Variety is the name of the game when it comes to pleasing today’s consumers. Digital cable offers hundreds of channels, satellite radio has hundreds of stations, and with the Internet, the possibilities are endless. Soon consumers might also have that kind of choice when it comes to beverages in quick-service restaurants.
The Coca-Cola Company (NYSE:KO) is testing fountain technology that can dispense more than 100 branded sparkling and still beverages from a single freestanding unit.
“We believe this will do for beverages what mp3 did for music,” says Ray Crockett, director of communications for Coca-Cola North America.
The new dispenser takes up about the same amount of space as the standard eight-valve dispenser used by many restaurants today.
“In order to match what this technology could provide, you’d need 14 or so [eight-valve dispensers], which probably wouldn’t leave any room for your customers,” Crockett says.
The prototype takes advantage of micro-dispensing technology, allowing it to make use of tiny amounts of highly concentrated flavoring. As opposed to the bag-in-box dispensers popular today, which can be difficult to change and sometimes leak, changing out beverages in the new unit will be like changing a printer cartridge, Crockett says.
“It will make it easier to launch new beverages,” he adds.
There are also storage and environmental benefits to the new technology. The small size of the flavoring cartridges will decrease shelf space needed for inventory and packaging waste will be significantly reduced.
There are benefits on the end-user side, as well.
“It provides what we think is a fascinating new consumer interface,” Crockett says. “It’s kind of the same as a self-service kiosk. It’s more user friendly, engaging, interactive, and the technology allows us to have a better grip on beverage quality.”
Customers can choose their beverages—among more than 100 varieties—via a touch screen located on the front of the machine, and research has shown that the interface appeals to users. In consumer testing, the new dispenser received satisfaction ratings 72 percent higher than units currently in use. Users also gave it high marks for ease of use, variety of choice, taste, value, and fun experience.
“We asked them to sample it along with a conventional unit, and they liked this one a lot better,” Crockett says.
Operators will like the fact that the company’s research shows that greater variety of beverages leads to better sales of beverages—a high-margin item for quick-service restaurants.
“One of the things that has happened in the U.S. beverage business is that consumers are looking for more choices,” explains John Sicher, editor and publisher of Beverage Digest, a newsletter covering the global non-alcoholic beverage industry. “They are in an experimenting frame of mind. [Coca-Cola’s new dispenser] will give consumers a much bigger array of products and, hopefully, boost sales.”
Harry Balzer, vice president of global market research firm NPD Group, agrees.
“It sounds like it’s giving me something that I have no doubt consumers like: variety,” he says.
It will also be more profitable for operators than carrying an array of bottled beverages.
“I would suspect that the operator would prefer, from an economic standpoint, to be dispensing the product themselves,” Balzer says.
Second-generation versions of the dispensers will begin testing in the first half of 2009, though Crockett declines to speculate on when they will actually come to market. Coca-Cola is also keeping the name a secret. The initial version is meant for front-of-house self-service, but Crockett says eventually the concept will be expanded to a line of products that might include a version for back-of-the-house use.
“This dispenser is the first in the family, so there’ll be more to come,” he says.