Can a premium brand revive hot beverage vending?

Coffee may be the hottest thing happening in refreshment services today, but when it comes to hot beverage vending machines, most operators want to change the subject.

For many, the hot beverage machine represents the industry’s past. Coffee vending was part of the traditional vending bank in a factory location. The type of location which has given way to smaller work sites with more professional clientele.

So holds the conventional wisdom.

But for those who aren’t swayed by conventional wisdom, coffee vending machines may be coming back.

The coffee vending machines coming on the scene nowadays bear little resemblance to the generic machines of the past. Instead, a new generation – scarce though it may be – bears brand names of some of the same blends that today’s coffee consumers are paying top dollar for at coffee houses.

Starbucks, the nation’s pre-eminent specialty coffee – has tabbed the vending industry as part of its new effort to bring specialty coffee to the masses. The initiative began last year with the introduction of the Seattle’s Best Coffee machine, which the company displayed at the National Automatic Merchandising Association OneShow in Chicago.

Seattle’s Best Coffee, part of Starbucks Corp., launched its first integrated, multi-channel advertising campaign debuting the brand’s “Anywhere Great Coffee is Needed” strategy. The first phase of the campaign includes a series of online TV ads, billboards, wild postings and digital messages introducing a bold new approach to premium coffee.

Jenny McCabe, director of communications for Seattle’s Best, said the dedicated vending machine is part of the company’s effort to make premium coffee accessible to consumers.

In addition to the vending initiative, Seattle’s Best has partnered with AMC Theaters, Burger King, Subway, cruises, colleges, and foodservice contractors.

Building distribution

The initiative has boosted the points of distribution for Seattle’s Best from 3,000 to 40,000, McCabe noted. The company plans to more than double this to 100,000.

The vending machine is a Crane National Vendors 677 Hot Drink Center with dual bean grinder, programmed gram throw and steep timing, and branded graphics for the machine, the cups and the cup sleeves. There is also a retrofit kit available from Crane for older Hot Drink Centers.

Half of the machines placed to date have gone in business and industry sites, followed by health care (18 percent), military (18 percent), education (8 percent), entertainment (3 percent) and professional offices (3 percent).

“We definitely see this as changing consumer perception of vended coffee,” said Maggie Rogers, director of national accounts and product supply initiatives at Crane.

The Navy Exchange Service Command (NEXCOM) currently operates 11 of the machines in barracks, training schools and at its headquarters office building in Virginia Beach, Va.

NEXCOM plans to add a minimum of 20 more in early 2011, said Gerard Fantano, NEXCOM vending branch manager. Overall, they have been very successful.

NEXCOM first placed a coffee machine with a bean grinder in a site with more than 500 personnel in 1992. However, the machine generated less than $50 per month and the top seller was hot chocolate.

In introducing the Seattle’s Best machine in 2010, NEXCOM priced a 12-ounce cup at $1.00. Similar size national brand cups at retail cost $1.50 to $1.80.

The machine builds sales

The Seattle’s Best machine generated more than $400 in the first 10 days, Fantano said. “It is noteworthy that headquarters personnel have other coffee options such as three OCS coffee stations and a number of individual coffee makers throughout the building,” he noted.

The machines installed at the Great Lakes Naval Command in Great Lakes, Ill. delivered 14,000 unit sales compared to 6,800 the previous year for the same period of time, Fantano said. At one school alone, the new machine did $9,176 in three months compared to $1,840 in the previous machine.