Costa Coffee’s Express vending machines are driving the bulk of profits at the Costa Coffee UK business as the company installed 1,500 new units last year providing further proof that consumers are increasingly happy with buying premium coffee through self-service machines.

The Costa Express business enjoys healthy margins judging by the company’s most recent results – for the 12 months to December 31 – that showed a 5% sales growth to £348 million and profits rising 1% to £61 million. The newly-installed vending machines take the total units in operation around the world to 14,600 of which 13,200 are within the UK and the remainder are scattered across 20 international markets.

The potential opportunity of the Express machines was one of the primary factors behind the acquisition of UK-based Costa Coffee from owner Whitbread by Coca-Cola in 2019 for nearly $5 billion. At the time the vending machines generated revenues of £335 million and profits of £47 million.

A major innovation this past year has been the development of a unique vending machine that serves both hot and cold beverages. This is likely to prove crucial for driving future growth because cold drinks account for one in five global purchases at Costa Coffee. Market trends suggest this will grow, judging by the experience at Starbucks where cold drinks account for three-quarters of its sales.

Costa Coffee directors stated: “Costa Express continues to innovate in respect of its coffee vending technology. The company has started to roll-out the world’s first integrated hot and cold beverage machine, with placements in several cities across the UK.”

The ongoing roll-out of its machines has given Costa Express a sizeable 64% share of the self-service coffee vending market in the UK where the total number of units in operation currently stands at almost 21,000, according to research from World Coffee Portal. The competition includes Absolute Coffee that is the second largest operator with 1,500 units in the marketplace, followed by We Proudly Serve Starbucks that operates 1,100 vending machines across the UK.

Many other coffee retailers have so far failed to take the vending machine market seriously despite the success of Costa Express. Although this might be about to change with the recent activity of Pret A Manger that is starting to roll-out vending units to complement its physical cafes business. However, other established operators like Caffé Nero have stated that they remain committed to providing hand-prepared coffee drinks from trained baristas.