While Tims said he has been able to negotiate with CCE, most operators do not have the volume that he has, and hence, don't have the same clout.
Some operators seek Alternative suppliers
Some operators are looking more aggressively for deals at retail outlets.
Jim Babiarz, who operates Winner Vending in Cocoa Beach, Fla., recently came across 24-can packs for $3.98 at a gasoline store and bought 1,000 cases. He estimated he saved $3,100.
Babiarz also expects to buy more secondary (non-core) items from Cadbury Schweppes, which recently opened up a warehouse nearby.
Like many operators, Babiarz already raised his can prices by a nickel last year to 60 and 65 cents and is reluctant to seek another increase so soon. He lost some accounts last year when he raised his can prices over 50 cents.
Lee Thompson, owner of a three-route operation in Troy, Mo., used to buy his cans from a convenience store that sold it to him at cost, which was lower than what he could get it for. Now convenience store prices have gone up. For 20-ounce bottles, Coke is charging the most, so he is buying less Coke and more Pepsi and Cadbury Schweppes, which works well for his market.
Bottlers underbid vendor
Thompson said his bottlers are trying to underbid him in some accounts, offering $1.00 for 20-ounce cans where he needs to now charge $1.25. He said he has been able to keep the business by telling customers what the bottlers are doing and reminding them that he can give better service.
It helps that even with the higher price, Thompson said, he still offers a better price than the convenience stores, which must charge a sales tax.
Operators are raising prices selectively, based on the location's volume and how long it has been since the price was changed.
Corporate Refreshment Services, based in Tampa, Fla., will be doing more business with Pepsi Cola and Cadbury Schweppes because of CCE's pricing, noted Jonathan Bartholomew, purchasing manager. Bartholomew was among several operators who has been disheartened to see that CCE has not raised its own vending prices. Where his company is charging $1.00 to $1.25 for a 20-ounce bottle, many CCE machines are still charging 80 to 95 cents. "It's kind of disheartening; I feel kind of betrayed by them," Bartholomew said.
Several operators noted that there isn't a lot they can do but raise prices. "You can't really do without Coke (Classic) and Diet Coke," noted Steve Marx, who operates Royal Vending Inc. in Maple Grove, Minn., serving the Twin Cities area.
Some see their options as limited
Transshipping, the practice of buying from a bottler in an outside territory that has a different price, is not a long-term option, Marx noted.
"They're going to find out very quickly" and take corrective action, Marx said.
Marx was one of the few operators to admit that the price increase might eventually be to the vending industry's advantage. Marx and others have noted that it often requires action by the manufacturers to get operators to raise prices. "At the end of the day, we will profit more," he said. He said the bottlers could do more to educate the public about rising costs.
Some operators say that the problem of rising costs is not confined to soda and is actually more significant in other areas, such as candy and snacks. Bruce Adams, who operates Rainbow Vending in Denver, Colo., said he has a harder time raising candy prices than soda prices.
Fresh Vend, based in Fort Worth, Texas, contracts with CCE to handle bottle machines in its accounts in exchange for a commission. Hence, his company has not been affected by the pricing. He said most of the machines are selling 20-ounce for $1.00. "We actually make out better if we allow them to do the full service," said John DeSimone, owner.
Bill Gilbert, purchasing and operations manager at Diverse Food Systems of Sacramento Inc. in Sacramento, Calif., said the increases are not restricted to Coke. He recently stopped carrying Dr Pepper because of price increases.
Gilbert found better pricing on cans at a membership warehouse club for Pepsi and Cadbury Schweppes products. He still sources his Coke bottler for Coke cans.