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Issue Date: Vol. 51, No. 10, October 2011, Posted On: 11/7/2011


BC Coffee & Supplies: OCS-Focused Distributor Stays At Top Of Its Game


Emily Jed
Emily@vendingtimes.net
BC Coffee & Supplies, dedicated office coffee service distributor, OCS distributor, OCS supplies, coffee supplies, hot beverage supplies, office refreshment supplies, vending machine business, Mark Nichols, Rick Gnatowsky, Adam Goldstein, Chuck Donath, Paul Bakunowicz, break room products, coffee brewing equipment

Mark Nichols

LAKE WORTH, FL -- BC Coffee & Supplies claims the distinction of being the nation's first dedicated office coffee service distributor. Three decades after its inception, second-generation owner Mark Nichols says his company continues to emphasize OCS, while competitors diversify their product ranges to serve a broader market.


PHOTO: BC coffee president Marc Nichols carries on the legacy of his pioneering father, Bob Nichols, who founded the OCS distributorship three decades ago. The second-generation distributor remains focused on catering to the office coffee segment and leveraging his team's specialized expertise to help operators grow their businesses.

"Our customers understand us as not just a distributor, but almost an office coffee service consultant," Nichols told VT. "It's our whole focus, we're experts at it and there's great value in that. We've grown BC Coffee -- and continue to grow -- by helping OCS operators do better, through sharing our knowledge. And more and more, we're also helping vending operators get into the coffee business successfully."

BC Coffee delivers coffee, tea and a wide range of allied breakroom products and equipment from its 65,000-sq.ft. warehouse to more than 400 office coffee service companies throughout Florida and parts of Georgia. It also ships orders nationwide and internationally.

What sets BC apart, Nichols emphasized, is a closely knit team of professionals versed in what it takes to succeed in office refreshment, and the expert guidance they are able to give customers. Some employees have been with the company for as long as 30 years.

"We run lean and mean, with a staff of 20, and without layers of management," said Nichols. "We can be very flexible and maneuverable to get in and make something happen. Our operators can turn on a dime with something new that might take a larger distributor two years to understand and adopt."

Something else the distributor brings its customers is a firsthand understanding of their business, since Mark's father, Bob, began as an OCS operator, and Mark also ran his own office refreshment company in his younger days.

The senior Nichols entered the industry in 1970 almost by accident. After serving in the military, he worked for Goodyear Tire & Rubber, eventually owning and operating several tire stores in southern Florida. His career path took an unexpected turn when Ralph Ricker, the owner of a local business called Easy Way Coffee, dropped in to pitch his coffee service. Not only was Nichols sold on the service, but he believed in Ricker's business so much that he purchased the company from the operator that night.

"My dad was the ultimate entrepreneur," Mark Nichols told VT. "He had a way of seeing an opportunity, and pursuing it in a way that turned red ink into black ink." The senior Nichols went on to acquire several more coffee service companies over the next few years, building a lucrative operation. He then sold the business to Standard Coffee, a nationwide OCS provider based in New Orleans.

Nichols drew on his know-how as an operator and took on a partner, Chuck Donath, to launch his next venture -- BC Coffee. The company initially specialized in remanufacturing and reselling used coffee equipment.

BC Coffee's expansion into product distribution came a few years later when two different customers mentioned to Nichols that they wanted to buy Carnation creamer, but neither could afford the minimum truckload orders required by the manufacturer. Nichols came to their aid by buying a tractor-trailer load and splitting it between them. Working from his 700-sq.ft. equipment warehouse, he stacked the creamer canisters by hand in a high-cube van and delivered the orders.

"We were the first product distributor in the U.S. exclusively for OCS operators," Mark said. "All of our competitors mainly focused on vending, and they still do.

"We began by concentrating on private-label coffee, along with creamers and sugars, and that still plays a big role in making our customers more distinctive and competitive, so they can protect their businesses," he continued. "And as they have supplied more products to their customers, we've delivered it to them."

Eventually, the company divested its remanufacturing business to devote its full resources to distribution.

