SME Profile: Yorkshire’s cool vending revolutionaries

FOR most of us, drinks vending machines are bulky inanimate objects designed to occasionally frustrate when refusing to offer up the world's most expensive can of pop.

The industry, which dates back to the 1950s, has remained relatively unchanged over the years. But Leeds-based the The Cool Drinks Company looks set to revolutionise the sector with its healthy drinks vending operation.

Founded in 2007 by former Arla manager Aaron Prout and Coca-Cola vending operation manager Neil Harrison, the business has already added 25% of Yorkshire's secondary schools to its portfolio thanks to its innovative “v-tailing” concept.

The company is now looking over the boarder to the North West to set up a similar satellite operation based in Greater Manchester in an effort to repeat its Yorkshire success.

It may seem like a simple business model – fill a vending machine full of healthy option drinks such as water, juices, smoothies and milk – but Prout and Harrison's operation is deceptively complex.

Each vending machine has an aerial, which transmits information through GPRS accessible through the web to enable the directors to replenish before supply runs out. It also enables them to analyse which drinks/brands are proving a hit – and which aren't.

The system also allows them to offer fresh drinks such as smoothies and milk, which traditionally have been left out of vending machines because of their short shelf-life.

“The vending industry is stuck in time,” explains Prout.

“And there has been little innovation over the years. What we bring is retail thinking to the industry. No one else has done what we do, and we have had great support from the large firms who make fresh drink produce, who up until now have been unable to get their drinks into the vending machine market.”

Indeed, it was taking part in a trial project for milk giant Arla that first put Prout and Harrison onto the idea for fresh drinks vending.

“In 2006, Arla started a project looking at putting fresh bottled milk into vending machines,” recalls Prout.

“It was good timing. Jamie Oliver was just embarking on his healthy eating in schools campaign and Arla had just developed its longer life fresh milk product Cravendale.”

“But achieving the goal was never going to be straightforward. Twenty years ago, milk outsold other drinks three to one. Back in 2006 that trend had been reversed. Milk was seen as a cheap low value alternative, not helped by its carton packaging. Getting the right packaging was key.”

Getting into schools, many of which had vending machines in operation, was seen as a great opportunity by Arla – particularly as few companies had the ability to offer fresh milk drinks for vending.

So through Education Leeds a trial was run in three schools. However, although it was a success, Arla decided that there wasn't enough scope – limited like its rivals to product range unwillingness to carry third party brands.

But Prout and Harrison immediately saw the concept's potential.

“Independently we could introduce other drinks,” explains Prout.

“So in June 2006, we raised finance through West Yorkshire Ventures after a Dragons' Den style pitch and set up The Cool Drinks Company.

“We also met with the managing director of Arla to explain what we were doing and why. They didn't see it as competition, more an opportunity to get their products into a new market. But I admit, to many it may seem to many like an unusual thing to do!”

Today, The Cool Drinks Company's nerve centre is a 2,500sq ft warehouse on Skelton Park Road industrial estate in Stourton (just a few minutes drive from Arla's headquarters). Most contracts are through local authorities, although the company does deal with an increasing number of schools direct as heads gain more autonomy.

Although sales are seasonal, driven partly by sweltering heating systems in winter and the need to cool down in summer, according to Prout working to formula is impossible.

“We quickly learned that there is no one trend. You can't predict sales take up or growth by demographic or size. Some schools take to the idea straight away – others don't. There are schools that have a preference for one product, but there's no real explanation for it such as Harrogate Grammar where 15% of drinks sold are smoothies.”

As well as looking to expand into the North West, the company is also working with other drinks manufacturers such as smoothie favourite Innocent to get new products into its vending machines.

It also hopes to go beyond schools at some point in the future to other public sector institutions such as hospitals and local authorities.

“For example, the Welsh Assembly has decided to ban snack vending machines in hospitals,” says Prout.

“It's all part of the growing healthy eating agenda.”

The Cool Drinks Company plays its own part in the nation's awakening healthy eating awareness through joint education initiatives with local farmers, which it takes into schools.

“We feel that education is important. Our approach however is to get the pupils to meet the producers so that they get more of a connection with what they eat.”

It's innovation such as this as well as the company's advanced IT systems that have earned it a recent Yorkshire Forward Innovation award.

But although the recognition is great, Prout admits that pioneering still has its risks.

“We believe that what we are doing is on the verge of a huge growth spurt,” he says.

“But it's still in its infancy. That said I wouldn't want to be doing anything else. It might have been a little daunting at first leaving a well-paid job and having a young family to take care of, but running your own business is a life experience well worth it.

“Leaving a big company makes you realise you're just a little cog in a big machine. I love being part of the small to medium size enterprise (SME) sector.”

FACTS:

Name: The Cool Drinks Company

Location: Leeds

Company turnover: Projected £500,000 end of 2008

Number of employees: Four

Founders: Aaron Prout and Neil Harrison