Part 3. «Doing like everybody»
Dmitry Petrov: Me, as the top-manager who must make decisions, so far I’m just confused by your comments. To clarify the question: “Where do I begin to quickly improve the performance of my coffee business? What do the market leaders do in this matter?”
Alexander Kuzmin: A standard way for the Russian CEO would be “doing like everybody”, but, alas, it’s not always the right one. I can not advise you any approach from those that are currently used by the leading retail players of the fuel market of the Russian Federation (as of 2014).
Take, for example, the competitive selection of coffee beans, commonly produced in the largest Russian chains of filling stations. In my opinion, this is a clear indication of misunderstanding of the very essence of the coffee business in filling stations.
Now it looks like this: the organizers of the selection committee shall convene a tasting, which includes 5-6 casual office staff workers. Each of the contenders for the supply of coffee beans prepare drinks, the Commission is trying them and fills the scorecards. By the results Commission determines whose coffee is most delicious. Such a choice is still based on the criteria of “like – dislike” and on a small sample of unprofessional respondents. Often these random people have no idea about the rules and methods of coffee tasting. For example, one member of such “commission” had to call an ambulance after tasting as the “expert” seven cups of espresso cups and five Americano cups in a row. The man simply had a heart attack. And you want to rely on his assessment of thirteenth’s cup of coffee taste?
But the real absurdity of such tastings that you evaluate the taste of the drink obtained only on the coffee machine, which the applicant brought to you.
Even if you require applicants to use a machine, installed on your gas station, then any other coffee machine of the same model with a slight change of settings will produce drinks with completely different taste from the same coffee blend. And none of the managers is able to control what configuration has one or another coffee machine installed at the station. The stations are spread over hundreds of kilometers – who and how will check the identity of the machine settings and uniform flavor of coffee? How to assess compliance with the real taste with which bidder has won the competitive selection? So lots of coffee machines, lots of taste options for coffee drinks, and all these variations have nothing to do with the one that you tried during the selection and you have no means of monitoring the process, except to drive around the stations and try coffee yourself. What is the sense in such a tasting?
Now, about the criteria for selection of coffee beans. Typically, as the object of selection a vague notion of “coffee bean” is used, without specifying the parameters of the blend even by arabica-robusta ratio. Using this, cunning bidders from the “famous” coffee companies use a “premium” blend of 100% Arabica, which has the average market price of 1200-1400 rubles per kilogram, and after winning the tender they supply chain of filling stations with a blend containing 60% or more of Robusta with average market price of 600-750 rubles.
Dmitry Petrov: I agree, tenders are very often meaningless and are only used to “drag” the right bidder to win. So I’ll just ask – do I have to choose a supplier of coffee beans? If necessary, how to do it?
Ksenia Van de Kamp: Supplier of coffee beans has to be chosen. But you do not need to arrange any meaningless performances for that. You or your appointed managers should just select one of the possible suppliers of high-quality coffee beans, agreeing on the price of supplies. At the same time you should be aware that the “quality beans for the automatic coffee machines” is a special kinds of roasted coffee that are the same from year to year and the content of aromatic components is supported regardless of the constantly changing environment in which new crops are ripening in the regions of coffee growing. To do so, frying companies need to procure blends with regard to the content of aromatics in each acquired batch of coffee beans. I.e. company-applicant must have the volume of purchases equal to the thousands of tons of coffee per year – it’s the only way to provide the production of blends suitable for the use in automatic coffee machines without the need for constant adjustments to their settings.
With all the abundance of frying companies there are very few that can actually comply with this requirement – no more than ten in the whole world. First of all, it is the leaders of the world coffee market in terms of sales – Dow Egberts, Mondelez, Lofbergs Lila …
If you want to select a supplier of quality coffee beans – invite representatives of five world leaders to negotiate and define the supplier by a better quotation on the coffee beans for automatic coffee machines. For your network you must choose one, universal blend suitable for black coffee (espresso and americano) and coffee with milk (cappuccino, latte). Practice shows that the optimal composition of such a universal blend should have arabica-robusta ratio of 80/20.
Dmitry Petrov: Can I select from the Russian providers offering premium coffees at better prices? Or even change the vector, drawing attention to the so-called “fresh-roasted coffee”, widely represented in our market. Personally, I think fresh-roasted coffee is quite a good idea.
Ksenia Van de Kamp: Yes, you can. But then, the task of achieving the same coffee taste at all gas stations of your chain becomes impossible. Here in North America, it is not considered a “bad behavior” to show the consumer the weaknesses of your rival, so let me tell you straight – Russian suppliers of coffee in the HoReCa segment tend to offer their own brands of coffee blends masked as European trademarks and not-fitting for the use in automatic coffee machines. Non-fitting in terms of achieving the same taste of coffee drinks at all gas stations, regardless of their location.
(Note. In 2015 RusHOLTS made a special coffee blend for automatic coffee machines under our customer’s private label. 1,5 years before this round table we sought the development).
“The Secret” of ensuring the same fermentation of coffee beans – the purchase of a special blend from a major supplier. Uniformity of coffee machines settings can only be achieved with the help of remote monitoring – there’s no other way.