Slot machines that pay off

Marketing: Britain's 100-year-old vending industry is worth more than £1bn a year and finding new ways to grow

BOSSES who worry about the office coffee dispenser being a centre for gossip and dissent may be surprised to hear that vending machines, in their early days, were seen as aids to efficiency. They meant employees could work long hours and still have a supposedly constant supply of fast food and drink, hot or cold.

The only problem then, as if often the case now, that there was no guarantee the machine was properly stocked or that, even it held the goods, it would dispense them. In the words of one operator, it was a four-way gamble: "Would the machine work, would the goods come out, would they be fit to consume - and, if not, would you get your money back?"

At the end of a week that has seen the 100th anniversary of the introduction of these machines in Britain, there are plenty of frustrated consumers who would challenge industry claims that this kind of shopping is now a safe bet. Nevertheless, what started off as little more than a novelty is today a huge business.

Britons spend more than £1bn a year on vended snacks and beverages, according to recently published research commissioned by the Automatic Vending Association of Britain. This amounts to every man, woman and child using a machine to buy at least two snacks or drinks a week, and the turnover compares with the £763m Britons spend on ice-cream, £645m on savoury snacks and nuts, £799m for crisps and £599m for coffee.

Britain's total of 310,000 refreshment machines, one for every 175 people, is nowhere near Japan's 4.1million, one for every 23 of its population, but the concept here is becoming increasingly important. Although Japan is reckoned to be a saturated market, visitors to the Avex '95 exhibition held in Manchester last week by the vending association were given the impression that there was plenty of growth to come.

David Hobbs, chairman of the Avab, believes the level of interest in the exhibition indicates that more and more people are turning to vending. He said research commissioned by his organisation showed thousands of man-hours and millions of pounds being wasted each year by companies using manual tea-making and coffee-making facilities, and suggested that this should keep the trend growing.

Vending machines made their first appearance on platforms of the elevated railway system in New York City in the 1880s. They sold chewing-gum. Other products soon followed: postage stamps, cigarettes, perfume.

Scientific American magazine hailed an amazing invention that would have the "charitable object of furnishing the poor with wholesome and strengthening beverages at a low price".

In Utah, they went so far as selling divorce papers.

Travellers were the first to try vending machines in Britain as well, in 1895. They sprang up on railway platforms in the 1920s and appeared in shop doorways, selling chocolate, chewing-gum and cigarettes. Growth stalled due to shortages during the war. Then, in the 1950s, came coffee machines from the US - but it was 30 years before manufacturers found a way of producing a convincing cup of tea, perhaps the key to expansion in Britain.

Tea accounts for 40 per cent of all hot drinks consumed in Britain, but lagged in third place behind coffee and chocolate for vending-machine customers. The Avab says tea's recent rise to No 2 has been due to the entry of big brands to vending. Ken Sheridan of Lyons Tetley said: "The British are traditionally anti-machine, and very suspicious of vended tea. However, consumers who have come to trust brands have learned through them to trust machines."

Important as development of drinkable tea undoubtedly is, it is not the only innovation in the market. Sophisticated technology is enabling better stock control as well as introduction of "heat-your-own" microwave machines. A growing number of companies are issuing vending machine cards to staff for use in place of cash. They can be recharged by the employees at coin machines, and provide employers with better security, cash flow and tracking of staff purchasing habits.

There seems to be no limit to the foods that can be offered. Visitors to the Manchester show saw machines delivering pizza said to be "as crisp and tasty as at any local trattoria", beer chilled to the right temperature (from a unit programmed to comply with local licensing hours), and the latest in coffees - iced cappuccino.