June 6, 2012 at 2:54 PM ET
Betting, perhaps, that Americans just can’t drink enough coffee, Coinstar announced Wednesday it would have 500 automated kiosks serving Seattle’s Best Coffee in the Northeast and West Coast by year's end and “thousands” across the country in the coming years.
Coinstar has experienced success with its Redbox movie rental machines in supermarkets and convenience stores. Seattle’s Best Coffee is owned by Starbucks.
The machines will also serve coffee drinks such as lattes and mochas. Prices will begin at $1.
It will be a new business model said Nick Montano of Vending Times, an industry trade publication. The coffee vending business is established, but no company yet has tried the placement Coinstar may use.
“The mainstream vending industry serves workplace locations,” Montano said. The operators are primarily regional.
“Is this something new? No. But how they are doing it? Yes,” he said. “They aren’t going outside of a 7-Eleven that sells coffee inside. But maybe inside a Wal-Mart or supermarket – places that have no coffee service.”
In a press release, Coinstar said the kiosks would be in “grocery, drug, and mass merchant locations. As Coinstar expands geographically with its coffee kiosk, it will also pursue additional channels as part of an ongoing roll-out.”
Coinstar CEO Paul Davis told CNBC the company has been testing the product for “a year-and-a-half to two years” and was optimistic about success.
“We’re convinced there’s a terrific business opportunity there,” he said.
Below, Davis discusses the company's moves and strategy with CNBC.