How Do You Take Your Coffee? Vending Market watch

By September 23, 2019Coffee and Tea, Vegan
Flavored creamers in dairy and non-dairy options are popular in OCS. DREAMSTIME
Remember when coffee was either served black or with cream and sugar? While those two classic choices certainly remain popular, consumers are increasingly personalizing their coffee, and suppliers have responded with an ever-expanding creamer selection in dairy and nondairy options. Operators with OCS accounts need to stay on top of the latest consumer trends to best service their clients.

Customization is key, and plant-based is growing

“We believe personalization is probably the biggest driver when it comes to the trend of variety in coffee creamers and flavors,” explained Nicole Meacham, brand manager, strategic growth channels at Danone North America. “This is especially true with the younger millennial and Gen Z consumers, who seek non-standardized options at every turn. We sell over 10 different flavored creamer varieties within OCS, which is proof that variety and personalization is increasingly important to consumers and operators alike.”

While operators with OCS accounts need to source a wider variety of flavors for their clients, they’re also finding that their customers are asking for more non-dairy options.

“We’ve seen operators express more interest in plant-based offerings as well as a greater variety of flavors to meet consumer needs,” Meacham said. “As a result, Danone North America created the first plant-based portion control creamer to respond to this growing trend, with our Silk Dairy Free Creamer Singles.”

The variety of plant-based options — soy, almond, oat, etc. — continues to expand. Arthur Siller, vice president of operations and business development at Avanti Markets Northwest, noted that businesses want to keep their employees happy, especially when unemployment is low. Providing employees with a variety of flavor options is one way that employers can show they are taking care of their valued staff.

“For our clients, keeping talent and gaining new talent has become very important,” Siller said. So we’ve seen, especially on the West Coast, a pretty dramatic shift to where just traditional creamers is not enough. Clients probably have more concern about what types of dairy alternatives we have than what dairy we have when it comes to milk options. They don’t want just milk, they want unsweetened almond milk, oat milk, rice milk, and three types of soy milk. These options have become increasingly important for our clients, which means they’re important for us.”

Siller said that even smaller and midsize companies — those with 40 to 100 employees, for example — might carry eight different milk options to cater to the individual needs of their staff.

“They’re really trying to please everybody, and it may sound silly, but they need eight milk options,” he explained. “They’ve got to have almond, unsweetened almond, vanilla soy, unsweetened soy, rice milk, 2 percent milk, 1 percent milk, fat-free milk. They may also ask for their dairy to be organic, or from a local source. Especially in the Northwest, our clients are increasingly interested in supporting companies and brands from their own city. It’s important not just for sourcing, but supporting local is a big trend in coffee service that we’ve had to adapt to.”

In addition to supporting local businesses, consumers like to know what’s in the products they’re consuming every day. Natural and organic products with minimal ingredients or additives are very popular, especially with millennials and people who  have dietary restrictions or allergies.

“The other piece that’s driving this trend, particularly with millennials, is the increase in health-consciousness, and knowing exactly what’s in the products you’re consuming,” Siller said. “People want ingredient lists that are short, not long, and they want products that are simple.”

Despite these trends, the top-sellers remain the same

Meacham said that their International Delight portion control creamers remain their top-selling product in OCS, with Half and Half as the topselling creamer product, followed by French Vanilla. French Vanilla is popular in both dairy and non-dairy options.

“French Vanilla is still the number one flavor in both dairy and non-dairy options,” she said. “Hazelnut remains the next top flavor, but we are seeing more and more consumers opting for the plant-based options when available. Seasonal flavors, like International Delight Pumpkin Pie Spice and Peppermint Mocha, also become very popular during the holiday seasons.”

Patricia Poole, category marketing manager at Nestle Professional, said that their top-selling out-of-home coffee creamer flavors are Original (which is considered a flavor as it is mildly sweetened), followed by French Vanilla. She said there is a rising popularity of plant-based creamers, and that Nestle Professional is responding to the consumers’ needs by innovating in the area of new flavors and plant-based creamers.

