Beginning in 2020 and continuing through 2022, the coronavirus pandemic has had a significant effect on consumer working life. Even before the COVID-19 outbreak, work-from-home jobs were expanding as many office jobs can be done from any location. The COVID-19 pandemic has caused the existing trend of remote work to accelerate.
The U.S. office coffee service (OCS) market is projected to expand at an average rate of 24% annually, reaching $4.4 billion in 2026 from a historically low 2021 base, due to both returns to the office and rising prices. Gains will follow the pandemic-induced bust of sales in 2020 and 2021 when most office workers began to work from home full-time or part-time, as reported by Packaged Facts' new report Office Coffee Service in the U.S.: Market Trends and Opportunities.
Remote Work Is Here to Stay, but Offices Are Staying Too
The pandemic has had drastic and lasting changes on telecommuting. Starting in March 2020, many office workers shifted to working from home indefinitely because of the risk of exposure to the virus in congregant settings. Thus, the need for office coffee service declined strongly in the last three quarters of 2020 and throughout 2021 as contracts with vendors were canceled or reduced.
Packaged Facts found in its June 2021 National Online Consumer Survey that 24% of consumers were working from home occasionally or part-time more than they were pre-pandemic, while one-third of consumers were working from home full-time more often.
By May 2022 (the most recent survey data currently available), almost as many consumers continued to report working from home more often than they did before the pandemic began in the U.S.
- 26% of consumers report increased frequency in working from home occasionally compared to pre-COVID-19 habits
- 23% of consumers report increased frequency in working from home part-time compared to pre-COVID-19 habits
- 27% of consumers report increased frequency in working from home full-time compared to pre-COVID-19 habits
Many offices have now reopened for employees who choose to work in the office full-time or part-time. Some companies are also beginning to bring all of their remote employees back to the office this year, or plan to do so in 2023, on a full-time or part-time basis, so there will soon be a greater need for office coffee service than during the worst parts of the pandemic.
However, working from home is here to stay. Some companies are reducing the size of their office layouts in anticipation of a permanent decline in the number of employees present on-site at any given time. Still, with the increasing view that offices are places for collaboration instead of solo work that can be done at home, more offices are realigning to include spaces to accommodate such work. Since casual conversations are often done around snack and coffee spaces, this presents an opportunity for office coffee suppliers to outfit such spaces for collaboration.
Expanding the Market Base: Extending “Office” Coffee Past the Office
As the workplace changes, coffee service providers need to look to other markets to expand sales. Though the industry has long been identified as “office coffee service,” shrinking office spaces and a permanent move of some positions to remote work indicate the need to redefine the industry as a more general “workplace coffee service.”
Targeting the work-at-home market (or simply direct-to-consumer – DTC – options, which can be used by anyone, even people who do work on location where coffee service is present) can stymie losses from fewer people working in office environments. Coffee service companies can try to better target this market for sales with exclusive supply arrangements with a specialty local roaster that could make local delivery or pickup easier.
Employers who work with office coffee service providers can have coffee, tea, snacks, and other items delivered or offered to home workers for pickup as a perk. However, DTC options have a high cost of last-mile delivery to many individual worker locations, which can present a challenge for expanding office coffee service to the work-at-home market.
To better target the work-at-home market (and employers who have employees working from home), office coffee service providers can also offer other services that consumers may want for their homes. For instance, many consumers have home water treatment and could benefit from regular deliveries of water filters and other supplies, or maintenance on their systems. Regular service check-ins for water could also include deliveries of coffee, tea, and snacks for home office workers.
Single-serve coffee is especially important to offer via the DTC model due to many households having only one or two coffee drinkers. Offering pods, K-cups, and other single-serve options such as steeped coffee are key to reaching this market. Additionally, coffee service companies could sell or rent pod-based machines to home users, offer rotating refills of coffee pods, or offer specialty machines that can add more personalization to single cups (e.g., a coffee maker with capabilities such as flavored shots of chocolate, espresso, vanilla, caramel, etc.) to add value.
Additionally, coffee service providers can target non-office work environments that require employees on-site to boost their sales in a centralized employer location. Most employers (e.g., manufacturing facilities, warehouses, hospitals, and retailers) have some type of break room for employees on-location. Addition or expansion of coffee or snack service in these areas can diversify the customer portfolio of coffee service providers and protect them from changes seen in office layouts and careers that have traditionally involved work in an office-like setting.
There are also opportunities for value gains by marketing more value-added coffee service options (including trendy beverages preferred by younger workers) to entice employees to come into the office more often. In Packaged Facts’ May 2022 National Online Consumer Survey, 63% of employed coffee drinkers reported they agree that great coffee and snacks provided by their company would make them want to go into the office more often.
Additional analysis of the office coffee service market can be found in the June 2022 Packaged Facts report Office Coffee Service in the U.S.: Market Trends and Opportunities, 5th Edition.
About the blogger:
Cara Rasch is a food and beverage analyst for Packaged Facts. She studies consumer and industry trends in this space and has a B.A. in economics from Allegheny College.