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Posted by: Jessie Scanlon on September 30, 2009
Yesterday, Coca-Cola gathered key partners and limited press to AMC Parkway Pointe, a movie theater in Atlanta, Georgia. Officially, the event kicked off the theater’s beta test of the beverage giant’s much-touted Freestyle Fountain, a sexy and smart digital dispenser that will give moviegoers an option of 100 different drinks — from standard fountain offerings such as Coke Classic to retail channel favorites such as caffeine-free Diet-Coke to Raspberry Coke, a drink otherwise available only in Australia.
The Freestyle is already being tested in Los Angeles and at 37 restaurants in the Atlanta region, including Burger King, Subway, and Wendy’s. And it has inspired innumerable blog posts and some mainstream media pieces since it was first announced in June, but none of those have gone into the back-story of the new fountain – and that is what the company revealed for the first time yesterday.
I didn’t travel to Atlanta for the event, but I got something better: 45 minutes on the phone with the key Coke execs involved and their most exciting partner – Dean Kamen, the founder of privately held DEKA Research and inventor of too many breakthrough medical products to name.
First, for those not familiar with Freestyle, it’s a soda fountain 2.0. The machines found today in fast food restaurants and movie theaters offer five to eight standard beverages – Coke, Diet Coke, Sprite, Fanta, etc. The Freestyle fountain offers 100 different drinks, all mixed on the spot. Raspberry Coca-Cola? Press here. Sparkling Dasani water? Sure – do you want orange or lemon flavoring?
The genesis story of the Freestyle begins inside Coca-Cola’s research and development labs. The soda fountain had provided the company’s bedrock, though as Coca-Cola expanded over the years, it added new retail channels and created new products, growing to some 500 brands. Meanwhile, the technology behind the soda fountain hadn’t changed in decades.
“We saw a growing disconnect between our portfolio of brands and the eight choices we could offer at the fountain,” says Gene Farrell, now vice president of the jet innovation program at Coca-Cola North America.
Farrell played a critical role in turning the idea into a business opportunity, but it was Nilang Patel, the head of Coca-Cola’s research lab, who came up with the initial concept and made the connection with Kamen. (Patel had met the inventor when he approached Coca-Cola about sponsoring his non-profit FIRST, an organization aimed at getting students excited about science and technology.) When Patel’s team began thinking about reinventing the soda fountain, he made a trip to DEKA headquarters in Manchester, New Hampshire to ask for Kamen’s help.
It might seem an odd partnership. Kamen is known for designing insulin pumps, and dialysis machines, a wheelchair that can climb stairs and, of course, the Segway. A soda fountain seemed rather outside of his area.
From an engineering perspective, though, the partnership made perfect sense. “Measuring fluids, mixing fluids, moving fluids – that’s what we do,” says Kamen. “I was used to working at ten to the minus ninth scale, while Coca-Cola is used to delivering liters, but from an engineering standpoint, the problems that Nilang and I work on are similar.”
Patel and Kamen put together a rough prototype in February, 2005 and presented it to the business development team in May. “[Then CEO Neville] Isdell immediately saw the opportunity to reinvent the fountain business and create a dynamic new consumer experience,” says Farrell, who joined the Freestyle team that June.
Ultimately, Patel and Kamen’s engineers worked together to create a machine similar to ones DEKA had previously developed to deliver small but steady does of, say, chemotherapy drugs. The Freestyle technology can combine small, exact amounts of concentrated ingredients, stored in cartridges, with water and sweetener to mix a beverage on the spot.
Farrell pointed out several advantages that the cartridge-based system offers Coca-Cola and its retail partners over conventional fountains, which simply mix pre-made syrup with carbonated water. The syrup is stored in five-gallon bags that are more expensive to ship and bulky to store, which limits the number of options that each fountain can offer. The Freestyle not only offers more flavors, but gives users the option to customize their drink.
Whether it’s the customization option, the taste (Farrell insists that these “freshly made” sodas taste better than syrup-based versions), or sheer novelty, retailers testing the Freestyle have reported double-digit increases in beverage sales.
Another advantage: the Freestyle fountains are connected to the Coca-Cola network, and are constantly reporting sales data – by brand, location, and day part. “It’s a tremendous new tool for understanding how customers consume our products,” says Farrell. He could see, for instance, that while Caffeine-Free Diet Coke ranked a ho-hum twelfth if you looked at overall sales for a fast-casual burrito joint in Los Angeles, it was the store’s #3 seller in the afternoon.
The platform also allows Coca-Cola to quickly test or roll out new products. “UPS a cartridge to a [retail] customer, download some software to the machine and within days we could have data on how and where its selling,” says Farrell.
It’s easy to understand Coca-Cola’s interest in the Freestyle fountain, which the company is still tweaking and hopes to roll out more widely next year. But Kamen? He took on the project at least partly, he told me, with the hope that the company would increase its FIRST sponsorship. But he had an ulterior motive: leveraging Coca-Cola’s global beverage distribution system for one of his side projects – “figuring out how to get clean water to every kid in the world,” he says.
For years, DEKA has been working on an innovative water-purification machine. And for years, Kamen has been talking about it to people at the United Nations and various non-governmental organizations. “But we realized the NGOs aren’t the ones who can help us get the machine into production, scale it up, bring down the cost curve,” says Kamen. Which is where the biggest beverage-maker on the planet comes in.
“That’s still one of Dean’s dreams,” the Coca-Cola press handler quickly chimed in.
Still, the company’s livelihood depends on clean water and if it were available in each of the 200 countries that Coca-Cola sells products, that would make a hell of a dent in the company’s operating costs – no more shipping bottles of liquid around the world.
I’ll certainly be watching to see the impact of the Freestyle. That story has yet to be told.
What comes next? The BusinessWeek Innovation and Design team of Michael Arndt and Helen Walters chronicle new tools for creativity and collaboration, innovation case studies in both the corporate and social sectors, and the new ideas that have the power to change the way things have always been done.