Dating back in 1880s, vending machines are rectangular-shaped box, standing up and selling certain kind of goods/services. Over the years, vending machines evolved to meet the sensitive needs of consumers, from bubble gum, coffee, sodas, chips, chocolate, fruits, vegetables, and even napkin and tampons. They are unattended in exchange of monetary payment. Recent innovations include healthy vending machines, cashless payments and LCD monitoring for nutrition facts. These fresh vending machines include fresh juices, fruit, veggies, yogurt and other healthy snacks and drinks

While the meltdown in economy temporarily moderated the growth of vending machines, it is expected to pick up by year 2015. Global Industry Analysts, Inc. (GIA), a research firm catering to major industries worldwide announced that vending machines installation will reach 35.2 million in 2015, from 32 million this year. According to GIA, growth during this period will largely increase because of changes in consumer food consumption habits leaning strongly towards 0healthy lifestyles.

GIA study shows that Japan and the US accounts for the 50% of the global installed machines and topping the list in the industry includes American Vending Machines, Inc., Azkoyen SA,  Fuji Electric Retail Systems Co., Ltd., Glory Ltd., GTECH, Maas International,  Tomra Systems ASA, and Westomatic Vending Services Ltd.

Technology advancements have made the vending machine industry more cutting-edge, offering benefits to modern time consumers, infusing reliability and the quality of the service and products being offered. Nowadays, due to health conscious public, more and more vending machine companies are selling fresh, organic foods, low-carb high-fiber food and fruit-based beverages.

In addition, vending machine these days offers cashless transactions via credit, debit card, and other cashless payment systems. Some have increased sophistication in equipment engineering by developing multi-functional machines capable of operating at multiple temperatures. It can well be noted that vending machine industry has weathered the recession better than other several businesses. This is because vending machines are the mirror of our fast paced society where convenience and accessibility is the public’s priority.

Kraft and Starbucks are disputing the terms of ending their partnership, by which Kraft also distributes bags of Starbucks coffee at supermarkets.

Despite the dent in sales the loss of Starbucks would cause, Kraft Chief Executive Irene Rosenfeld said she was committed to that business.

“Single serve has been an important part of our portfolio. It’s growing quite nicely around the world and we expect that that will continue to be a key part of our coffee portfolio,” Rosenfeld told Reuters at a conference in Boca Raton, Florida.

Kraft also sells the mid-range coffee brands Maxwell House and Yuban. It is unclear what premium brand will replace Starbucks and Kraft has declined to comment on any specifics, given the ongoing fight with Starbucks.

COFFEE GETS BUZZ

The demise of Starbucks’ partnership with Kraft has led many to wonder what the world’s biggest coffee maker will do next as it seeks growth outside its namesake cafes.

Marcel Smits, chief executive of Sara Lee, which has the Senseo brand one-cup brewer, said the flurry of headlines and focus on the single-serve market are good for the industry and prove coffee is an exciting business.

“It adds buzz to the category,” said Smits at the same industry conference.

The buzz comes as Sara Lee is planning to split into two companies — one focused on its North American meat brands such as Jimmy Dean and Hillshire Farm, and one on coffee and tea brands such as Senseo, Douwe Egberts and Pickwick.

Green Mountain also announced a deal on Tuesday with Dunkin’ Donuts to bring that company’s coffee onto its machines. Analysts said bringing in such a popular brand lessened the potential competitive threat from Starbucks.

MORE THAN JUST THE COFFEE

While companies like Sara Lee and Kraft spend a lot to market their coffee brands, their electronics partners spend a lot to market the machines, said Sara Lee Chief Financial Officer Mark Garvey. Since many purchases are driven by hardware, the coffee makers sometimes offer brands for rival machines.

For example, in Europe, Sara Lee sells L’Or espresso capsules for Nestle AG’s Nespresso machines and Kraft sells Carte Noir coffee made for Senseo machines.

When asked if Senseo would make coffee for Keurig machines, Smits said it was too early, since the brand has such a little presence in the United States, where Keurig has more than an 80 percent share of the market.

“If we would have a very big brand, I guess we’d start thinking about it putting it into Keurig machines. But we don’t have a very big brand here in the U.S.,” Smits said.

Of Senseo’s total 2010 sales of $536 million, the United States only accounted for $20 million.

Smits, who was named permanent CEO last month after serving on an interim basis since May, said Sara Lee’s beverage business will take aggressive steps to compete with Nestle, the world’s largest food company.

“In Europe, it’s obvious the Nestle people, they have an ambition. There’s other people out there who have less of an ambition,” Smits said. “We have an ambition. We want to play. We will throw everything we have at that category.”

The market’s reaction suggests that Starbucks could have created more long-term shareholder value by acquiring Green Mountain and introducing its Keurig brewing technology internationally. That potentially could have made Starbucks a major player in the global single-serve coffee market.

