Office Coffee Service in the U.S.: Market Trends and Opportunities

Date: March 1, 2012
Pages: 110
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US$ 3,500.00
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Publisher: Packaged Facts
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: O63F178FA34EN
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Office Coffee Service in the U.S.: Market Trends and Opportunities
The office coffee service (OCS) market is on the rebound after slumping during 2008-2010. Sales (including related hot beverage and creamer/sweetener supplies) approached the $4 billion mark in 2011, and are forecast to grow 3.5% in 2012 and in 2013.

The competitive landscape and consumer trends are transforming the where, how, and what of coffee drinking in the workplace. Packaged Facts consumer survey data show that among full-time employed daily coffee drinkers who have drunk coffee at work within the last seven days, the office coffee pot remains king, with 50% drinking an office coffee pot brew while at work. Even so, almost a quarter (22%) drink individually brewed coffee from coffee pods/k-cups, among whom 70% use coffee pods/k-cups supplied by their employer. Moreover, while the office coffee pot is the most common way to grab a cup of coffee at work, it is also the option with which employees are least satisfied.

Convincing employers that office coffee service can increase productivity and morale—and thereby justify the cost associated with office coffee service—is key to the industry’s future success. Many employees do use coffee as a productivity booster, and view high-quality office coffee as an important workplace perk. Packaged Facts data show that among coffee-drinking workers, 40% “strongly” agree and 43% “somewhat” agree that coffee helps keep them productive through the workday.

In addition, opportunity exists for office coffee service providers that blend a wider variety of beverage options speaking to health and wellness. Wellness programs have continued to gain momentum in Corporate America to address skyrocketing health care costs and reduce absenteeism, along with enhancing productivity throughout the workday.

Significant challenges nonetheless remain for market. For example, while targeting coffee drinkers primarily means targeting breakfast, 71% of the 66 million full-time employed adults who drink coffee on a daily basis do so before they get to the office—more people than drink it while they are at work. So the drive-thru or stop-in foodservice and coffeehouse/donut chains are formidable competitors to office coffee service.

The entrance of Starbucks and Dunkin Donuts into the single brew coffee space throws an additional wild card into the market. The OCS market may be undercut by single brew systems that allow consumers to swap in their own K-cups, already widely available to them via office supply vendors and big-box stores. Single-brew systems and Starbuck’s VIA coffee sticks are playing a major role in the decline in whole bean coffee usage among higher-income groups, and single-serves will have an analogous cannibalization effect on office coffee service sales.

At the same time, smaller office coffee operators face increasing competition from national contractors Aramark and Compass Group, which are aggressively growing their presence in office coffee service via acquisition. For smaller players, this will mean targeting locations with smaller headcounts, where national players will be less likely to tread.

Office Coffee Service in the U.S.: Market Trends and Opportunities provides insight on the challenges and opportunities shaping the U.S. office coffee service market. Scope of analysis is centered on office coffee service provisions and employee office coffee usage and attitudes; however, content also draws from competitive context, such as household coffee usage and usage preferences and foodservice alternatives to office coffee service.
CHAPTER 1: EXECUTIVE SUMMARY

Scope and Methodology
  Scope of coverage
Methodology
  Consumer survey methodology
  Market size and forecast
  Menu item trend analysis
  Other sources
  Restaurant categories
  Limited-service restaurant definitions
  Full-service restaurant definitions
Other definitions
Office Coffee Service Market Size and Forecast
Insight Capsule
Office Coffee Service Macroeconomic Drivers
Insight Capsule
Consumer Trends Shaping Office Coffee Service
Insight Capsule
Coffee Foodservice Menu Trends
Insight Capsule
Consumer Coffee and Office Coffee Usage & Behavior
Insight Capsule
Office Coffee Service Provider Analysis

CHAPTER 2: OFFICE COFFEE SERVICE MARKET SIZE AND FORECAST

Market size and forecast summary
  Moderate growth ahead
  But competition looms
  Pursuing smaller accounts is paramount
  Consumer purchase patterns a wildcard
  Bottom line
Graph 2-1: Office Coffee Service Revenue, 2005-2014
Largest sales category? Coffee, naturally
Graph 2-1: Office Coffee Service Revenue, Dollar Share by Product Category, 2005-2011
Branded coffee makes a comeback
Table 2-1: Office Coffee Service Revenue, Percent Share by Product Category, 2005-2011
Industry segment analysis
Table 2-2: Office Coffee Service Accounts, by Industry Served, 2005-2011

