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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O Overall, the revenue for the offce coffee service segment continued to climb this year reaching $4.5 billion. While this is modest growth compared to the year before, it is still a record high for the last decade (chart 1). Operators report four main reasons for the rise in coffee sales. In areas where the economy is improving, the number of workplaces offering a beverage program to employees as a perk increased. Growing employee numbers at existing locations also increased OCS revenues. A third rea- son for better coffee sales is the strong demand for single-cup among con- sumers. Finally, OCS providers report that the consumer is more educated than ever before about the quality of coffee they drink. If quality and vari- ety is important to the location, these OCS customers are demanding better coffee options and are willing to pay the higher price per cup. The fndings of the 2014 Auto- matic Merchandiser State of the Coffee Service Industry report are based on input from more than 180 operators from across the U.S. who reported on their OCS businesses. Full-line vending operators, OCS operators who offer vending and OCS-only operators provided the data and insight into the coffee service channel, which continues to break sales records for a fourth straight year. OCS pulls up totals A majority, 71.2 percent of OCS pro- viders reported a rise in total opera- tion sales over the last 12 months, in addition to increased coffee sales (chart 2). OCS was reported as the strongest segment of companies' growth. Many operators indicated that increasing coffee sales balanced out stagnant or declining segments, such as vending. Although OCS sales increased, operators saw tighter margins due to the high price of raw green coffee. Since April of 2011, the cost of green coffee has mostly dropped, according to the Interna- tional Coffee Organization (ICO), see chart 3. However, the price of green coffee spiked in April of 2014 to $1.70 per pound, up nearly 70 cents from the last quarter of 2013. The price has since gone down in the last several months, but OCS pro- viders are unsure what to expect of green coffee prices for the remain- der of 2014. Some coffee-growing countries have reported that crops are being destroyed by drought and leaf rust while others report having a surplus of green coffee. The volatile green prices make it diffcult for OCS operators to plan and execute price adjustments to their coffee and ser- vice this year. Many operators reported raising prices and absorbing the increased THE average price charged to consumers for coffee increased over the past 12-months S P O N S O R E D B Y Automatic Merchandiser 23 B I L L I O N S O F D O L L A R S 0 1 2 3 4 5 13-14 12-13 11-12 10-11 09-10 08-09 07-08 06-07 05-06 04-05 3.74 3.92 4.11 3.93 3.73 3.93 4.33 4.50 4.12 3.56 CHART 1: OCS REVENUES – 10-YEAR HISTORY