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. The report provides the following:

• Market size and forecast for office coffee service revenue for 2005-2014, as well as product category analysis and industry segment share.

• Analysis of the impact of macro-economic drivers shaping office coffee service, including an economic forecast through 2014; consumer confidence, unemployment, and spending trends; and commodity and retail coffee pricing trends and forecasts.

• Discussion of opportunities and challenges central to the growth of office coffee service, including employee morale, retention and productivity; the rise of the K-Cup; the need to move beyond coffee; tapping into breakfast; the VIA effect; virtual workspaces; tapping into wellness; and restaurant competition.

• Assessment of coffee menu trends, focusing on menu item penetration by restaurant segment, including top flavors and types. Trended menu item data is provided courtesy of Datassential, a leading food research company.

• Assessment of consumer coffee usage, type and flavor/variety preferences; office coffee procurement methods; satisfaction with these methods; and employee attitudes toward coffee as a productivity tool and office perk.

The report also analyses leading coffee service providers, including national foodservice contractors, coffeehouse chains and independent providers. Companies include Aramark Corp, Compass Group PLC, Farmer Bros. Co., Green Mountain Coffee Roasters, Inc., Peet’s Coffee and Tea, Royal Cup Coffee Office Beverages, and Sodexo Inc.