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Stir It Up! The Case For Vended Coffee

Posted On: 8/31/2012

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TAGS: vending, vending industry, coin machine business, coffee service, office coffee service, Coinstar, Rubi coffee machine, vending machine operator, Seattle's Best, Marley Coffee, full-size fresh-brew vending machine, automatic coffee, automated retailing, premium coffee brands, Alicia, Vending Times editorial

Alicia Lavay

As you've likely read by now, Coinstar plans to deploy Seattle's Best coffee venders in high-traffic public locations (see VT, June). The vending machine rollout began this summer, and Coinstar expects to place about 500 of them by the end of the year. The "coffee kiosk," called Rubi, looks like a standard 72" vending machine (except it's mostly red), and will be located in grocery, drug and mass merchant retail channels -- locations that Coinstar already serves with its namesake coin-counting and Redbox DVD rental equipment.

Might Coinstar be targeting a segment that mainstream operators have abandoned? I find it interesting that both Seattle's Best and Marley's Coffee have worked with major machine manufacturers to develop full-size fresh-brew venders showcasing their premium brands. Earlier this year, Marley and AVT teamed up to offer a "coffeehouse experience" aimed at traditional retail locations. This speaks volumes about the sometimes troubled relationship between vending and branded marketing. I think it's a step in the right direction, and if successful these developments could be very good for our industry.

Many of us old-timers still remember vending's prime locations during the classic age of full-line vending: huge factories with thousands of employees. Vending was the ideal service method: it was available for the second and third shifts; it was available on weekends; it was close enough to the workstations to enable everyone to enjoy a coffee break or lunch within a short period of time. But its customers were blue-collar workers who often viewed vending as a second-best, something imposed on them by The Boss. This was not vending's fault, but it did produce a perception-driven vicious circle: our customers think vended coffee is inferior, so we can't get a fair price for it, so we can't afford to provide first-rate vended coffee.

There always was a dedicated group of operators who didn't believe it. They provided good quality vended coffee, and told the world about it, and did get their price. But they got little support from the dominant national roasters -- and gourmet coffees were found only in a few large cities.

A colleague recently reminded me that during the 1980s, the now-defunct Coffee Development Group sought to increase coffee consumption through "taskforces" assembled in target segments. One was responsible for setting up campus coffeehouses, working closely with local specialty roasters to introduce college students to the pleasures of gourmet coffee. The specialty coffee business, as a national phenomenon, burst onto the scene within a decade.

And many of those dedicated full-line operators worked on the Vending Task Force to conduct studies, which (unfortunately) ended with the lapse of the 1983 International Coffee Agreement in 1989. CDG had been underwritten by the Promotion Fund of the International Coffee Organization, which had received its revenue from a surcharge paid on green coffee under the ICA's pricing mechanism.

Several of those research projects are worth remembering. One of them showed that consumers would pay a higher price for premium coffees vended through a dual-grinder machine, if they were given good information about the offering. So renowned beans like Jamaican Blue Mountain and Kenyan AA could command a premium price. Another found that consumers liked vended coffee, but had two objections: the cup did not provide sufficient insulation, and there was not a real dairy creamer available. Both of these objections had, and have, real-world solutions, but they were more expensive. This conflicted with the conventional wisdom of the times -- that vended coffee has to be cheap because people just don't like it, so we can't afford to make it better.

In fact, the best "full-house" coffee machines of the 1990s did give imaginative operators many tools for working on the price and the perception, and they were making progress. However, the wave of deindustrialization that set in at the turn of the millennium shifted the focus to smaller workplaces and the fusion of vending and office coffee service techniques. This has had many good results, and we expect it to produce more; but what about larger locations? There still are some, and if the present deindustrialization goes the way of the first two, there will be more. There also is the large and growing public vending segment, which Coinstar seeks to address. This a development worth watching.

But why should Coinstar be the only one to seize the opportunity? It's high time for this industry and its suppliers to give some serious thought to marketing the benefits of serving fresh coffee on demand to people who never worked on an assembly line. How about some television commercials showing upscale young people lining up to patronize these machines? We've said it before: vending has a bright future, and we just hope our operators are a part of it.