Pret confirms plans to enter self-service vending machine market with Pret Express trial: Pret A Manger, the JAB Holdings-backed brand, is to attempt to rival Costa Coffee in the self-service vending machine market, with the trial of Pret Express, “24/7 self-service coffee-to-go solution”. Propel revealed in July that Pret, which has been seeking new routes to market as its core business in central London was impacted by the crisis, had trademarked the Pret Express name and may look to follow Costa, which operates circa 10,000 Express machines around the world, and introduce a vending format into offices, convenience stores, hospitals and petrol forecourts. Pret has entered into a partnership with JDE Peet’s, the world's leading pure-play coffee and tea company and owner of brands including Peet’s Coffee, Douwe Egberts and Jacob, to launch the trial. JDE Peet’s will provide the self-service technology and capabilities, with bespoke furniture designed exclusively for Pret. The trial follows the recent introduction of a new aluminium coffee pods range, the first venture under the partnership between Pret and JDE Peet’s. Pret said Pret Express will be introduced in convenience stores, forecourts, universities, healthcare facilities and workplaces, offering the same “organic coffee and tea customers enjoy in Pret shops in places where Pret baristas aren’t able to operate”. Each Pret Express coffee station will offer a wide range of slow roasted, 100% organic speciality coffee and fresh organic milk combinations, as well as tea, a first in the self-serve coffee-to-go sector. Each solution will create up to 21 drink recipes and everything is included; from ingredients to machine and housing installation, with each station having its own cashless payment terminal and service package as standard. Pret said the move was the next step in its transformation strategy, designed to bring the brand to more people, including plans to open 200 new UK shops over the next two years. The Pano Christou-led business recently announced plans to double the size of its business within the next five years and is aiming to hire at least 3,000 team members and baristas by the end of 2023. Last year Pret launched the UK’s first coffee subscription. Guy Meakin, UK trading director at Pret A Manger, said: “We are excited to be working with JDE Peet’s to launch Pret Express, our first self-serve coffee machines. This is new territory for Pret, which will allow more people across the country to enjoy Pret’s organic coffee and tea on the go, in places where there isn’t the right space to set up a new Pret shop. Using the latest technology from JDE Peet’s, Pret Express will give people a delicious and convenient coffee boost, at the touch of a button.” Sarah Lonorgan, marketing director professional UK & Ireland, JDE Peet’s, added: “Expectations for coffee and tea on-the-go have evolved, with people seeking the highest quality experiences at any location. Through this innovative partnership, Pret Express will deliver a wider range of products across all out-of-home segments, to a broader audience than before. We are delighted to partner with Pret to debut this powerful new contender to the ‘coffee to go’ market and look forward to seeing this in action.”

As one sector commentator said to me earlier this summer when Propel first revealed Pret was considering exploring the vending machine market, “at last someone to take on Costa Express”. Indeed, and although this has seemed an inevitable move over the past 18 months as Pret has grappled with how to get its brand and offer to more people, you can understand why the JAB Holdings-owned business has been cautious over its plans. It knows it won’t be able to dabble around the edges, this will need serious time and investment, especially if it wants to take share off market leader, the Coca-Cola Holdings-backed Costa, which has a decade-long head start. 

Costa was an early entrant into the self-serve coffee market. In 2011, Europe’s largest coffee chain acquired the 900-unit Coffee Nation vending machine business for £59.5m, which it converted into its Costa Express brand. Costa Express is now by far the largest brand in the UK premium self-serve segment, operating 10,390 units and holding a 71% market share. Sainsbury's has the UK’s second largest premium vending presence with 810 units, with the Starbucks “We Proudly Serve” automated concept operating 750 units across the UK. Earlier this year Boparan Restaurant Group also took a step into that arena with its Carluccio’s brand launching the trial of a “grab-and-go” vending machine in a Budgens supermarket. 

In 2020, Costa Express generated turnover of £264.7m, a 23% increase on the previous year. Pre-tax profit in the 12 months, in which it opened circa 850 new units, stood at £46.2m (2019: £43.9m). The company also invested £25.9m into its Express estate during the year. It already has existing and long-standing roadside, supermarket, university and convenience store relationships to call on. And it continues to expand and innovate in the space. Last October it acquired US automated coffee business Briggo. Earlier this summer it began trialling a new line of coffee machines across selected locations in Bristol. The company said the Costa Express Hot & Iced drinks machine was “the world’s first integrated self-serve coffee machine, reinvented to deliver both hot and iced drinks”. It has rolled out the machine at more than 40 Costa Express locations across Bristol, with Nick Orrin, director of Costa Express UK & Ireland, describing the technology as “nothing short of a gold-standard level of innovation”. 

Pret already has relationships with Waitrose, Sainsbury’s and Tesco in the retail sector to call on as it looks to break into this category, as it also does on the roadside with Moto. Pret won’t say how much it is investing in this move into self-service, but it has picked a partner it already has a relationship with, and one that claims to serve approximately 4,500 cups of coffee or tea per second. In July, Pret partnered with JDE Peet’s to launch a new range of aluminium coffee pods in more than 500 Tesco supermarkets throughout the UK and online with Ocado. Also backed by JAB Holdings, the €19bn coffee business listed on Euronext in Amsterdam last year. It trades across 100 countries through 50 brands. Safe to say it knows a bit about coffee, and the technology and machinery to make it. Pret will need to call on all that expertise as it enters a new category from a standing start. There seems no obvious deal like Costa’s for Coffee Nation in the offing, although perhaps it could be seen as a candidate to upgrade Sainsbury’s estate. Will Pret’s offer be more premium than Costa’s or cheaper? And which retailers, if any, will consider switching out of their existing Costa contracts? The pandemic has certainly sped up the number of new revenue streams Pret is now exploring or having to take a calculated gamble on. This could be the most significant one yet.