CHAPTER 3: OFFICE COFFEE SERVICE MACROECONOMIC DRIVERS

Overview
Macroeconomic trends: our take
Economic forecast through 2014
GDP: A long time getting back, but finally passes pre-recession levels
  Forecast factors
Graph 3-1: Unemployment, GDP & Inflation Forecast, 2011-2014
Consumer confidence remains abysmal but is rising from bottom
Graph 3-2: Unemployment Rate, Savings Rate & Consumer Confidence, 2007-2012
Unemployment remains high but is tapering downward
Demographic analysis
  Trouble areas
Table 3-1: Unemployment Trends, by Demographic, October 2009 to December 2011
Consumer spending trends
Consumer spending ticks upward
  Inflation-adjusted foodservice & accommodations consumer spending up 4% since 2005
Coffee price outlook
Commodity coffee prices coming back down to earth?
Graph 3-3: Monthly & Annual Coffee Price Trends: 2001-2011
  PPI for coffee
Graph 3-4: Producer Price Index: Coffee, 2007-2011
  PPI industry index follows commodity trends
Graph 3-5: Producer Price Index: Coffee and Tea Manufacturing, 2007-2011
Translation: higher coffee and coffee drink menu prices
Table 3-2: Average Increase in Price of Coffee and Drinks, by Beverage Type, 2007-2011
  Retail price trends
Graph 3-6: Consumer Price Index: Coffee, 2007-2011
Coffee imports: volume flat; value on the rise
  Increase in coffee sales highly influenced by cost per ton, not volume increases
Table 3-3: Coffee Imports, by Product Type Value, 2006-2010
Table 3-4: Coffee Imports, by Product Type Volume, 2006-2010
Table 3-5: Coffee Imports, U.S. Dollars per Ton, by Product Type, 2006-2010

CHAPTER 4: CONSUMER TRENDS SHAPING OFFICE COFFEE SERVICE

Overview
Opportunity: morale, retention and productivity
  Coffee does helps employees through the workday—at least employees think so
  Employees view coffee as productivity tool
  For many, high-quality office coffee is an important workplace perk
Rise of the K-Cup
The office coffee pot is still king—but for how long?
  Pods/K-cups closing gap; office usage significantly influenced by personal purchases
Table 4-1: Office Coffee Service Single Cup Brewer Placements: Manufacturer Share, 2005-11
  Consumer K-cup purchases encroach on office coffee service territory
  It’s going to get worse—fast
  Dunkin’ Donuts
  Starbucks
  Tripling household penetration within 5 years?
Opportunity: move beyond coffee
  Water filtration
  Office and cleaning supplies
Specialty coffee & tea growth
  Mainstreaming is at hand
  Shift away from carbonated beverages
Opportunity and challenge: tapping into breakfast
  142 million opportunities to sell coffee every morning: but office coffee service loses out
  Pre-work coffee drinking siphons away workplace drinking
Challenge: the VIA effect
Starbucks VIA revitalizes instant; threatens office coffee
  VIA raises instant coffee quality bar
  The Via Effect
Challenge: virtual workspace trend
Off-site-only employment reaches 16% in 2009
  Percentage of employed working only at home surges
Table 4-2: Employed Persons* Working At Home, At Workplace, and Away From Workplace,
Time Spent Working At Locations, 2003-2009
Office coffee service vulnerability
Continued growth in remote employment expected
Opportunity: tap into wellness
A trend on the rise
Table 4-3: Wellness Program Benefit Access, 2000-2010
Healthy food promotion policies nearing majority status
Tea provides health and wellness halo
  Tea’s healthful properties a hit with consumers
Table 4-4: Consumer Beverages Purchased for Nutritional Benefits, 2011
Table 4-5: Tea Types Purchased in Last 12 months: Health Significance, 2011
Challenge: Restaurant options beckon offsite
Familiarity and ease of use drive restaurant decision
  Convenience is King
  Among restaurants, convenience comes in many forms
  For employees, what does it mean?
Restaurant density analysis provides insight
  As urban as it gets: Aon Corporation
  400 restaurant choices!
  A giant in Rural America: Tyson Foods
  Setting up shop on the suburban fringe: General Motors
  Suburban sprawls: Baxter International, Allstate and
Why it matters
Table 4-6: Restaurant Selection Density, Selected Fortune 500 Locations
Challenge: healthy coffeehouse and coffee-centric QSR chain performance
  Same-store sales comparisons
  Reading the graphs
  One-year and multi-year comparisons
Coffeehouses ride positive sales wave
Graph 4-1: Coffeehouse and Donut Shop Restaurant Annual Same-Store Sales Index:
2005-10, 2006-10, 2007-10 & 2008-10
  Positive segment momentum through 2011
Graph 4-2: Coffeehouse and Donut Shop Restaurant Quarterly Same-Store Sales Index:
2008-11, 2009-11 & 2010-11
QSR coffee players: coffee is big business
McDonald’s: the behemoth grows while others falter
Graph 4-3: QSR Coffee-Centric Restaurant Annual Same-Store Sales Index:
2005-10, 2006-10, 2007-10 & 2008-10
  Mixed momentum through 2011
Graph 4-4: QSR Coffee-Centric Restaurant Quarterly Same-Store Sales Index:
2005-10, 2006-10, 2007-10 & 2008-10