The Green Mountain deal follows Starbucks’ cancellation of a distribution agreement with Kraft Foods Inc., (Kenco Singles and Tassimo) which among other things had given Kraft the right to sell Starbucks coffee for pod brewing machines. But cutting ties to Kraft, Starbucks has hoped to regain control over key areas of potential growth in both the grocery aisle and single-serve. Kraft lost against the split but is still pursuing damages.

It can be argued that the new Green Mountain alliance will only pay dividends in the long term so it should not have a dramatic impact on Starbucks’ stock. But the fact that Green Mountain’s stock ran up 40% on the news versus 10% for Starbucks shares and Starbucks has retained only a third of those gains while Green Mountain has held onto 85% suggests that Starbucks management left value on the table.

Starbucks is playing the role of kingmaker for Green Mountain’s Keurig brewing system. Keurig has an installed base growing 5 million units per year and accounted for five of the top 10 models representing 50% of holiday sales dollar volumes in the U.S. But there is a long way to run, as single-serve machines have penetrated only about 6% of U.S. households, and 80% of Starbucks customers don’t own one. Of those that do, 25% indicated in a recent Morgan Stanley survey that Starbucks would be their primary single-serve brand.

Under the agreement, Green Mountain brewing machines will be distributed via Starbucks’ 11,000 domestic retail outlets, nearly a 50% increase over Green Mountain’s 23,000 current locations.

Gaining access to the Starbucks brand is a coup for Green Mountain, which now has licenses for four of the top five coffee brands in the U.S. — Folger’s, Starbucks, Dunkin Donuts and Green Mountain. In addition, it bought itself protection from Starbucks, which might have developed its own machines or partnered with one of Green Mountain’s pod rivals.

Given the value contributed by Starbucks, it’s hard to see why Starbucks’ management didn’t make a bid for Green Mountain and the Keurig technology. Green Mountain had hit a high of $47.81 on February 14 on media reports of partnership talks with Starbucks before falling to $40.16 when Starbucks suggested it was considering a range of single-serve alternatives.

Green Mountain’s founder still serves as chairman and he and his children control 18% of the company, so Starbucks could conceivably have offered a modest premium to the recent highs. Starbucks could have offset dilution by raising leverage for a cash-and-stock bid.

Green Mountain’s stock price now appears to factor in the possibility of expanding the partnership internationally, where Starbucks has nearly 6,000 additional outlets. The international singer-serve market is seven times as large as the U.S.

However, the Starbucks deal covers only the U.S. Starbucks appears to be taking a hardware-neutral strategy, and it is free to partner in other countries with regional market leaders. Any value currently ascribed to Green Mountain on account of the international potential could easily be transferred to a prospective partner in Europe such as Sara Lee Corp., which uses machines from NACCO Industries Inc.’s Hamilton Beach Brands.

Having risked a damages award to end the relationship with Kraft — damages some analysts estimate could run as high as $1 billion — Starbucks shareholders may fairly ask why management didn’t capture more of the $2 billion created for Green Mountain shareholders by the new partnership.

Kenco Singles Brewer

Tassimo

Here in the United Kingdom, the oddest vending machines that we get tend to be the sort in Airports that sell things like cameras and MP3 players. We don’t really get any of the truly disgusting ones like the Chinese vending machine that sells live crabs. A strange vending machine has now surfaced in France that sells something I would like to see in UK machines – fresh baked bread.

Fresh baked bread isn’t something we get a lot of in my area, the stores tend to bake once per day so if you get there too late it’s as cold had hard as a loaf wrapped in plastic. The French on the other had have a machine that you can slip a coin into and 90 seconds later the thing pops out a nice fresh baguette.

The photographer who took the photo says that the taste and texture won’t be putting any bakeries out of business soon, but I bet it tastes better than the fresh bread.

French Bread Vending Machine

Coffee Nation Machine Branded Costa Coffee

Hotel and restaurant group Whitbread has bought the Coffee Nation brand with a view to launching self-service coffee machines under the name Costa Express.

Whitbread, which already owns Costa Coffee, is paying £59.5m for the brand, which operates 900 coffee machines.

The group said it would aim to open 3,000 Costa Express vending machines across the UK over the next five years.

Whitbread said Coffee Nation “self-serve bars” were “fundamentally different” from traditional hot drink vending machines because they used fresh milk and freshly-ground coffee.

“Customers increasingly want great tasting coffee on the go, which makes the self-serve coffee market very attractive,” said Mr Harrison.

Costa Coffee has 1,850 outlets around the world, with 1,200 in the UK.

The consortium includes Forking Co., a major vending machine operator, and Panasonic Electric Works which will develop and produce electric vehicle chargers with rivals.

Forking has business ties with companies which own a combined 1.2 million vending machines across Japan, or about a half of the national total, company official Reiko Kobayashi said.

