By Bob Tullio
Note: This article first appeared in vendingmarketwatch.com on January 23, 2018. It is reprinted here with permission of the author.
You can learn quite a bit sitting in a hotel lounge in Dallas, TX. In 2013, I was on my way to the NAMA Show in Orlando and stopped in Dallas to assist a coffee service subcontractor. While dining at the bar, watching the Cowboys play, I struck up a conversation with someone in the residential water filter business. He knew only one thing about the office refreshment business.
Giving the store away
“You idiots in coffee service install point-of-use water units for $29.95 or $35.00 a month,” he said. “You take customers who are spending $500 to $1,000 a month on bottled water and after your units are installed, they are spending $150 a month, maybe. Did it ever dawn on you that if you offered something better for maybe just a 20 percent savings, they might just buy it?”
He was right. As an industry, we were giving the store away. In fairness, back in 2013, workplace water systems did not come with all the bells and whistles that are available today.
Inspired by the tongue lashing that I received in that Dallas bar, I met with my partners and our water filter representative at the Orlando NAMA Show. We developed a two-stage carbon filtration system that dramatically improved the taste, the quality and easily commanded a much higher monthly rental. It was a big step in the right direction for us.
Water at the NAMA Show
Today, there are so many ways to turn water into gold. Drinking water and ice has more revenue potential than ever for coffee service operators. The 2018 NAMA Show in March will showcase plenty of exciting equipment in the water space and Operators would be wise to pay attention. Everyone I spoke to for this column will have their products on display at the NAMA Show.
The view from Pentair
Christopher Williams is an industry veteran and national key account manager at Pentair Water Quality Systems. He says the workplace water landscape has changed quite a bit over the last five years. “Today’s workplace has a different attitude about water. They are far more selective about the taste profile and are willing to pay more for it,” said Williams. “We can see that based on the number of high end, cartridge style filters that we are selling today.”
Williams points out that Reverse Osmosis Systems (RO) have given operators a nice opportunity to up their game and profitability. Williams said the RO system, criticized for wasting water, is gaining popularity because of high efficiency units that are now available. “It’s plug and play, easy to operate, efficient for the location and for the Operator, a nice profit center,” said Williams, adding that high efficiency RO systems will be a big attraction at the 2018 NAMA Show.
Vivreau – A stylish approach
Vivreau, who makes point of use water units, (hot, cold and sparkling) is positioned as a unique player in the workplace water market. Their Vi-Tap unit attracts the attention of companies who want point of use water delivered with style, a feature that sets the company apart, said Chris Dagenais, VP of marketing.
Dagenais believes that if operators want to move clients away from plastic water bottles and 5-gallon bottles, four factors must exist. The point of use system must be reliable, easy to maintain, easy to use and stylish. Vivreau also offers higher volume water units, allowing clients to bottle their own still or sparkling water, with custom logo “signature glass bottles” – another style component that is perfect for conference rooms and workplace catering kitchens.
As an industry, “We are just scratching the surface when it comes to growth,” said Dagenais.
Vertex – Focusing on operator support
“What we are positioned for right now is to help Operators understand the water space more fully,” said John Miller, national sales manager at Vertex Water Products, who manufacturers point of use units and filtration products. Miller adds that workplace consumers are becoming more knowledgeable than ever about water and said Operators need to be experts, aware of which solution works best based on the specific water quality challenge.
While Miller is proud of the design and look of Vertex equipment, he said it is more about “What goes inside the cooler than what the cooler looks like on the outside.”
“We see situations where filters haven’t been changed in years – we are very concerned about that,” said Miller, who believes that Operators need to be diligent when providing service on water coolers and making sure that the filtration selection is the right choice, depending on what is happening in a specific water district.
Follett – Water and ice
Follett changed the office refreshment landscape with the release of their Series 7 Ice and Water dispenser in 2011. The sleek little countertop dispenser delivers ice (125 lbs. a day, 7 lbs. stored) and purified water without the need for a drain. Their newer Series 15, (125 lbs. a day, 15 lbs. stored) launched in 2014, is rapidly becoming the dispenser of choice in the workplace as demand for ice increases, said Mike Purcell, Product Marketing at Follett Corporation.
While the Follett dispenser cost can give an Operator a case of “sticker shock” compared to most water units, from my experience, offering the Series 7 or 15 as part of a major workplace refreshment proposal can make the difference when selling a key account. Clients will often pay five to ten times the typical monthly water rental just to have a Follett or two in their office. The new sparkling water interface, released in May of 2017, only intensifies the appeal.
Purcell said that the growth of Follett’s ice/water dispensers for the workplace shows that the demand for ice is there. Beyond the rental, said Purcell, “With ice in the office, Operators will sell more ice based drinks, like iced tea and bag in the box products, generating more revenue.”
Bevi – Hip, healthy and green
When Sean Gundy and his partner created Bevi about five years ago, the focus was to offer a product that would eliminate disposable plastic bottles. “We were collectively horrified by the waste that was going into landfills, rivers and oceans,” said Gundy. “In B2B office environments, we saw companies going through thousands of bottles and we realized that we could match many of the flavors, help companies save money and save time needed to manage a beverage program.”
The Bevi dispenser offers still, sparkling and multi-flavored waters. From my experience, it is “love at first sight” for many clients, especially in the tech and entertainment space, but Gundy says, to his relief, the Bevi is becoming increasingly popular in traditional businesses, including many Fortune 500 companies.
Gundy points out that Bevi is a nice strategic fit for a variety of needs, attracting clients who seek to save money, those who are motivated by a “green initiative” and companies who want to attract the best talent by offering premium amenities. Gundy added that the next direction for Bevi is toward vending and micro-markets, where customers can pay for beverages at the point of use.
Lavit – Personalized, convenient and eco-friendly
Lavit was developed about five years ago around the need for “happy, healthy employees” and an eco-friendly solution, said Hayden McClenny, who recently joined Lavit as Vice President of National Account Sales after a decade with Keurig Green Mountain. McClenny sees the similarities between the two companies, with both offering highly personalized drinks, convenience and innovative technology. The Lavit offers a single serve water system with still or sparkling flavored beverages and a recyclable capsule.
McClenny said Lavit enjoyed explosive growth in 2017 and is looking to work with more Operators in 2018. “Coffee was the all-star in the beverage world for many years,” said McClenny. “Today, cold beverages are four times more popular than hot beverages to begin with. Water is the new big opportunity for Operators in the workplace and Lavit is a product that will help Operators succeed.”
In the past, customers were originally driven toward point of use water systems to save space and money. Today, additional factors also motivate them – environmental concerns, control over water quality and a demand for more personalized beverages. For Operators, the opportunity in the water space is bigger than ever. See you at the 2018 NAMA Show!
Over the last 37 years, Bob has sold video games, cigarette machines, cranes and juke boxes to bars and amusement centers, full line vending to public locations and office environments, pay telephones to retailers, coffee service to thousands of office locations and of course, micro-markets. He has a very successful track record as key strategist, sales trainer and media manager under the title, "Director of Business Development" for World Wide Vending and Gourmet Coffee Service.