BPOs driving vending machine business of beverage companies

Sabir Ali Sayed faithfully followed his daily routine of three tea breaks a day during his eight-hour shift at the call centre he had been working with for the past few years. And then, his tea breaks became shorter.

“Earlier, I would go to the canteen and chat with friends while I sipped my tea or coffee. This would, obviously, take time. Whereas now, there are two vending machines on our floor. So I don’t need to go to the cafeteria,” he says. “No more long tea breaks for us now,” he laments.

“We keep vending machines for employee convenience,” says Vineet Mittal, managing director at Stream International Services Pvt. Ltd, a Mumbai-based BPO company. “This comes under our corporate wellness programme for healthy living as body needs stimulants to deal with stress.” Tea and coffee are healthier options than aerated drinks, he adds. Stream International has a policy of keeping a vending machine at every 5,000 sq. ft of office space.

In the process, call centres are opening up a big retail opportunity for beverage companies. Some, in fact, are already generating good business from BPOs. Sangeeta Talwar, executive director, Tata Tea Ltd, says, “35-40% of our total vending machines are installed at BPOs or ITeSs (information technology-enabled services).” Tata Tea is the world’s second largest branded tea company and dispenses Tata Coffee and Tetley tea through vending machines. The vending business on BPO and ITeS campuses has grown 60-65% in the past two years, Talwar says.

Similarly, about 30% of the vending machines of Café Coffee Day, a division of the Amalgamated Bean Coffee Trading Co. Ltd, are in BPOs.

And as this segment grows further, several companies are planning to ramp up their presence in such offices. “Increasing out-of-home consumption is a natural consequence of economic development, work culture and changing lifestyles,” says G.G. Pillai, business manager, out of home, Nestle India Ltd. “This is more visible in the BPOs and IT offices that work round the clock.”

Beverage companies point out that as ITeS companies in India provide more value-added services, they are getting a more varied set of employees, some of whom have worked abroad and are used to coffee machines and snack bars.

“They are captive consumers for us. Their being young and paid well also helps,” says D. Sankaranarayanan, business head of the vending machine beverages division at Café Coffee Day. He adds that his company plans to increase its presence in the sector in the coming years.

The ready-to-drink tea and coffee market was worth $125 million (Rs506.25crore) in 2006, according to Datamonitor Plc., a UK-based consumer research firm that tracks various sectors in India. The segment is expected to grow to $145 million by 2010, according to the firm.

Coca Cola India Inc., Hindustan Unilever Ltd (HUL) and Nestle are also betting big on the BPO campuses. HUL, which sells Knorr soup, Bru coffee and Taj and Lipton tea through its machines, maintains that the BPO/ITeS industry is an attractive segment for its out-of-home business.

The company provides cash-less service in some offices by providing consumers smart cards. Such services can help BPO centres control costs, it claims. The company is also excited about the trend among BPOs to move to smaller towns. “A key advantage for Hindustan Unilever is its deep reach into smaller towns and, therefore, the ability to service customers such as BPOs as they set up centres in smaller cities,” says Rishi Pardal, business head of the out-of-home division at HUL.

Nestle, while refusing to divulge its expansion plans, also maintained that its vending business in BPOs is growing fast. “Our cuppage from the BPO and IT offices has been growing extremely rapidly last year,” says Pillai of Nestle.

Meanwhile, Tata Tea plans to open its recently launched café chain, Chai Unchai, on BPO campuses. Café Coffee Day recently introduced cereals and flavoured milk apart from coffee at its dispensers. “We are looking at tapping this segment through attractive offerings. We are also looking at providing a choice of beverages such as flavoured teas and green teas,” adds Talwar.