The Case For Vending, Part 3: Product Manufacturers Value Vending, but Face Challenges

While the vending industry struggles to improve its image, product manufacturers view the channel in a mostly positive light, although many believe it could benefit from a higher level of professionalism.

Consumer product manufacturers see the vending channel as a means of getting products in front of consumers where they work. Being a more fragmented industry than other channels, the vending channel offers both advantages and disadvantages to manufacturers.

Historically speaking, the relatively low cost of entry to get products into the vending channel has allowed some small manufacturers to gain national exposure through vending. Some well known brands, such as Gardetto’s, Veryfine and Act II Microwave Popcorn, were able to use the vending channel to become established retail brands.

However, the fragmentation comes with a price. Many manufacturers complain that field execution in the vending channel is much less reliable than other retail channels, and that consumer sales data is practically nonexistent. Manufacturers find such data important in developing their marketing programs.

VENDING IS EASY FOR SOME MANUFACTURERS

Because the vending channel consists of a large number of small companies, some manufacturers find it an easier channel to work in.

Mark Van Wyk, owner of Van Wyk Confections LLC, knows vending operators will do business if what’s being offered is a good product that is packaged properly and provides a good profit margin.

“If you have a product that fits their need, they’re interested in doing business with you,” said Van Wyk. The 9-year-old company does 20 percent of its sales through vending. Van Wyk has seen the 1-dollar price point become widespread and enjoys interacting with vending operators. He notes that calls from operators that start out about product can lead to a conversation about the state of the industry and economy. He said, “That just doesn’t happen with a big retail account.”

Tom Reynolds, vice president, sales, PepsiCo Foodservice, said one of the best aspects of the vending channel is the numerous customers who wear multiple hats. “It is not unusual for owners to have multiple roles in the company — operations, human resources, finance, etc. As a result, our sales teams work directly with decision makers and can quickly provide solutions when there are challenges and help provide volume-driving ideas,” said Reynolds.

White Castle Food Products LLC uses vending to reach the millions of people who don’t have access to its more than 400 restaurants. “We want to make our products available to as many people as possible,” said Vicki Reilly, director of sales and marketing of the frozen food division.

OWNER-DRIVEN BUSINESS IS A PLUS

Reilly has sold White Castle products to vending for more than 15 years, and she said it’s being able to talk with business owners and operators that really sets the channel apart. “The people have been great to work with. We really enjoy calling on owners/vendors. In retail, you deal with so many big stores that you don’t pick up a rapport like you do in vending,” she said.

Big retail organizations usually have a buyer deal with manufacturers, but in vending, the operator wears so many hats, it allows manufacturers to better understand the location of the machine and what the operator is trying to do. “That information isn’t always passed down from buyers (in other channels),” Reilly explained. “There’s a lot more personal contact with a vendor/owner, which is very nice.”

“Vending allows exposure to products whether you’re a national brand or a small one like Buddy’s,” said Steve Carvel, national sales manager for Buddy’s Kitchen Inc. Without a dedicated marketing department, Carvel counts on the fact that each vending machine acts as a store where Buddy’s Kitchen products are available to the public.

Since Buddy’s Kitchen doesn’t sell to supermarkets, vending is an important way to build the business.

BECOMING NATIONALLY KNOWN