CHAPTER 5: COFFEE FOODSERVICE MENU TRENDS

Overview
  Datassential
Coffee varieties
Table 5-1: Top Coffee Varieties, Restaurant Penetration, by Segment, 2011
Restaurant penetration increases
Table 5-2: Top Coffee Varieties, Restaurant Penetration, by Segment, 2007-2011
Coffee flavors and types
Table 5-3: Top Coffee Flavors/Types, Restaurant Incidence, by Segment, 2011

CHAPTER 6: CONSUMER COFFEE AND OFFICE COFFEE USAGE & BEHAVIOR

Summary Analysis: Coffee
  Mature usage dictates need for expanding varieties & usage occasions
  The Via Effect
  Single-brew/instant innovation cannibalizing ground/whole bean coffee?
  Coffee conversion opportunities
  143 million opportunities to sell coffee every morning
  But office coffee service faces “first cup” dilemma
  Weakness: Drive-thru
  Competing on price and customized programs are keys to success
Coffee usage holds steady through recession
Table 6-1: Coffee Usage Trending, 2008-2011
Coffee drinks, espresso/cappuccino and instant coffee
Coffee drinks, espresso/cappuccino and instant coffee
  Note on reading charts on this section
  Instant coffee gaining traction among higher-income households
  Espresso/cappuccino an important racial/ethnic distinction; usage trends are afoot
Table 6-2: Coffee Drinks, Espresso/Cappuccino and Instant Coffee Usage Trending, 2008-2011
Instant coffee & instant flavored coffee
  Usage upswing among black consumers
Table 6-3: Instant Coffee & Instant Flavored Coffee Usage Trending, 2008-2011
Ground and whole bean coffee: suffering at the hands of single-brew?
Table 6-4: Ground and Whole Bean Coffee Usage Trending, 2008-2011
Framing foodservice coffee drinking trends: coffee drinkers
  Usage baseline: 183 million adult coffee consumers
  Age gap exists—but is gap narrower?
  Relevance to Hispanic and Asian consumers
Table 6-5: Coffee Drinkers, Selected Demographics, 2011
Daily coffee consumption frequency
  At least 240 million opportunities to sell coffee per day
Table 6-6: Daily Coffee Consumption Frequency, Selected Demographics, 2011
Coffee drinking by daypart
  142 million opportunities to sell coffee every morning
Table 6-7: Coffee Drinking by Daypart, 2011
Coffee Procurement in Past 7 Days, by Method/Location
Coffee relevance rises among full-time employed
Coffee procurement methods among the employed
  Before work versus during work
  A toss up: Bringing coffee versus making coffee
  On-the-go importance
Table 6-8: Coffee Procurement in Past 7 Days, by Method/Location:
Full-Time Employed Consumers, 2011
Feeding the habit: usage frequency
Table 6-9: Coffee Procurement Method/Location in Past 7 Days:
Full-Time Employed Consumers, by Coffee Usage Frequency, 2011
Generational analysis
Table 6-10: Coffee Procurement Method/Location in Past 7 Days:
Full-Time Employed Consumers, by Generation, 2011
HH income analysis
Table 6-11: Coffee Procurement Method/Location in Past 7 Days:
Full-Time Employed Consumers, by Coffee Usage Frequency, 2011
The office coffee pot remains king—for now
Pods/K-cups closing gap; office usage significantly influenced by personal purchases
Table 6-12: Coffee Types/Methods Used by Consumers Drinking Coffee at Work, 2011
Coffee usage frequency significantly influences office coffee procurement choice
  Pods/k-cups may pose price barrier for frequent coffee drinkers
Table 6-13: Coffee Types/Methods Used by Consumers Drinking Coffee at Work,
by Coffee Usage Frequency, 2011
Generational differences
Table 6-14: Coffee Types/Methods Used by Consumers Drinking Coffee at Work,
by Generation, 2011
Coffee pods/k-cups: urban office usage emphasis
Table 6-15: Coffee Types/Methods Used by Consumers Drinking Coffee at Work:
Urban/Outer Suburbs/Rural, 2011
Satisfaction with office coffee procurement methods
  Free vending on top?
Table 6-16: Satisfaction with Coffee Types/Methods Provided by Employer, 2011
Coffee helps them through the workday
Table 6-17: Coffee Helps Keep Me Productive Through The Workday, Selected Demographics, 2011
For many, high-quality coffee is an important workplace perk
Table 6-18: Coffee Helps Keep Me Productive Through The Workday, Selected Demographics, 2011
Aramark Corp
Foodservice operations