Mark learned the ins and outs of coffee service by growing up in the family business. In 1986, he ventured out on his own as an operator, starting A1 Coffee Services. In 1989, just as his father had done more than a decade earlier, he sold his south Florida operation to Standard Coffee. He then rejoined his father at BC Coffee. Mark has been BC Coffee's president since Bob retired 15 years ago.

The second-generation distributor said that one of the company's earliest services to its customers remains one of its most valued. "We have the ability to help operators leverage the competitive advantage of private-label coffee, not only by supplying it to them, but also by providing logistical support," said Nichols.

He explained that many of BC's customers are smaller operators who lack the cash to cover the costs of large minimum orders required by private-label roasters, and the room in their warehouses to inventory them. A roaster may require a minimum order of 300 cases, Nichols instanced. If an OCS company carries three varieties of a signature roast, BC Coffee has the resources to order a total roast, store it, and supply and invoice the amount of cases needed each week to the operator.

Mark Nichols

BC customers also often rely on BC's expertise to determine the best blend, film design and package weight to meet their customers' specific tastes.

"We have the resources and understanding of the business to put a program together for them," explained market development manager Rick Gnatowsky, who joined the company a year ago, bringing a well-balanced mix of industry knowledge as a distributor and an operator from his prior positions at Vistar Corp. and Standard Coffee. "We can help them develop their own unique blends through our roasting partners."


PHOTO: Vice-president Adam Goldstein's roasting and administrative background has been instrumental to BC Coffee's success since he joined the company 14 years ago. Establishing private-label programs for operators is one of the distributor's specialties.

PURCHASING POWER
Gnatowsky added that BC Coffee can save its customers money through the economies provided by its purchasing power. The company's volume commitments to roasters permit it to buy coffee on the futures market three to four months in advance. "We can source 1,000 lbs. of Kona, for example," he explained. "That way, by then dividing it among several operators who may feature it as part of their private-label lines, we help them with their cost efficiency."

Important contributors to the successful track record of private-label programs BC Coffee brings its customers are longstanding relationships with two highly regarded roasters, Colonial Coffee (Miami) and National Coffee Roasters (Le Center, MN). Through these relationships, BC also has exclusive distribution rights in Florida to National Coffee Roasters' brands.

The company also supplies a wide array of leading national brands including Starbucks, Godiva, Eight O' Clock, Copper Moon, Green Mountain, Lavazza, J.M. Smuckers' Folgers and Kraft's Maxwell House and Tassimo brands. It has exclusive rights to the Godiva coffee line in Florida.

Additionally, BC is an approved Keurig distributor for Green Mountain and Timothy's fraction packs and K-Cups. In fact, it was the first distributor to launch Timothy's K-Cups in coffee service.

BC's most recent roasting partnership is with Jammin Java Corp. (Los Angeles) as its exclusive distributor throughout Florida and the Caribbean. The company's premium Marley Coffee pays tribute to reggae music legend Bob Marley. It is available in five varieties, offered in 2.5-oz. fraction packs and in pods, a format the distributor sees as having enormous growth potential.

"We've always been a leader in bringing new opportunities to the OCS business," emphasized Nichols. "We helped lead the charge, distributing Keurig K-Cups to OCS. Now we're seeing huge growth in pods. Marley pods, which include Jamaican Blue Mountain -- one of the best coffees in the world -- should build a lot of excitement."

Accelerating growth on the equipment side is BC's recently inked distribution agreement with Bunn-O-Matic Corp. for the OCS channel. BC is also a distributor for Newco Enterprises and Bloomfield Commercial Beverage Systems.

MORE THAN COFFEE
Cold drinks are also in demand in the OCS marketplace, especially in warm climates like Florida, and BC was recently awarded a distribution agreement by PepsiCo to serve the OCS segment. "When an operator wants 10 cases of soda, they don't have to go to Sam's Club anymore," said Gnatowsky. "We buy it directly from Pepsi and deliver it to them. There haven't been office coffee suppliers that did that until now, at least in our area."

Paul Bakunowicz

The distributor also supplies a limited array of snacks, ranging from sandwich crackers to biscotti, in small packages suited for breakrooms. But, Gnatowsky emphasized, it has no immediate plans to extend its snack variety to pursue vending.


