Convention Report

State officers learn about Energy Star, electrical safety and other issues

The Florida sun offered an upbeat setting for the state council officers meeting that preceded the National Automatic Merchandising Association National Expo in Orlando, Fla. An exceptionally large turnout of state officers also made for an enthusiastic gathering at the Peabody Hotel on the first day of the convention. The state officers meeting is an annual event where officers review a host of issues.

Following introductory remarks from Brian Allen, NAMA government affairs director and counsel, and Rich Geerdes, NAMA president and CEO, the meeting got down to business with an overview of regulatory issues.

This year, Larry Eils, NAMA senior director of technical services, tweaked his customary "Dr. Doom" hat with some creative head pieces, including one that looked like a big hot dog.

Eils noted that the Energy Star label for refrigerated vending machines is now available with more efficient components. Energy Star certification is available for both new and rebuilt machines. On July 1, 2007, when stricter Energy Star requirements take effect, Energy Star rebuilt machines will potentially be 50 percent more efficient than conventional machines.

Machines must have ground fault circuit interrupters
Eils then addressed new electrical requirements for machines, noting that the 2005 National Electrical Code says vending machines made after Jan. 1, 2005 must include a ground fault circuit interrupter (GFCI) as a part of the power supply cord. Machines not incorporating GFCI protection must be connected to a GFCI protected outlet.

Eils related a 1995 incident in which a 10-year-old boy was electrocuted after reaching for a quarter that had fallen under a vending machine. Investigators concluded the power cord had been frayed, exposing the wires, and when the metal foot rested on the wires, it allowed the cabinet to be live due to the ground fault.

Eils said the GFCI requirement is not effective in any municipality until it adopts the 2005 National Electrical Code.

He added that new vending machines with GFCI protected cords will not be available until early 2007.

Eils noted that GFCI can be a selling tool for operators.

Turning his attention to foodborne illness, Eils said operators with commissaries must include information about allergens on the labels under a new FDA requirement. As of Jan. 1, 2006, all food labels must state if the products contain any ingredients that have protein derived from the eight major allergenic foods: milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat or soy beans.

The first option is to include the name of the food source in parenthesis following the common or usual name of the major food allergen. The second option is to place the words, "contains," followed by the name of the food source from which the major food allergen is derived, immediately after or adjacent to the list of ingredients.

Eils also noted that NAMA has produced a booklet titled, "How to handle a foodborne illness call" which explains how to determine if an illness was caused by a product bought in a machine. This booklet is available at the NAMA Website in the "members only" section.

Eils then encouraged the attendees to develop public health committees. He said a volunteer in the Texas vending association recently exhibited at a local health convention. He said public health activities provide state associations extra value to their members.

Dean Gilland, NAMA vice president of membership and coffee service, addressed ways to build state council membership and revenue. While the meeting itself was one of the best attended state officer meetings ever, Gilland noted that overall, state council membership is falling faster than NAMA membership. Membership is suffering largely on account of mergers.

Keynote speaker John Walsh talked about the fact that society is changing in ways that challenge industry trade groups. People 20 to 35 years of age who have been nurtured on the Internet are not inclined to belong to trade groups.

Walsh suggested three things state associations can do to get people involved:

  1. Create a database of member companies. This makes it easier for members to keep in touch with each other.
  2. Tell prospective members things the group can do for their business.
  3. Identify the movers and shakers in the group and encourage prospective members to contact these "zealots." These people make good third party references.

Walsh added that trade organizations should periodically survey their members on what services they would like to have.

At the present time, Walsh said it makes sense for vending organizations to have programs addressing vending theft and new technology. While investing in technology involves risk, it will pay off. "Risk is the hottest thing in America right now," he said. "That is where all the rewards are going to." Walsh is a business consultant whose company, Alignmentnow, Inc. helps owners of private, family-owned businesses.

Jackie Clark, NAMA public relations director, gave an update on the Balanced for Life initiative. She said the marketing materials are available online in the form of a "Get healthy and fit kit" for both school and work place accounts.