CHAPTER 7: OFFICE COFFEE SERVICE PROVIDER ANALYSIS

  Sales analysis
North America Education Sector
North America Health Care Sector
North America Business and Industry Sector
Vending & Office Refreshments Operations
  Filterfresh acquisition
  Waste-to-Energy and Terracycle sustainability initiatives
  Small business service innovation
  Giving clients choices
  Equipment upgrades help drive bottom line
On-Site Foodservice
Event Catering
Strategy: Workplace Productivity, Value-Added Services, Contract Design
  Workplace Productivity
  Value-Added Services
  Contract Design
Table 7-1: Aramark by the Numbers
Compass Group PLC
Compass Group North America (CGNA)
  Sales analysis
Foodservice strategy
  Room for growth
  It Takes You - Eat Local
  Leveraging role of single-source provider
North America Business & Industry Sector
Corporate Dining
Premium/Executive Dining
Catering and Event Services
Vending and Refreshment
Canteen Office Coffee Service
  The Starbucks connection
Canteen’s aggressive acquisition path
  Coffee Distributing Corp brings strong northeast office presence
Strategy
  Focused Promotions and Value Offerings
  Kimco & Cross-Selling
Table 7-2: Compass Group by the Numbers
Farmer Bros. Co.
  Acquisition-based growth
Business operations
Office Coffee Service: Custom Coffee Plan
Sales performance
Table 7-3: Farmer Bros. by the Numbers
Green Mountain Coffee Roasters, Inc.
Growth strategy
  “A beverage for every occasion”—pushing beyond coffee
  Penetrating away-from-home venues
K-Cup branding reach
  Expanding its own foodservice & retail coffee brands
  Tully’s
  Timothy's Coffees of the World
  Diedrich Coffee Roasters
Tea branding
Other beverages
Table 7-4: Green Mountain Coffee, Tea and Other K-Cup Brands, 2011
Coffee makers & accessories leader
Significant business relationships with coffeehouse giants
  Dunkin Donuts
  Starbucks
  Lavazza
Filtered coffee machine in the works
Operating segments
Sales performance
  Segment sales
Table 7-5: Green Mountain Coffee Roasters, Selected Metrics, 2007-11
Peet’s Coffee and Tea
  Coffee & tea types and blends
Growth strategy
  California base
  Geographic expansion
  Thwarted acquisition crimps single cup presence
Distribution channels
  Retail stores
  Grocery: strong growth
  Home delivery
  Foodservice and office
  Office Coffee
Sales performance
  Business segments
  Business categories
  Historical summary
  Q3 2011
Table 7-6: Peet’s Coffee and Tea, Selected Metrics, 2007-11
Royal Cup Coffee Office Beverages
On the office menu
Table 7-7: Royal Cup Coffee, Coffee Offerings
Marketing & promotional activity
Sales performance
Sodexo Inc
Education Foodservice
North American Health Care
Corporate Foodservice
North American Corporate Foodservice
North American Corporate Foodservice
Strategy: Sustainability, Celebrity Chef Partnerships, Employee Health
  Employee Health
  Celebrity Chef Partnerships
  Sustainability
  Work/Life Balance
Cafes, Retail Brands
Catering
Office Refreshment
  Recent initiatives
Table 7-8: Sodexo by the Numbers
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