The price is hot, the drink is cold - Coca-Cola's plan to maximise profits on hot days
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Imagine it's summer, you're lying on the beach and it's really warm outside. After a few hours in the sun, how much do you crave an ice-cold drink? There is a drinks vending machine nearby. How much more are you willing to pay for this drink than the normal supermarket price?
![Beverage vending machine by Coca-Cola Beverage vending machine by Coca-Cola](https://grafik.beverage-world.com/beverage-world/8dba/8dba602f720b5deb94c897f438277a03t_beverage_vending_machine_by_cocacola_970x360.jpg)
The former CEO of Coca-Cola, Doug Ivester, explained in 1999 that the company had developed a new range of vending machines that took advantage of this fact. Specifically, Ivester explained that Coca-Cola had experimented with vending machines that contained a thermostat and simple software that raised the price of the products in the machine once a certain temperature threshold was reached.
The problem was that while customers generally accept variable pricing in many cases without complaint, most companies do not just blatantly announce to customers that the main purpose of variable pricing is to squeeze every possible cent out of customers. Instead, this type of variable pricing is generally presented as a benefit to customers, although the real goal is of course always to maximise profits. Hotels, for example, do not advertise that they raise prices during peak periods, but that they lower them in the off-season.
And so disgruntled Coca-Cola drinkers complained in droves to Coca-Cola, and the media further fuelled the controversy by asking competitor Pepsi for a statement. Pepsi spokesman Jeff Brown said at the time, "We believe that machines that raise prices in hot weather exploit consumers who live in warm climates. At Pepsi, we focus on innovations that make it easier for consumers to buy a soft drink, not harder."
Coca-Cola's spokesman at the time, Rob Baskin, tried to limit the damage to Coca-Cola's image. He explained that, if anything, Coca-Cola would only use variable-price vending machines to lower the price of its soft drink during off-peak hours.
In the end, however, the public was not convinced by Coca-Cola's half-baked explanation, and the company's share price suffered a significant drop following continued negative coverage of its vending machine plan.
As a result, Coca-Cola thus ended its experiment and did not launch any vending machines with variable prices.