In Pictures: Single-serve pods give traditional coffee business a jolt
The influx of cheaper pods threatens to eat away at Office Coffee Solutions's market
Claudio David launched Office Coffee Solutions in 1996 and supplies coffee, machines and accessories to a network of law firms, advertising agencies and university staff rooms. The Toronto-based company has 30 employees and last year pulled in $5.2-million in revenue.Galit Rodan/The Globe and Mail
The company also has two retail locations. But the business needs to cope with the proliferation of single-cup coffeemakers by Keurig and Tassimo.Galit Rodan/The Globe and Mail
At first, Office Coffee adapted by selling the machines and their little single-serve pods. “The minute we got into single-serve our growth took a big jump,” Mr. David says. “It was very common to see 20 per cent growth per year.” But now the patent for K-cups, one variety of pod, has run out, and other brands have begun manufacturing their own pods. Costs have dropped.Galit Rodan/The Globe and Mail
Single-serve machines and coffee pods are available in more stores, and they are cheaper than ever, Mr. David says. His office-coffee clients, who make up 75 per cent of his business, have started to shift toward single-serve machines in an effort to cut the costs of coffee supply services.Galit Rodan/The Globe and Mail
The convenience of using the pods also makes them more attractive for smaller businesses that can pick up their own supplies for cheap at the grocery store. The sprawling availability of compatible pods is also threatening to hurt Mr. David’s retail operation. “When we started in this, we didn’t have a lot of players to compete with,” he says.Galit Rodan/The Globe and Mail
How can Office Coffee Solutions protect its business in an increasingly saturated market?Galit Rodan/The Globe and Mail