Changing beverage market drives diverse strategies

With summer on its way, operators are looking to increase cold beverage sales by meeting the needs of consumers while maintaining their profitability. To do this during a recession, operators are adopting different strategies.Since the recession has made many consumers more cost conscious, some operators have switched from 20-ounce bottles to 12-ounce cans in the interest of offering a better perceived value.

At the same time, beverage bottlers continue to provide vending operators more glassfront beverage machines, giving them the opportunity to add more variety, and hopefully better values, as well as meet more diverse beverage tastes. These include wellness, energy, and ethnic preferences, all of which have driven cold drink sales in recent years.

Hence, operators are pursuing diverse strategies to maintain profitability and meet consumer needs.

Pricing continues to be a challenge for all products, and while operators have increased cold beverage prices in the last year, they have not kept pace with convenience stores as consumers continue to resist paying as much in vending machines.

Cans make a comeback

Steve Thornburg, general manager of Family Vending Co. in Coral Springs, Fla., says cans are making a big comeback in vending. “I don’t know if people ever wanted 20-ounce bottles,” he said. “I never heard someone drink a 12-ounce can and say ‘that’s not enough.’” Thornburg believes the 20-ounce bottles might have been a concoction by the bottlers to increase revenues.

Thornburg prefers cans because bottles cut capacity in half, produce more weight on the trucks, don’t cool down as quickly in the machines, don’t get as cold, and are more likely to foam over. The one drawback to cans is they don’t merchandise as well in glassfront machines. Filling the spaces with cans doesn’t look as appealing. “There’s so much space between the can and the next shelf, it doesn’t look full,” Thornburg said.

Family Vending sells cans for 75 cents to $1, which customers are more willing to pay than $1.50 for 20-ounce bottles. “When we go to a $1.50, we see a significant drop in sales,” explained Thornburg, “When we switch from bottles to cans, we see a significant increase in units, not dollars necessarily, but units.”

Cans help deal with price resistance

Camelback Vending in Phoenix, Ariz. also uses cans to address consumer price resistance, noted Jodi Glimpse, vice president of business development. She said if a location is at a $1 price point for bottles and a price increase is needed, switching to cans makes sense. “Changing over to cans allows the price to stay lower,” she said. Plus, she’s sold accounts on the environmental benefits of cans. Glimpse believes cans are more recyclable.

Her drivers also prefer working with cans, and it provides her with the ability to partner locally with a canner.

Glimpse is waiting for water in a can. “Schools have asked for it,” she said.

The Automatic Merchandiser State of the Vending Industry report quantifies the growing popularity of cans in the past year. The 2009 report noted a gain in the share of cans versus bottles. This was the first increase for cans in four years.

Despite the advantages of cans, Richard Harvey, owner of A&R Services in Monument, Colo. doesn’t believe they are the way to go because of something he calls “package competition.”

“We can be competitive with 20-ounce bottles,” he said, citing the $1.40 to $1.60 price point of comparable sodas in convenience stores, or even Walmart, which has a reputation for having the lowest prices.

“We can’t sell (cans) as a perceived value the way we can with bottles,” said Harvey. With cans, consumers can buy a 12-pack at a big box store for $2.99, which is much less per can than what’s charged in the vending machine.