart 8).

1.7

Automatic Merchandiser * September 2019

Editor's note: In 2017 and 2018 we collected
data specifically for each category.
In previous years, we measured more
categories which resulted in overlap when
calculating the percentage of revenue.
Revenue dollars relating to coffee remain in
line with previous years when considering just
main coffee categories.

CHART 6: Plumbed-in, automatic

and thermal as % of total

● Pourover glass pot
● Automatic thermal
● Pourover thermal
● Automatic glass pot
● Single-cup

11.4%
24.3%
33.7%
25.1%
5.5%
2018/2019

line with last year's results (chart 3B).
One noticeable shift from last year's
survey is the number of respondents
who said they're combating rising
costs by selling additional services
(33.3 percent, up from 16.7 percent)
and by adjusting their product mix
(29.4 percent, up from 21.4 percent).
Alternately, multiple respondents said
they were not raising costs; instead,
they've increased sales and gained
new customers.
WHAT'S TRENDING IN OCS

Many trends are driving the continued growth of OCS, and according
to our 2019 survey respondents, the
most impactful of these trends is the
increased desire for a variety of better
quality products in the workplace.
Customers want more options, and
better options, and they want them at
a reasonable price. Several respondents
noted that their clientele are more
informed than ever and are requesting
specific products and brands.
Customers are asking for beanto-cup, pantry service, local brands,
darker roasts and bolder coffee; one
OCS provider noted that clients are
demanding more selections than their
supplier offers, showing the importance of being able to source the items
your clients want. Single-cup brewers continued their upward trend,
capturing 24.3 percent of the equipment placed (chart 6), surpassing the
2014-15 high of 23.2 percent. While
multiple respondents said customers
are asking for micro markets, only half
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