Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 13, 1994 TAG: 9403110037
SECTION: BUSINESS PAGE: D-3 EDITION: METRO
SOURCE: Seattle Times
DATELINE: LENGTH: Medium
They rattle like bottle caps in the bottom of your pocket or sit idly on the top of your dresser. They occupy volumes of shelf space in closet corners, preserved for posterity in mayonnaise jars.
Retailers use them as goodwill gifts. Banks shun them.
Ah, there's the rub. What does one do these days with a lifetime collection of pennies and other spare change?
The founder of Bellevue's Coinstar Inc. thinks he has found the answer. Jens Molbak has started putting consumer coin-sorting machines in Seattle-area supermarkets.
The Coinstar units will sift through that bottle or bucket of change in minutes, turning it into a voucher that can be exchanged for greenbacks or groceries at the checkout counter and handing you a bundle of money-saving coupons. The fee to use the units is 5 percent for nickles, dimes and quarters and 10 percent for pennies.
"Coins are such a pain," Molbak said, only half sincerely.
Seattle-area banks seem to agree. Some don't accept large amounts of loose change.
Seafirst Bank will accept more than $50 worth of unrolled coins, but it charges $10 for the service.
"We encourage you to roll your own," Seafirst spokeswoman Sheri Pollock said.
First Mutual Savings Bank in Bellevue refuses to accept large amounts of loose change. "We send you to the big banks, like Seafirst," said Phyllis Easterlin, corporate secretary.
Given that, the market for Molbak's machines might be huge. According to the U.S. Mint, about 340.6 billion coins worth $16 billion have been made since 1968. In 1993 alone, 12 billion pennies were produced.
Molbak estimates there are $5 billion to $10 billion in coins "out there lying around," out of circulation.
Molbak started Coinstar three years ago in the San Francisco area, placing machines in 17 stores there.
Last winter, using money from local investors, Molbak expanded the business into the Seattle area, putting the machines in two QFC stores in West Seattle and Bellevue and Olson's supermarkets in Redmond and Edmonds. The investors are not the Molbak family, he added.
He hopes to have 200 machines in stores around Seattle and San Francisco by the end of this year. In nine months, Coinstar's work force has grown from six to 18.
The coupons that pop out of a Coinstar machine are an inherent part of Molbak's business. He makes half his revenue from the handling fees paid by consumer giants such as Pepsi, Kraft and General Foods by putting those companies' coupons directly into the hands of shoppers.
Molbak estimates that in-store coupon giving will become a $1 billion business by 2000. It is part of the larger in-store advertising business, which amounted to $15 billion in 1992, the most recent year for which figures are available, according to the Point of Purchase Advertising Institute, of Englewood, N.J.
"There's a huge movement into in-store advertising . . . away from at-home distribution vehicles like newspapers," Molbak said.
Molbak won't discuss his company's revenues or profitability, other than to say Coinstar is "on plan and looking good."
by CNB