The firms plan to install some 10,000 electric vehicle chargers at the sites of the vending machines in the first year of the project, which is due to start at the end of March, she added.

Charging machines “will be installed where beverage vending machines already exist or together with new ones. There are various options,” she said.

SoftBank Telecom and SoftBank Mobile are due to provide telecom services to connect the charging systems, the group said in a press release.

Automakers such as Nissan, which launched its all-electric Leaf last year, are gambling that electric cars with zero tailpipe emissions will catch on and, some time in the future, start to drive traditional gas-guzzlers off the road.

But many consider the lack of a charging network as the key obstacle to the proliferation of electric vehicles, prompting consumer concerns such as “range-anxiety”, or the fear that their cars will run out of juice between charging points.

The company confirmed to the Chicago Tribune it is working on a new product for single-serve coffee machines. 

Experts say that any significant effort by Starbucks is likely to transform the $509 million single-serve coffee market in the U.S. by bringing more consumers into the fold. According to Euromonitor International, single-serve coffee accounted for only 7 percent of the fresh coffee market in 2010. But that’s up from 2 percent in 2008, and it is expected to hit 10 percent in 2012. 

“Single-serve brewing is going to steadily take share from at-home coffee brewing for a long time,” said David Palmer, an analyst with UBS who follows Kraft and Starbucks. He described single serve as an “undeniable market opportunity” for both companies. 

Palmer explained that despite the higher price per serving, single-serve coffee has become popular because it’s faster, easier, and doesn’t force the entire household to drink the same thing in the morning. 

Lynn Dornblaser, director of consumer-products insight at Mintel International, said a meaningful Starbucks entry could be a “catalytic event” in single-serve coffee. 

At the same time Dornblaser said she doesn’t expect hard-core coffee drinking families — those that may down a pot or two a day — to embrace single servings. Brewing single serve cup after cup may be too expensive, and too much of a hassle, she said. 

Still, the products may be especially appealing to 18- to 24-year-olds setting up their first homes, or older consumers with limited living space, Dornblaser said. 

Starbucks apparently sees a broad market for single serve. Spokeswoman Lara Wyss said the coffee chain hopes to accomplish with “single-serve coffee what Apple did for mobile phones.” 

She said the company is in a “unique position because of our retail footprint” and its ability to use baristas as ambassadors for new beverages. The company will either make its own machines or partner with a coffee machine-maker, and will sell the machines in Starbucks cafes. 

Wyss cautioned that “single-serve coffee is still in the nascent stages of development.” The company has yet to decide which, if any, partners it will use, or what the product will be called. 

Single-serve coffee is made, in about 40 seconds, by inserting a small plastic container into a specialized machine. These containers, known as pods, come in a variety of flavors for coffee or espresso-based beverages. There are also pods for hot chocolate and tea. 

The sticking point for some consumers is cost. A machine may cost between $75 and $275. And while most consumers can make a cup of drip coffee for 10 cents or less, single-serve pods can cost 50 cents to $1. 

For Starbucks the push into single serve is a dramatic break from its past. Starbucks has had an exclusive deal with Northfield-based Kraft and its Tassimo system since 2007. 

However, Kraft’s Tassimo system has not performed up to Starbucks’ expectations. Kraft has 2 percent to 3 percent of the single-serve brewer market, according to Janney Capital Markeys, compared with 71 percent for Keurig. This disparity heightened tensions in Starbucks’ relationship with Kraft, according to executives familiar with the matter.In an interview last week, Kraft Chairman and CEO Irene Rosenfeld said, “We feel very good about the performance of Tassimo.” She said the business had a very strong fourth quarter in the U.S. and in Europe, adding that Tassimo “has been an important growth engine in the coffee business.” 

Richard Haffner, head of global beverage research at Euromonitor, said Keurig claimed the top spot in the single-serve coffee market by getting its machines in office buildings where workers could sample different beverages. Some of these people then purchased single-serve machines for their homes. 

Keurig also gained an advantage with its technology. Owned by Waterbury, Vt.-based Green Mountain Coffee Roasters Inc., Keurig owns a number of patents associated with K-cups, the pods used to make drinks on its machine. The patent expires next year, although the company hopes to extend it through 2023. 

Now a number of competitors are looking for ways to circumvent those patents. Walmart stores are selling “Walnut Grove” pods, made by Sturm Foods, a division of Oak Brook-based TreeHouse Foods Inc. Meant for use on Keurig machines, these pods use a blend of regular and instant coffee and sidestep the use of Keurig’s patented filter. The company is expected to expand the product to a handful of retailers this year. 

Sturm Foods declined to comment for this story. 

Several people familiar with the matter say Starbucks is considering a similar product, using Via Ready Brew. By using an instant coffee product, Starbucks could likewise avoid using Keurig’s patented filter. 

