Ice trends present business opportunities for dealers

May 15, 2014

One sales and marketing angle water treatment dealers often rely on is that cold water is both a healthy and refreshing alternative to drinking high calorie, sugary …

One sales and marketing angle water treatment dealers often rely on is that cold water is both a healthy and refreshing alternative to drinking high calorie, sugary drinks. However, besides being a popular standalone beverage choice, water is integral to the taste, color and experience of consuming several of those other drinks as well. Taking it one step further, supplying ice can elevate your business as well as your customers’ workplaces or bottom line to the next level.

Simply put, there is no denying the iced beverage craze that has taken hold in our country. The popularity of iced tea, iced coffee and practically anything cold and slushy is undeniable. And, this is no longer a seasonal or regional trend. The good news for our industry and its dealers is that the ice in demand consists of 100 percent H2O.

The new Ice Age  

On average, more than 250 billion pounds of ice is used in the U.S. each year. Also, according to a Heart+Mind Strategies study, while water remains a popular beverage choice throughout the day and into the night, consumers enjoy iced beverages, including coffee and tea, more and more during the afternoon hours. This can be a significant growth opportunity for dealers and morale and productivity boosting opportunities for office and general managers.

Further, according to Mintel research, 20 percent of consumers drink iced coffee. In the 18- to 24-year-old age group category, 38 percent of consumers drink this beverage; 11 percent among 55 to 64 year olds; and five percent for 65 and older.

“People want ice. We’re an ice culture,” insists Mike Rice, vice president of marketing for Follett Corp. In fact, due to its popularity in certain areas of the U.S., Rice identifies Virginia to South Carolina to Texas, New Mexico and Arizona as the “chewbelt” as a result of residents’ love affair with ice. Just visit a Sonic® restaurant and see for yourself.

Supporting an ice machine investment even further, ice can come in many forms today. While cube is still a popular option, independent market research shows that chewable ice is preferred by over 70 percent of consumers in the U.S.

Heating up cold sales

How can dealers properly capitalize on this societal movement and ensure their customers gain a desirable return on investment? Additionally, although the end product (water) is still the same — albeit a much colder temperature and form — ice machines need to be evaluated differently than water filtration equipment.

Rice indicates that the most popular approach is to lease an ice machine, similar to a POU water cooler. However, because the initial outlay for a quality ice machine is more expensive than a POU water machine, in order to achieve a satisfying ROI, customers may have to adjust their expectations with ice machines, states Rice. One way to meet that end is to extend the payback horizon a bit recognizing that a high quality ice machine is a durable piece of commercial equipment. 

Another approach is to realize that the sale or availability of other drinks, such as iced tea and iced coffee, are not possible without an ice machine. Include the margins of iced beverages in your economic analysis, Rice advises, because it can give you and your customer a more easily accepted price point.

“The introduction of ‘drainless’ ice dispensers as well as space-saving, countertop models have allowed machines to be placed in locations previously not possible, driving rapid adoption. Also, the trend toward ice machine rental has been accelerating as customers increasingly opt out of the risk and capital expense associated with equipment ownership,” adds Todd Peterson, COO of Quench USA.

Other dealers may choose to sell the ice machine and provide service contracts for filter changes and maintenance. But in the end, you want to get as much value as you can from a value added product offering such as ice. 

“An ice machine is different than a POU water machine and not just mechanically, but also from a business model perspective,” says Rice. "As a result, purchasers must understand the bigger picture of what ice provides and the intangibles it brings to a workplace or business."

For instance, there are multiple uses and needs for quality ice throughout the year, even if not used in beverages. While it is well-documented that office workers enjoy iced water and the availability of ice to make other beverages, ice can also be helpful during company events and holiday parties as well as for injured or overheated workers, as examples.

Also, when workers do not have to leave the office to purchase an outside iced beverage, not only does it save them money, but it can also increase workplace morale and productivity.

“[Furthermore,] when you look at overall costs, an ice and water dispenser is not much more than the cost of a cooler and an ice machine,” notes Rice. “You need to use this to overcome initial price shock (your own or your customer’s). So, it requires a bit of a change in thinking but it is all connected to the idea that people like and want ice.”

And, how can dealers stay successful when selling ice machines after the initial sale? “Generating a recurring revenue stream is an important way for a dealer to ensure [their own] ROI,” Peterson says. “A rental contract or maintenance contract are ways to secure recurring revenue from the placement of an ice machine.”

Machine and water quality make the difference

Operating in the ice space requires an investment on your part and your customer’s part. At the forefront of the plans should include quality, sanitation and ice type. Helping customers understand water quality, which is your forte, and why ice machines are priced the way they are will help customers overcome sticker shock.

While there are several makes and models available in the ice machine category, you get what you pay for. Typical ice machines can range from $200 for a small countertop machine with an open ice bin to $5,000 or more for a large ice and water dispenser with enclosed storage and hands-free dispensing. Ice machines typically have a large refrigeration system to transform water into ice. In fact, it takes twice as much energy to freeze 32º F water to 32º F ice than it takes to chill the same water from 72º F to 32º F. Quality machines also have heavier duty mechanical components, insulated compartments to store ice and more sophisticated controls.

In order to sell ice machines the right way, customers need to be offered these key considerations, according to Rice:

  • Sizing: Select machines that will serve the customer’s needs
  • Quality/reliability: They have to work and be trouble-free
  • Sanitary dispensing: Avoid hand scooping in most cases
  • Ice type: The right ice enhances satisfaction and most people prefer the soft, chewable ice in their beverages.

“Quality includes everything from the reliability of the machine to the ease of installation and ease of cleaning and maintenance because that drives upfront installation costs and ongoing maintenance requirements,” adds Rice.

Keep these factors in mind when looking to capitalize on iced beverage demand. Dealers can partner with local food service businesses, office managers, schools as well as central dispatching environments, such as construction and parcel delivery services, just to name a few target buyers.

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