“Customers want variety in flavors so their customers can customize with flavor,” Poole explained. “They are also looking for new offerings like plantbased options as well as new packaging formats that are more sustainable.”

Siller concurred that while French Vanilla is “far and away the leader” in flavors, the healthy, better-for-you trend is impacting this longstanding favorite.

“Unsweetened has become increasingly popular among non-dairy products,” he said. “For a long time, vanilla and then hazelnut creamers were the standard, but now unsweetened is a must. While every region is different, we certainly see this as trend to provide options without sugar.”

Siller pointed out that sugar-conscious consumers have been driving this trend for years, but instead of opting for chemically-based sugar alternatives, people are now gravitating towards natural and organic options like raw sugar, honey, stevia and agave.

Looking towards the next cup

Siller stressed that the rising popularity of natural sweeteners and non-dairy milks and creamers doesn’t necessarily mean that traditional products aren’t still popular in OCS.

“Traditional products are still selling, even in locations where we supply all these dairy alternatives,” he revealed. “They’re still getting Coffee Mate creamer, and French Vanilla is still number one in that category, no question. But what it really comes down to — and this is true of every segment in our industry — is that our clients want to offer more choices. They don’t want to just limit it to healthy; they want to please everybody. They want to have more options, not less. So for now they’re not saying, ‘We want to replace [our regular creamer].’ They’re saying, ‘In addition to [regular creamer], we want to have these alternatives.’”

That being said, Siller said this may not be the case in 10 years, especially as baby boomers continue to retire and a larger number of millennials and Gen Z enters the workforce.

“Traditional products will continue to lead, but the alternatives may start to take over,” Siller predicted. “For now, they want all the options, but I see a day probably not too far from now where they may say, ‘We just want to have dairy, dairy alternatives, and natural sweeteners in the office.’ And that may start with smaller companies — they can do that as it would only affect a smaller number of employees — and then that will slowly make its way to bigger companies as well. But that’s probably a slow trend.”

Meacham also stressed that while they’re seeing more requests for plant-based offerings, traditional Half and Half remains their bestselling creamer in OCS — for now.

“We believe plant-based creamer growth within OCS will follow retail trends gaining increasing importance, especially for younger consumers,” she added. “Sixty percent of millennials are choosing dairy-free food and beverages. In addition to the Silk Creamer Singles, Silk also offers Almond and Soy refrigerated creamers. Additionally, Oatmilk and oat creamer have become increasingly important in the past year, likely due to its relevance at coffee bars with a dairy-like creamy texture and mouthfeel. Our most recent innovation, Silk Oat Yeah Oatmilk creamers, are now available as well.”

Siller also said that having a large variety of non-dairy options is more expensive, and that not every company is willing to spend that much on OCS, nor does their workforce demand it.

“Not every company can say that they have money set aside for a dairy budget,” he explained. “They say, ‘Powdered creamer is very economical, and it lasts, so that’s what’s in our coffee service budget.’ When our industry discusses this topic, we tend to picture a lot of white-collar environments. The reality is, we also serve a very large number of blue collar locations, and they’re certainly slower to adopt these trends. If there’s 300 employees in a manufacturing facility, they’re likely not as concerned about having oat milk.”

Siller said that operators can address the growing desire for greater variety in OCS by taking a consultative approach with clients.

“Like anything, I would say to get ahead of it so you maintain control,” he said. “With our sales approach, we try to guide the conversation. If you want to be successful in having more dairy and dairy alternatives, lead that conversation with your client. Don’t wait for the day to come where that large, potential new piece of business is making these requests and you’re not prepared. Instead, you can be the expert and say, ‘Here are 10 dairy alternatives we currently carry, and here’s what makes sense from a cost standpoint.’ They’re a lot more willing to follow you in that conversation.”

Operators may find that they need to carry more products to satisfy the needs of their OCS clients, but it’s worth the extra effort.

“We’re carrying a lot more SKUs of OCS products than we did in the past,” he said. “It presents an interesting challenge for us, having to source all these different products, but the flip-side of that is we’re also winning new business, retaining business, and keeping happier clients.”