PHOTO: Sales director Paul Bakunowicz takes stock of single-serve drinks now available through BC Coffee's distribution agreement with PepsiCo to serve the OCS segment. Marley Coffee and Sequelle-brand sweeteners and creamers are also new to the expansive product range that BC stocks in its 65,000-sq.ft. warehouse.

"We have operators asking us to get into distributing vending products, but that's not what we do," he said. "We're a team of OCS professionals serving OCS operators and that's what makes us unique."

In addition to Nichols and Gnatowsky, key players on the BC Coffee team include vice-president Adam Goldstein, an industry veteran with many years of experience in roasting and administration. Regional sales manager Paul Bakunowicz has worked in the industry for 25 years, serving as general manager at Belmont Springs Bottled Water and Coffee (Belmont, MA), and later as manager for the water and OCS division of southern Florida at Crystal Springs Water (Ft. Lauderdale, FL) before joining BC Coffee & Supplies. Account manager Kent Johnson is a 30-year food and beverage industry veteran who held previous sales positions at National Coffee Service & Vending brokerage (Erie, CO), Pepsi Lipton Tea Partnership and General Mills.

Gnatowsky added that BC has been growing its base of operators with vending companies as they expand into coffee. "As vending operators see their traditional business shrink, they are gearing up to enter the OCS arena and be competitive there to support the goal to be more profitable," Gnatowsky told VT. "We're not there just to sell them product, but to help them understand OCS, be with them every step of the way, and to keep on helping them build that new business. We educate our customers on how to sell and roll out an office refreshment service program. If we help them build their business, we'll sell more product and they will continue to grow a segment of business that can support the profitable growth of their companies. Everybody wins and OCS remains a strong, viable segment."

One product in the BC Coffee pipeline that the distributor sees as having enormous growth potential is hand sanitizer in wall-mounted dispensers. "That's where OCS and vend operators will make more money -- adding products like that, and paper towels and other cleaning products," said Gnatowsky. "Office supply stores like Staples may ship product, but OCS operators sell and deliver it themselves. They're already spending the time at the account; they have a relationship with the contact. We show our customers how to sell more products and how to make more money on each visit."

Nichols said he has high hopes for BC's newest product offering: Sequelle brand sweeteners, and soluble creamers and beverages from Custom Beverage Concepts (Tallapoosa, GA). BC has exclusive distribution rights for the line in Florida. Launched last month, it includes value-priced canisters of "pink," "blue," and "yellow" sweeteners, cane and raw sugar and soluble and flavored creamers, along with hot chocolate mix. "People can pour as much as they want from the canister without having to open packets, and it's a cost-saver," he said. "I think it will go over real well."

BC Coffee has seen continuous double-digit sales growth over the past 12 months, and has expanded its salesforce in the past year to support the surge. Nichols credits much of this success to his team's steadfast commitment to keeping its eyes open for new products and concepts, and helping its customers market them.

OPERATORS' WEB PARTNER
E-commerce is a recent BC Coffee initiative that is expanding opportunities for the company and its customers. The distributor serves as a fulfillment house for some OCS companies that sell coffee and related supplies on their websites. Orders sent to the operator's website are echoed to BC Coffee, which picks, packages and ships the order.

"It's not practical for many companies handling a great many tiny orders to manage their own e-commerce businesses," explained Gnatowsky. "We keep 100% of their inventory; we'll bring in anything they want to sell, within reason, and they don't have to do a thing."

Nichols added that more and more OCS operators are selling online. "Ten years from now, if you don't have an e-commerce site, you won't be in business -- because someone else will and you won't be able to compete," he observed. "We're here in every way to help operators be as competitive as possible."

BC Coffee PHOTO: At left, from left, warehouse specialists Mark Chapman, Frances Dorman, Barry Stewart, Carmen Guzman and Nancy Long pool decades of experience to ensure speedy delivery from BC's Lake Worth, FL, headquarters. At right, from left, Denise Johnson, Jessica Keighley, Carol Johnson and Diane McConnaughay oversee the distributor’s customer service and administrative functions.

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