Hot Can Vending Initiatives Emerge in the U.S.

Will Starbucks perform the same miracle for hot beverage vending that it has for the U.S. coffee industry in general?

Last year, Starbucks, in partnership with PepsiCo Inc., announced a Starbucks branded machine that dispenses cans of ready-to-drink hot beverages. The machine uses proprietary, heat-on-demand technology and was presented at a Pepsi bottler meeting in San Diego, Calif. last year, as reported in the November 2006 Automatic Merchandiser.

Starbucks claims that units will begin testing this summer and will continue through the fall.

"We anticipate rolling out this new beverage option broadly in winter 2007/2008," the company said in a prepared statement. The technology within the vending unit heats each sealed, 9.5-ounce beverage to approximately 140 degrees in less than one minute. Proprietary sealed packaging insulates the beverage, making it portable and convenient.

Beverage options include Italian Roast Coffee with milk and sugar, caffe latte, caffe mocha light, caramel latte and hot chocolate. The Italian roast coffee will be offered at a suggested retail price of $2, while the espresso-inspired beverages and hot cocoa will be offered at a suggested retail price of $2.50.

Starbucks takes the lead
Starbucks' joint venture with PespiCo, called the North American Coffee Partnership, has taken the lead in developing packaged hot beverages, which offers great promise for hot drink vending.

Prepackaged, single-serve hot beverage vending has never found a place in the U.S. For a variety of reasons, hot beverage vending in the U.S. evolved in cup machines. While cold beverage vending switched from cup machines to bottle and can machines in the 1960s, coffee has remained strictly a cup machine business.

In recent years, however, the cost of hot beverage machines has increased while the market has dwindled, due to the downsizing of large accounts needed to justify hot beverage machines. The Automatic Merchandiser State of the Vending Industry Report has reported consistent declines in the number of hot beverage machines.

While the economics of hot beverage vending has become increasingly difficult, packaging and heating technology has evolved, creating new possibilities for hot beverage vending.

Over the years, beverage industry observers have contemplated duplicating the success that hot can beverage vending has experienced in Japan, where hot can beverage machines are common. Attempts to introduce hot can beverage machines have been made in the U.S. over the years, but these efforts never came to fruition.

With the decline in hot cup vending, new package heating technology and the support of a major coffee brand, a new day may be dawning for hot beverage vending in the U.S.

Pepsi bottlers test Starbucks machines
According to reports from the field, the Starbucks/Pepsi partnership has already tested the Starbucks branded machine in several locations. The machines were placed and serviced by Pepsi bottling companies.

According to reports, the company is in the process of making some changes to the program based on these tests.
The machines, made by Dixie Narco Inc., accept both cash and credit cards.

Starbucks machines encourage Some vending operators
Steve Marx, owner of Royal Vending Inc. in Maple Grove, Minn., said a Starbucks vending machine was tested at a college he serviced last year. The machine was serviced by a Pepsi bottler. Marx said the products were priced at $3.00. He noted that the machine did not cannibalize his coffee machine sales at the college.

Marx is encouraged. "I think that these machines will revolutionize the industry," he said. "It would be great to eliminate (traditional) hot drink machines altogether. People are not cheap about Starbucks," Marx said.

Jimmy Lee III, CEO of Buffalo Rock Co., a Birmingham, Ala.-based Pepsi-Cola bottler that has a full-line vending division, saw the initial prototype at the bottler meeting in San Diego last year, but he has not seen or heard much about it since then. "It's a pretty impressive piece of equipment," Lee said.