NEW YORK -- Taking full advantage of the law of supply and demand, the Coca-Cola Co. has quietly begun testing a vending machine that can automatically raise prices for its drinks in hot weather.
"This technology is something the Coca-Cola Co. has been looking at for more than a year," said Rob Baskin, a company spokesman, adding that it had not yet been placed in any consumer market.The potential was heralded, though, by the company's chairman and chief executive in an interview earlier this month with a Brazilian newsmagazine. M. Douglas Ivester, the chairman, described how desire for a cold drink can increase during a sports championship final held in the summer heat. "So, it is fair that it should be more expensive," Ivester was quoted as saying in the magazine, Veja. "The machine will simply make this process automatic."
The process appears to be done simply through a temperature sensor and a computer chip, not any breakthrough technology, though Coca-Cola refused to provide any details Wednesday.
While the concept might seem unfair to a thirsty person, it essentially extends to another industry what has become the practice for airlines and other companies that sell products and services to consumers. The falling price of computer chips and the increasing ease of connecting to the Internet has made it practical for companies to pair daily and hourly fluctuations in demand with fluctuations in price -- even if the product is a can of soda that sells for just 75 cents.
Vending machines have become an increasingly important source of profits for Coca-Cola and its archrival, Pepsico. Over the last three years, the soft-drink giants have watched their earnings erode as they waged a price war in supermarkets. Vending machines have remained largely untouched by the discounting. Now, Coca-Cola aims to tweak what has been a golden goose to extract even more profits.
Industry reactions to the heat-sensitive Coke machine ranged from enthusiastic to sanctimonious. "It's another reason to move to Sweden," one beverage industry executive sniffed. "What's next? A machine that X-rays people's pockets to find out how much change they have and raises the price accordingly?"