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EXCLUSIVE: Going for Gold

Author : David Strydom

27 July 2015

As the UK coffee market takes off, Nescafe Gold Blend Barista Style vending is described by clients as ‘the whole package’. The exclusive story behind the brand.

The coffee market is doing particularly well in the UK, with 10.7% turnover growth (£7.2bn) in 2013, as reported in the Allegra Café report 2014. Non-specialist coffee outlets, which are outperforming traditional coffee shops, saw 7.8% growth.

Unsurprisingly, this growth owes much to the fact that the UK has become a nation of coffee drinkers – 80% of general consumers visit a coffee shop at least once a week while 65% of coffee drinkers consume two or more cups a day at work.

The popularity of coffee means consumers are increasingly demanding premium coffee, which in turn has led to 25% machine growth to the value of £230m in so-called gourmet vending.

According to research, so-called ‘premium’ consumers rate the size and feel of the cup as significant in their buying choice, followed by the quality of the coffee, then the cost. Put these figures together and it’s clear the trend is towards premium coffee coming from gourmet vending machines.

This, naturally, has provided opportunities for the likes of Nescafe. In a recent interview, Craig Holt, MD of Northbridge Vending, says the Nescafe Gold Blend Barista Style vending offering is ‘the whole package – it’s high quality coffee but is also extremely easy to use which is essential for driving sales. Since using Nescafe Gold Blend Barista Style, we’ve already seen a 13% increase in cup sales compared to this time last year’.

Holt’s business buys Nescafe vending machines and installs and manages them with the end-user. “Although we currently use other premium instant vending machines across our sites, we wanted to try the new, state-of-the-art Nescafe Gold Blend Barista style vending solution at a commercial site for two key reasons.

“One, we felt the quality of coffee was that much better – for me, it’s the best instant coffee I’ve ever tried – and so we had no doubt it would appeal to customers. Two, the machine has touchscreen media technology providing ease of use and aiding the overall customer experience which makes a huge difference to sales.”

Holt pointed out that the touchscreen menu enables users to select and customise their favourite coffee to meet their preferred taste at the touch of a button – particularly important on public sites as people can find other styles of vending machines difficult to navigate.

A main challenge for any vending outlet is the ability to increase the price of the products to gain higher margins. However, Holt said, with Nescafe Gold Blend Barista style, Northbridge can offer a range of premium coffees which customers can tailor with extra shots of syrups or coffee at a price that offers ‘fantastic value for money’.

Holt says the ability to customise drinks can also make a real difference to sales. “So far, we’ve already seen an increase in cup sales of 13% and during peak weeks we’ve achieved sales of 700 cups. What’s more, since including the option of flavoured syrup and coffee shots we have found customers opt for extras on 10% of all drinks.”

One new and, according to Holt, particularly appealing aspect of the Nescafe Gold Blend Barista Style floor-standing self-serve solution, is that the machine dispenses fully branded, embossed twin-walled cups providing customers with a quality, insulated cup.

Holt believes that when customers see the recognisable branding of the machine and cups they instantly gain confidence in the quality of the machine and product. “The feedback we’ve received so far has supported this with people commenting on how good the overall experience of the Nescafe Gold Blend Barista Style vending offering has been!”

According to Holt, most FMs want ‘nice-looking’ vending machines that ‘look the part’ and are reliable. “They want to see easy-to-use machines so customers or staff can use them without complications. They also want the machines to dispense a quality product as well as a good service from our point-of-view. And they want rapid response if there’s a problem with the machine.

Confidence building
Lynn Little, Nestlé Professional's category business unit lead for standard ingredients and vending, is responsible for the Nestle coffee brands – Nescafe Original, Gold Blend, Azera, GB Barista, all the manufacturer’s café products. She describes it as the ‘B2B business for Nescafe’.

“We’ve been able to give Northbridge Vending a solution that means Craig can deliver quality to his clients and ultimately to the consumer. He can drive value from that solution and ensure it’s sustainable. I think part of that is having the confidence Nestle will continue to innovate around products, and invest in our brands to make them relevant so when people walk up to that machine they already understand and have an expectation of what they're going to be served.”

Nestle Professional launched Nescafe Gold Blend Barista in December 2014 to a group of regional operators, including Northbridge Vending. “We brought them to a venue and showed them the machine at a launch event. From there, Craig signed up to a trial to actually take this solution based on the fact he could see the proposition: it was a quality drink, the look and the feel of the machine was modern and contemporary in-line with what people expected to see when they went to have a drink dispensed.”

But the proof of the pudding is in the eating, Little explains. “When you put that machine in an environment where we’ve said it will work and it drives value and quality as well as increasing revenue, you know it’s the right solution. Craig has seen growth in terms of actual volumes of cups dispensed from that machine. In addition, he was able to drive incremental value against those cups and people were still coming back to the machine and re-using it so they're comfortable with spending at the retail price.”

Little took over standard ingredients and vending more than two years ago. She says that while much work has been done by Nestle and vending historically, the company had ‘kind of lost of its way’ in terms of having a conversation with the vending industry and understanding what the vending market is really about, what’s driving it, what Nestle could bring as one of the world’s biggest coffee providers to that marketplace and which would benefit customers and itself.

“We decided to do a route and branding approach where we stood back from the category and executed a series of pieces of research just to understand what was happening. And in fact a large part informing the vending story is understanding the key drivers of the vending market. To put it simply, there are several drivers but a key motivator for vending now is quality and value.

