Profiles

WMF: Global Experience

After 27 years of working with the same company and 20 years in the same department, one might guess that Gert Riethmüller of WMF would eventually tire of his job. However, as the head of international business for the company’s coffee machine division,  Riethmüller says nothing could be further from the truth. “Every day presents its new challenges. It’s a very interesting business,” he says. “When you look at all of these concepts in coffeeshops, it has really been a new industry in the last 15 years.” With a history of producing commercial coffee machines since 1927 – and specialising in automated machines – WMF is well placed to have observed the industry’s changes over the last century. They set up a coffee machine service in 1932 and went on to build their Filtromat system in 1958, working with two boilers for brewing water and steam. From the late 1960s until today, they have refined their automated coffee machines for bulk brewing as well as automated single cup methods.  Riethmüller started with the company in the mid-1980s via a traineeship and after seven years of working with the general WMF group was transferred to the coffee machine division. Moving from the regional division to head the international distribution division six years ago, Riethmüller has continued to be entranced by the reach of coffee in the international environment. “Of course, coffee is the second most traded commodity in the world. It brings you into contact with something like 90 per cent of the world’s population,” he says. “It’s at your hairdresser’s, at the airports, you can’t run away from coffee and even then it’s still a growing industry.” With such an extensive reach, naturally coffee takes different forms all over the world and operating in such a multi-layered environment proves its challenges. To extend its distribution, WMF works through 10 subsidiaries around the globe and where they don’t have subsidiaries they work with partners. “With daily business, it’s best to be a local business,” Riethmüller says. Jokingly, he adds: “we can’t just send out busses of Germans.” In adapting to their local operations, however, WMF do keep some structures in place, modelling on their headquarters with two main divisions: one for sales and marketing and one for technical service, that is, after-sales services. With fully-automatic machines, Riethmüller says that after-sales service is a vital part of their operations and ensures customer satisfaction. “These machines are like cars, you need to ensure maintenance and there needs to be someone to take those calls,” he says. “Every cup of coffee that can’t be sold is a loss of profit.” In each location, WMF’s approach will naturally vary depending on the market. While many European cafés are happy to bring in automatic machines, Riethmüller says that they could not take the same approach in other countries with a stronger attachment to traditional espresso-machine coffee, such as Australia. “What I have noticed in Australia is a long history of a strong coffee culture. Especially in Melbourne, there is a great scene over there. It’s something I’ve never seen anywhere else in the world,” Riethmüller says. “Where that culture grows out of coffee shops and into convenience stores, hotels, and so on, this is where we see our opportunity for growth.” Market research like this probably takes up 70 per sent of Riethmüller’s days in heading international operations. The fun part of the job, he says, is being able to visit so many countries, where he can observe the coffee culture in action. He travels the world, visiting not only existing customers, but also potential ones. “The interesting part is this sales part, being in contact with customers,” he says. “You need to be in these countries to understand the business and understand the people who are making the decisions. You need to be flexible.” Personal involvement in his work has taken Riethmüller all over the world. He guesses he’s been to almost every country in Asia and certainly every country in Europe and has regularly visited North America. As for Africa and South America, however, his visits have been more limited as the price points of their machines make them a harder sell in these developing countries. Within the developed markets, Riethmüller sees further divisions, speaking of the classic divide between “old world” and “new world” mentalities. In the old world European mentality, Riethmüller speaks of traditional ways of drinking coffee in coffee houses based on the Vienna style. Many business models, he notes, are based on the American “new world” mentality, of global chains like Starbucks and McDonalds. In this space Riethmüller speaks of strong opportunities for growth, as food-chain restaurants look to coffee to extend their profits. He points to the increased use of automatic coffee machines in this space as a logical transition, from when fast-food chains first started selling coffee as part of their breakfast concepts. Most recently, they’ve observed that selling coffee can also pull in some business during the quiet, after-lunch period. Their move into coffee puts these chains into competition with restaurants, hotels and coffee shops. He points to the McCafé as a strong example of a viable coffee shop alternative – the new world butting up against the old world. As for regions with major opportunity, Riethmüller highlights their recent activity in former “second world” nations, that is former communist countries in Eastern Europe, as well as the lucrative Asian market. Around 10 years ago, WMF started moving into the Indian market, initially targeting five-star hotels and essentially, anywhere foreign business people would be staying. The biggest challenge is trying to tap into what Riethmüller calls “street business” – that is coffee shops and restaurants.
Similar to South America, as a developing country the cost of a cup of coffee is quite low, resulting in a low profit margin, which doesn’t leave much capital to invest into an automatic coffee machine. “Everyone is talking about booming markets in Asia,” Riethmüller comments. “These are traditionally tea drinking countries, although they are catching onto trends like specialty coffee. You have to keep these cultures in mind.  However, you can’t conquer the world with espresso.”

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