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Coca-Cola Co. has partnered with a technology company to allow the new Coca Cola Freestyle fountain dispensers to work hand-in-hand with radio-frequency identification (RFID) chips imbedded in beverage cups.
The tagged cups will trigger the computer software in Coca Cola Freestyle machines to pour the customer's beverage. Without the chip, the dispenser won't work.
This technology, which was announced today during the National Restaurant Association Show in Chicago, will be rolled out next year and should have an impact on businesses such as theme parks, zoos, and cruise ships that sell refillable cups.
The refillable cups typically allow a day or more of free or low-priced refills.
The idea of selling cups that permit a certain number of refills "is also certainly something that could work at the retail level, depending on what an operator wants to do," said Gene Farrell, vice president and general manager of Coca Cola Freestyle.
"It opens up all kinds of potential promotion and marketing possibilities," he said.
ValidFill LLC of Sarasota, Florida, developed the RFID control technology. The company is a partner of Warren, Pennsylvania-based Whirley DrinkWorks, which makes plastic cups and other food and beverage containers.
The chips cost upwards of a dime each, but Farrell said he expects the price to drop as orders for the technology increase.
The latest announcement expands the flexibility of Coca Cola Freestyle, which launched in 2009. The touch screen soda machine originally featured 100 Coca Cola drinks, but that expanded to 125 this year to mark the company's 125th anniversary.
The additional flavors were created by an overnight software update sent electronically.
Long lines of show attendees lined up at the Coca-Cola booth at the NRA Show to try the customizable dispenser and its behind-the-counter "crew serve" version. The machines rely on computer software to pour various beverages and flavors, and an advanced nozzle prevents drinks from containing any of the flavors poured earlier.
The machines also save space, both in the front of the restaurant and in the inventory required in the back. Beverage cartridges can contain syrup for 3,300 ounces of a drink.
Any concerns about Coca Cola Freestyle's new technology slowing transactions has been blown away by strong sales increases experienced by a number of restaurants that have installed the dispensers to replace old soda fountains, company officials said.
Coca Cola Freestyle was introduced in 15 markets last year and is now in about 600 outlets in 50 markets. It should be in about 80 markets by the end of the year.
"We are expanding this very deliberatively," said Chris Lowe, president of Foodservice & On-Premise for Coca Cola, which is based in Atlanta. "We wanted to make sure we created density in a market so we could have trained technicians to service" the machines.
Carbonated soft drinks make up the largest liquid refreshment beverage category but have been facing declining sales for several years. Beverage Market Corp. reported the segment's volume slipped 0.8 percent last year to 13.8 billion gallons.
One of the age groups ordering fewer regular carbonated drinks is the coveted 18-34 segment.
Coca Cola Freestyle presents a potential bright spot, according to Eric Giandelone, foodservice analyst for research and consulting company Mintel Group.
"Freestyle and all the flavor shots are an experimental approach to sodas, so it should have appeal to younger people," he said.
Another potential benefit of the machine is that it allows operators to eventually pair certain beverages with particular food items, much like wine and beer pairings, or to develop menus for certain times of the day when a drink is popular.
Coca Cola Freestyle is being market tested by some large quick-service and fast-casual restaurant companies, including Wendy's, Jack in the Box, and Five Guys and Fries.
At the dozen or so Pei Wei locations that have installed the machine, the results so far are inconclusive but encouraging, said Terry Haley, vice president of marketing for the Scottsdale, Arizona-based Asian fast-casual chain.
"It's generating tremendous interest, which is very encouraging," he said. "There are so many great flavors that there is a lot of potential to expose customers to them."
The machines create an immediate impression and "people are enjoying the ability to experiment," he said. "The question going forward is how do we untap all the potential that it presents. I think we're seeing that there's a lot we can do with it."
The National Restaurant Association Restaurant, Hotel-Motel Show is the restaurant industry's largest trade show. It takes place in Chicago's McCormick Place until Tuesday, May 24.
For more information, visit QSR at booth #4861.
By Barney Wolf