“That’s coming out of people’s perceptions of hot beverages in totality because people have an expectation now, wherever they're actually served a hot coffee that they're going to get the best quality product they can have in the environment they're in with any of the constraints that operationally they might have.

“But also they have the opportunity to manage that quality against value as well, because for many people, it isn't an assumptive close that I’m going to spend £3 for a cup of coffee every time I want to consume coffee – for many people that’s still not where they want to be. So we started to deconstruct what was happening in vending and understand the challenges our operators have, and there are macro-challenges around changing in workplace patterns, size of workplaces, number of people continuously using the workplace.”

People are increasingly out of their offices, working between home and office, Little points out. “If you're not there you're not interacting with the facilities present in the workplace so that’s real and will continue playing out from a workplace point-of-view. Also, from our point-of-view, there's innovation happening in the vending market specifically around gourmet vending. Think of it almost like a premium vending offer of which the Costa Express execution is a good example of how that premium vending solution has come into the marketplace so people’s perceptions of what vending machines are about has started to change.”

Little says potential customers in a retail environment or a forecourt are expecting to see premium vending machines, not something dispensed in a plastic cup for 20p. “You approach those machines assuming you're going to get a quality cup of coffee. People are expecting more. We looked at that situation and thought: ‘We’ve a very good offer with our Nescafe Tradicion and Gold Blend but haven’t actually explored the premium and gourmet part of the marketplace. So we’ve essentially identified a gap – a piece of white space where you could bring a quality brand to the marketplace and allow people to essentially vend at a higher price but you're not in the £1.80 or £2.50 territory. So we developed our Nescafe Gold Blend Barista solution to actually sit in that white space.”

One driver for the execution of that solution is understanding what people want from an experience, Little says. “If they're going to pay £1 for a drink they're going to want the best quality you can get. They’d expect it to be dispensed in a paper rather than plastic cup; they'd expect to be able to customise it to some extent and they'd expect to be able to have a full suite of drinks that include all the café style products – latte, cappuccino and Americano, the three most popular out-of-home coffee shop drinks.”

An interesting point is that when the proposition is right, you're potentially bringing people to a vending machine they would ordinarily have walked past. “The increase is coming from existing consumers consuming more or people who have an expectation that that drink will be better than traditionally dispensed coffee. And as you use it in an environment such as a hospital, people will say the coffee is good.”

Vending operators are constantly looking for innovations that will help deliver for their clients and for the end-user customer. “If it’s a good quality experience, the relationship is positive on all sides.”

Little says Nestle and its brands stand out because of the quality of its products – ‘that’s a fact-based discussion’, she adds. “What we can’t and don’t do is talk about our preference in statistical terms. But what we can say is that Nescafe is the country’s number one favourite coffee. That’s attributable – a fact-based statement.”

As a business, says Little, Nestle has a clear ethos that it will always deliver the best quality proposition in whichever segment it chooses to operate. “If we don’t achieve that, we’ll keep working until we do.”

The sustainability of Nestlé's propositions isn't visible by a ‘relatively simple device such as an accreditation,’ Little points out. “The ethos for sustainability from Nestle is that we develop what we call creating shared value.”

This method is widely known as fair trade and means, in essence, that Nestle educates the coffee farmers it works with that there's ‘mutuality’ in becoming sustainable. “That’s about us delivering to them the ability to continue to grow good coffee, and them making money from growing it. We try to show them that that benefits their own personal circumstances – the long-term circumstances for them and their own communities and families in particular. It also enables us to know there's going to be enough coffee in the world for us to carry on producing these top quality products, all while helping improve the circumstances of the farmers.”

There are pillars to Nestle’s sustainability platform, says Little. “Fundamentally, it’s about delivering for the coffee farmers the ability to be able to create a life for themselves that’s better than it was before. An example of that is that since 2010 Nescafe has delivered 24 million coffee plantlets to help Colombian coffee farmers to have healthier crops. That’s us going in to physically improve the quality of the coffee that’s going to be produced.

“We’ve got agronomists working in fields all over the world helping farmers extract the optimal yield from the space. We’ve been doing this since the ‘60s and ‘70s. It’s not something we’ve just decided we’re going to do in the past decade. We’ve always had a consistent investment strategy back into the people who essentially produce the products that keep us in business – that’s why we call it creating shared value.”

How does Nestle know that it’s producing equipment and products clients want from them, I ask Little. “We’d never produce something we hadn’t spoken to our customers about it,” she says. “The ethos at Nestle Professional is that we’re a customer-centric organisation and customer-centricity means you do exactly do that – you go to your customer and identify with them the dilemmas you want to overcome.”

However, as Little points out, that might not mean Nestle has a product for every dilemma. “It could be that we have a different way of actually delivering a service that helps you deliver directly to your customers or clients and ultimately consumers.

“We’d never advocate doing something that had no customer insight but equally because we have the critical mass as Nestle we can talk to the consumers about their expectations, so it comes from both sides. We can help inform customers about what the consumer broadly is looking for, then help them with the solutions we put together. That’s the faith we have in Nescafe Gold Blend Barista Style – that we’ve delivered something that the consumer is going to love and that the customers such as Northbridge Vending are going to be able to generate the type of revenues they need.”

The hot beverage sector is experiencing phenomenal growth – more than enough reason, Little says, to innovate. “Consumer behaviour – characterised by the requirement for better quality coffee – has changed and it won't revert,” says Little. “As a consequence of that change, as well as the marketplace change, we’d be remiss if we said we’re going to ignore the fact that the environment in which we’re operating has changed. That would be bad for us and bad for our customers.”

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