Automatic Merchandiser - 22

CHART 5A: % OCS sales
by supplier type
SUPPLIER TYPE
Private label
Local coffee brands
(known to customers)
National brand - value
coffee
National brand specialty coffee
Espresso coffee

2019/20
21.6%
26.1
27.4
15.1
9.7

CHART 5B: % OCS sales by
product category
PRODUCT CATEGORY
Frac pack
Whole bean coffee

2019/20
53.2%
16.4

K-cups

11.5

Single cup (non K-cup)

18.9

CHART 5C: Top-selling OCS
products for past 12 months,
by volume
TOP PRODUCT
Local coffee brands
Private label

2019/20
36.4%
13.5

Value frac packs

4.6

Specialty drinks

4.6

Whole bean
National brand coffees

4.6
27.2

K-Cups

9.1

Single-cup

0

Tea

0

Pantry or direct
delivery service (food/
snacks/beverages
delivered to locations)

0

Water filtration service
(point-of-use/POU)

0

CHART 5D: OCS product
category, % of sales
PRODUCT CATEGORY
2019/20
Coffee
42.9%
Non-coffee hot beverages
8.1
Soft drinks

5.9

Bottled water (5 gallon)

11.1

Creamers/sweeteners

9.2

Cups/plates/paper
products
Tea

8.3

Pantry service/micro
kitchen (paid by employer
offered to employees)
Water filtration service
(non bottled)
Ice machines

3.3

22

5.4

4.0
1.9

Automatic Merchandiser * September 2020

compared to 4% last year - are
serving accounts with more than 100
employees. It will be interesting to see
how this shifts in next year's survey
with many large employers moving to
staggered scheduling and work-fromhome models to keep employees from
spreading COVID-19.
COSTS, INCLUDING
GREEN COFFEE, RISE

According to The International Coffee Organization, green coffee prices
have been steadily dropping for the
past three years, but this trend started
to reverse in late 2019. In December
2019, the average price of green coffee
jumped to over 117 cents per pound,
the highest amount that year. The average price held steady above 100 cents
per pounds until June 2020, when it
fell to 99 cents per pound (chart 3A).
In addition to the increase in
green coffee prices, OCS operators are
challenged with rising costs in other
areas of their businesses. In last year's
survey, operators attributed rising
costs to the growing popularity of
specialty and upscale coffee options.
This was partially driven by more
informed consumers who wanted the
same high-quality coffee products they
enjoy outside of the workplace to be
available in the office.
Those same trends were seen in
2019. Employers, wanting to keep
employees happy - and in the workplace - met this increasing demand
by upgrading equipment to provide
premium coffee and beverage options
including bean-to-cup brewers, cold
brew kegs, specialty beans, a variety
of creamers (dairy, plant-based, flavored, better-for-you), customizable
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

26.7%

23.8%

19.9%

19.9%
8.3%

2019/2020

water dispensers and pantry service.
With so many options in the break
room, employees don't have to leave
the office and take time away from
work to enjoy their favorite beverage.
This year, respondents said that
they're raising prices to maintain or
increase profitability, to keep in line
with inflationary costs of goods and
services, to offset freight increases and
rises in product or operating costs.
Or, as one operator put it, simply "to
survive." Half of the survey respondents
(50%) said they dealt with these rising
costs in a similar way to last year, by
a combination of raising prices and
absorbing costs (chart 3B). Many opted
to adjust the product mix (30%) or sell
additional services to their accounts
(27.5%). Again, with such savvy
consumers who are accustomed to
enjoying high-quality coffee drinks outside the workplace, this illustrates the
importance of staying on top of trends
affecting OCS to keep clients happy.
When looking at the past five
years, green coffee prices are still
generally lower than they were from
2014 to 2017. But, as other costs
associated with OCS rise, operators
need to watch every penny (and not
just because the U.S. is experiencing a
coin shortage at press time). While it's
a little early to make predictions, OCS
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