Automatic Merchandiser

SEP 2013

Automatic Merchandiser serves the business management, marketing, technology and product information needs of its readers including vending operators, coffee service operators, product brokers, and product and equipment distributors in print.

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SPECIAL ANNUAL REP ORT: STATE OF THE COFFEE INDUSTRY OCS REVENUES REACH RECORD HIGH O Operators who provide offce coffee service (OCS) are enjoying increased revenues for the third straight year due to higher-margin products, aggressive marketing and more demand. By Emily Refermat 18 Automatic Merchandiser CHART 1: OCS REVENUES – 10-YEAR HISTORY BILLIONS OF DOLLARS CS continues to return strong sales. Whether operators have full-line vending with OCS or focus just on coffee service, revenues for the segment continued to climb in 2012. The aggregate industry revenue for this year's Automatic Merchandiser State of the Coffee Service Industry Report increased 5 percentage points to $4.33 billion, a record high in the last 10 years. Single cup is a major factor contributing to OCS revenue growth, now representing more than 20 percent of the brewers in the marketplace. While profitability of single cup is squeezed by competitor price, operators are experimenting with other singleserve alternatives such as generic K-Cups and coffee pods that have better margins. Also contributing to the increase in revenue was more aggressive marketing by operators in 2012 with sales departments fnding more business, including growing businesses as the economy improves. Challenges included increased competition from internet retailers and offce supply 5 4 3 3.39 3.56 3.74 3.92 4.11 3.93 3.73 3.93 4.12 4.33 2 1 0 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 CHART 2: OPERATOR SALES CHANGE, 3-YEAR REVIEW ● SALES ROSE ● SALES DECLINED ● NO CHANGE 6% 12% 14.5% 22% 77% 66% 2010/11 2011/12 stores, especially on prices for single cup options. More than 220 operators from the readership of Automatic Merchandiser and VendingMarketWatch.com responded to the OCS survey and VendingMarketWatch.com 9% 17% September 2013 76.5% 2012/13 provided valuable data and insights, used in the report. Driving change Dropping green coffee prices, as seen in chart 3, helped drive higher cof-

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