Green Mountain sued Sturm in October, claiming patent infringement and other grievances. The company also alleged that TreeHouse’s use of instant coffee in the pods violates Keurig’s trademark. In a regulatory filing, Green Mountain also claimed that the Sturm pods “do not work safely or effectively.” 

Green Mountain declined to comment for this story. 

Starbucks announced its plans to terminate its relationship with Kraft in November. 

Kraft countered by filing suit against Starbucks in December, seeking to halt Starbucks’ plans until the parties completed mediation over how much, if anything, Starbucks should pay Kraft to exit the arrangement. Under Kraft’s management, Starbucks’ grocery coffee has grown into a $500 million annual business. 

Last week Kraft filed a second motion for preliminary injunction — the first one was denied — in an attempt to stop Starbucks from taking over its bagged coffee business.

The initiative originated from last year’s suggestion that passengers would be charged for the pleasure of using onboard toilets. Although the toilet charge idea literally went down the tubes the airline continued to explore the idea of passengers paying at point of use for certain onboard facilities. One such idea has developed into the Onboard Vending Machine (OVM).

An added bonus of the vending machines is that cabin crew headcount can be reduced by 2 per flight thus growing the cost saving revenue. It is understood that Ryanair is to tender for the provision of the vending machines in the coming weeks. 

A first aircraft, B737-8AS registration EI-DWW has already been fitted out in an operation which involves fitting forward and rear snack and drinks vending machines. Allowing access to the forward vending machine involves removing the first row of seats on the starboard side of the aircraft. The drinks vending machines are located in the galleys at either end. 

It is understood that Ryanair is converting 6 aircraft which will be tested throughout the carrier’s network over the next three months. If deemed a success, the idea will be rolled out to the remainder of the fleet by year end.  In the picture below taken on board EI-DWW yesterday afternoon, the main cabin vending machine is clearly visible.

So what next? Vending machines for checking in?  Vending Machines for paying for excess luggage?  Vending machines to buy your life vest in the event of landing on water?  After this there should be no problem converting the toilet doors to vending machines where money is required to gain entry.

Vending Machines in Aircraft

Continuing on the idea of filtering coffee, the single portion system evolved.  The idea being to produce a variety of coffees (and teas) from single portion pods, sachets and capsules.  These systems appeal to both domestic and workplace markets alike because the choice, reliability and simplicity they offer.  The most successful brands are Keurig, Flavia, Kencos Singles, Tassimo, Nespresso and Lavazza. 

The traditional espresso coffee machines are still highly popular both at home and on the high street.  These machines work by using pressure to force the coffee through the machine and into the cup.  On a commercial level, “Barista” skills are needed to work the machine, especially when it comes to foaming the milk with the steam wand.  Depending on the number of cups required on a daily basis, these machines have between one and four “groups”, a group is a dispense head with one or two outlets, so with a four group machine up to 8 coffee can be made at the same time. 

Finally, there are the fully automatic or “Bean to Cup” coffee machines.  These machines make a coffee from the bean at the touch of a button.  If a cappuccino is required, on touching the “cappuccino” button, the enough coffee beans are ground to make the espresso, the milk foamer warms and froths the milk and then the coffee and milk come together in the cup.

Traditional Coffee Machine 2 group

Single Portion Coffee Machine

WMF Bistro Fully Automatic Bean to Cup Coffee Machine

In 1921, LC Gibbs and CS Baines began selling coffee from a shop in Vere Street, Mayfair. The shop sold roast and ground coffee locally but most of its sales were by mail order – selling coffee to country houses using advertisements in publications like Tatler, Country Life and The Times. 

The company went through several changes of ownership, THF (Trust House Forte) just after the Second World War, Cadbury in 1972, Premier Foods in the mid seventies and General Foods in 1987. 

Soon after, with the power of the Kenco brand, Kenco Singles was launched to fight the growing success of Flavia, the single portion system launched by another global player, Mars.  Like Mars, General foods launched an in-cup drinks system in 1974 know then as “Maxpax” and very successful it was, however, like Mars, they had to recognise and deal with the growing demand for freshly filtered coffee delivered in a hassle free manner. 

Again, like the Flavia system, the original Kenco Singles machine had a plastic case, changing to steel in the late 90’s.  Having scrutinised the Flavia system, the Kenco designers made a system which was much more user friendly and had the power of a recognised coffee brand “Kenco”. 

And so the scene was set with Kenco and Mars fighting a battle on 2 fronts, Klix in-cup versus Maxpax in-cup and Flavia versus Kenco Singles.  That battle continues today, with the Flavia and Kenco Singles systems being the main players as the demand for in-cup using instant coffee diminishes. 

This is good news for the market as the two giants have to try new concepts to stay ahead, which can only mean better drinks and better coffee machines and vending machines in the future.

Kenco Coffee the first shop

Kenco Singles Brewer (New)