It’s fair to say the last six months have been eventful for Melitta System Service in the UK, with the company ushering in a new ownership structure, a new managing director and a new strategy. Here’s what you need to know about the fully automatic coffee equipment specialist with high hopes for market growth.
10. Share buy-back marks new dawn
For the last 22 years, Melitta System Service (MSS) has been run by Paul Hopkins, who had the exclusive MSS licence from Germany, where the coffee machine manufacturer is headquartered. Hopkins retired from the business back in April, with the German parent company buying back his shares. Having acquired the sales organisation of what was essentially its local distributor, MSS has subsequently realigned the operations and put the foundations in place to prepare for a new period of growth.
9. Automatic choice
MSS turned to Steve Penk, a 20-year veteran of the coffee business, to lead the new operation and plot its direction in the UK market. It was a trip to sister company Cafina’s factory in Switzerland, where Melitta units are made, that turned him into an automatic machine convert having previously specialised in traditional espresso machines. “I have to say I was blown away by the ability of these machines,” admits Penk. “The technology, build quality, the attention to detail and the amount of variables you can control is amazing. I realised my ignorance in not looking at super automatic machines in the last 10 years and how much they have improved.”
8. Five-year plan now underway
One of Penk’s first jobs was to put a five-year growth plan together. The fruits of that plan are already apparent, with the 20-strong company recently moving to larger offices in Maidenhead and securing five times more warehousing than it had before. “Melitta is an international company, present in 50 markets around the world and with a €2.2 billion (£1.8 billion) turnover, so it is a major player,” says Penk. “They are serious about their intentions of investing in the business, and that is what they have done. They have invested in my plan and part of that plan included moving to new premises, a new showroom, and the recruitment of new sales guys.”
7. Ramping up resources
Penk’s arrival has signalled a ramp-up in resources, with five new sales people recruited to the team and a new operations manager on the verge of joining. A further five service engineers are budgeted into the headcount for next year. “There is some serious growth involved,” says Penk. “I have used the quote many times before, but [the owners] have not bought it to look at. They feel that Melitta should be a player. When we look at our competitors, such as WMF and Franke, we see what these guys are doing and we should be up there.”
6. Hot on stock
One of the most significant changes for Melitta this year has been a revised approach to managing inventory. It now holds stock locally after investing in new warehouse facilities. Previously, the company imported straight from the factory, meaning lead times from order to receipt spanned several weeks. “I don’t think you can run a business like that in any meaningful capacity, so we now have access to £250,000 worth of coffee machines and they are coming in and going out on a weekly basis,” says Penk. “It means a sales person can actually sell a coffee machine and within a week the customer can have it installed.”
5. Playing catch-up
Compared with some of its competitors, Melitta has not exactly been prolific when it comes to expanding its portfolio, but that is all set to change with a series of new lines poised to be added to the offering every three or four months over the next two years. Penk admits this approach is long overdue. “From what I can see, the focus of the business has not been on new products in the last five or six years. We haven’t really brought anything new out, so it is desperately needed to bring us up to what competitors are doing. Our competitors have been leaps ahead of us at the moment with their innovations, but I think we will catch up and, in some instances, surpass where they are.”
4. Picking up the pace
This year’s product roadmap includes a launch schedule for both midrange and high-end lines as Melitta seeks to strengthen a portfolio that includes flagship models such as the C35 and Alpha F. New developments for pour and serves, thermo brewers and bulk brewers are all planned. “There is a whole raft of new machines coming out one after the other in the next 18 months,” he says.
3. Breaking down barriers
Coffee resellers and catering equipment dealers form a central part of Melitta’s route-to-market strategy. While Melitta carried out its fair share of direct business in past — especially with larger customers and contract caterers — Penk is proposing to operate a clearer channel policy. “Our fundamental belief is that you can’t run with the hare and the hounds,” he says. One of the key challenges for Melitta is convincing the dealer market about the attributes of super-automatic machines and challenging any perceptions that such appliances are too expensive or costly to operate. “Our plan is to break down those barriers and show people that we can be a proven partner,” he adds.
2. Hole in one
Melitta claims its machines carry an array of USPs, including innovative touch screen controls, multiple hopper options and exceptionally small footprints. One detail it is particularly proud of is the sieves at the bottom of its pistons. They contain 45,000 conical-shaped holes, compared with the 17,000 holes that it claims a rival German manufacturer has. So, why does that matter? “We know that having so many holes allows us to grind coffee finer so that we can get a better extraction from a lesser amount of coffee,” explains Penk. “We have illustrations of it magnified [to show customers] because to get 45,000 holes in something fractionally bigger than a £2 coin is quite an achievement!”
1. Pump up the Volume
The major selling point of Melitta’s bulk brew machines is that they meet the volume needs of commercial customers, in some cases helping operators to produce more than 500 drinks an hour. Penk says end-user clients vary from coffee shops located in tourist destinations to British Airways lounges at Heathrow Airport’s Terminal 5. “There is no one ‘typical’ customer, it is quite diverse, but there is a common thread of volume,” he notes. “High volume throughput is where we excel, and the build quality of the machines enables these things to work for a very long time.”