Monday, December 18, 2017 | Today's Vending Industry News
And This Is Where It Starts To Get Interesting

Posted On: 11/22/2017

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As we look around at the current workplace coffee scene, I am reminded of a prophetic observation made by one of the "coffee ambassadors" deployed by the Coffee Development Group some three decades ago. An enduring worry for the coffee industry at that time was the persistently low per-capita consumption of coffee in the United States. This had been falling since 1962 (according to the statistics used by the old Pan-American Coffee Bureau; some sources say 1946), while consumer enthusiasm for soft drinks continued to increase.

This CDG coffee ambassador observed that the rate of increase was slowing. In her view, the soft-drink industry was coasting on the momentum imparted to it by the innovations in packaging, distribution and marketing that had begun in the immediate postwar years. It had run out of options, and the rising generation tended to perceive carbonated beverages as boring. The time was ripe for coffee purveyors to position premium coffees as exciting and well worth the effort of cultivating an educated taste for them.

She was right in all important respects, and the Coffee Development Group played a key role in the specialty-coffee upswing that began a few years later and has not yet peaked. CDG worked with local roasters to organize campus coffeehouses to educate future business leaders in the pleasures of coffee and the satisfactions of coffee connoisseurship. It cooperated with culinary education programs to educate future foodservice professionals in quality coffee preparation. And it coordinated taskforces in the vending and coffee service sectors.

The recognition by the American public that good coffee can be appreciated in a variety of forms, and possesses properties beyond being "hot and black," fits into a larger market shift that has occurred so slowly that it can be difficult to grasp just how different today's consumers have become from the public that vending and OCS were developed to serve.

It's seldom possible to point to one year, or one decade, as marking a historic turning point. If I had to choose a decade, it would be the 10 years after I joined Vending Times in 1967. We are aware of the danger of supposing that nothing important happened before we arrived to watch it, but we do believe that a major transformation began during that period, and it is continuing today.

In the 1970s, the global economy was completing its recovery from the dislocations caused by World War II. Commodity prices were rising, and the effects were amplified by the Arab oil embargo. The price stability to which the public had become accustomed over the previous two decades began to fall apart. We vividly remember vending operators' reluctance to raise coffee prices in high-volume industrial workplaces; the need to move from 10¢ to 15¢ prompted an outburst of creativity that resulted in larger cups - and new attention to quality.

And it wasn't just coffee, or just vending. Consumer packaged-goods producers and retailers in general had to deal with consumers who expected the unit price of everything, however packaged, to be the same as the supermarkets were charging. This created a real obstacle for retail channels - vending and convenience stores - that were growing in response to a new demand by on-the-go consumers for single-serve packs.

That struggle pretty much ended with the 1970s, as consumers started a transition from expecting price stability and equivalence to evaluating each product offering on the basis of its immediate value to them, in terms of convenience and quality. We think it's possible to trace the extraordinary fragmentation of preference, the emergence of whole new product categories and the gradual erosion of unswerving loyalty to the great, universally familiar brands to this new analytical consumer mindset. That novel mental climate certainly has conditioned the expectations and the diverse tastes of Generation X, the Millennials and the upcoming Generation Z.
Other forces now are at work, unleashed by unrelenting media coverage of research into food and nutrition, conspiracy theories and what appears to be a revival of nature-worship in a new guise. And the end result is that we find ourselves in a whole new ballgame.

The rules have changed, and the new landscape challenges many long-held beliefs in this industry. Water - especially premium water - has become an expected luxury, and a new cold-beverage segment is challenging gourmet coffee for the affections of today's workers. New products and delivery systems are offering an array of gourmet water-centric still and sparkling drinks, many formulated with the esoteric ingredients favored by younger consumers - who are willing to pay the price for products that provide the experience they desire. And the proliferation of exotic single-serve snacks, formulated for specific market segments that appreciate their worth, shows no sign of slowing down.

The future will belong to people who can apply the lessons of the past to a fast-changing present, while observing what's going on around them and widening their view of what is and isn't possible.