Mint director: New $1 Presidential Coin will help vending

The Sacagawea Golden Dollar never caught on with the public the way many had hoped, but it did demonstrate the Mint’s ability to work with the vending industry in coming up with a new coin that could be accepted by vending machines without extensive retrofits.

Edmund C. Moy, director of the U.S. Mint, believes that the dollar coin will get new life with the introduction of the Presidential $1 Coin Program next year. A series of coins bearing the images of deceased U.S. presidents will be introduced in 2007, beginning with George Washington, John Adams, Thomas Jefferson and James Madison.

Moy addressed the general meeting at the Orange County Convention Center in Orlando, Fla. during the NAMA National Expo. The Presidential $1 Coin Program includes several benefits that the Golden Dollar brought, and then some.

The government and many vending operators alike believe that widespread adoption of dollar coins will result in higher sales, since consumers are more likely to spend coins than bills, and less maintenance, since coin mechanisms are less maintenance intensive than bill acceptors.

"If there is widespread adoption of the dollar coin, you would save $1 billion a year in maintenance costs," Moy said.

One reason Moy is optimistic about the Presidential $1 Coin Program is that consumers have already shown they like coins introduced in a series. The state quarter program was popular mainly because it featured a series of different designs. The state quarter program resulted in 140 million casual coin collectors, Moy said. "There will be a coattail effect" with the Presidential $1 Coin Program, he said.

The new dollar coins will also be gold in color and in the same material composition as the Golden Dollar, he said. The coins will have the same electronic signature. They also will have the same distinctive edge and tactile features to assist the visually impaired.

The obverse designs for the 2007 dollars will bear a likeness of each president, while the reverse of the new Presidential $1 coins will carry an image of the Statue of Liberty, extending to the coin’s rim.

The new coins will also feature an edge-incused lettering for the inscriptions, "In God We Trust," "E Pluribus Unum," the year of the minting or issuance, and the Mint mark.

Each deceased president will be honored with a single $1 coin, regardless of the number of consecutive terms served. Presidents serving more than one non-consecutive term will be honored on more than one coin.

The first coins will be unveiled in November, Moy said, and there will be four presidents introduced in a given year.

Sacagawea Golden dollar will remain
The Mint will continue to mint and issue Golden Dollars featuring Sacagawea throughout the course of the Presidential $1 Coin Program.
"This (new) coin is going to have widespread acceptance across a wide swath of consumers," he said.

The Mint will conduct an aggressive consumer advertising campaign for the new coins, he noted.

But unlike the introduction of the Golden Dollar, the Mint will not introduce the new coins through only one retail chain. The new coins will be introduced to different retailers to build circulation.

"The Mint is very incenticized to make this successful," he said.

Mint urges vending operators to place orders early
Moy urged vending operators to place orders for the new coins early with their financial institutions. This will help the Mint monitor demand.
He also encouraged vending operators to use posters and take advantage of information tool kits the Mint will make available to educate consumers.


Consumer study: vending needs repositioning

For years, consultants have urged vending operators to think more like retailers. Operators have accepted this advice to varying degrees, but now they have hard evidence that doing this will positively impact their business.

Mike Dabadie, senior vice president of Harris/Wirthlin Brand & Strategy Group, Harris Interactive, presented the results of the first extensive consumer research done in several years at the NAMA general meeting. The research, sponsored by NAMA, revealed that consumers are generally not aware of the healthy offerings currently available in vending, are largely unaware of technological advances, and generally hold vending in low esteem in terms of value compared to other retail venues.

While much of this isn’t news to operators, Dabadie believes that there is a lot operators can do to improve the value proposition they bring to the table. The first step is understanding how consumers define value. Once they do this, operators will recognize that they can meet consumer expectations by better positioning themselves.

The research covered vending consumers’ perceptions, expectations, usage patterns, and habits. The findings also included insight on barriers, pricing, and alternative payment methods.

Dabadie noted that it’s important for vending operators to understand how consumers view vending.

Harris Interactive interviewed 2,223 consumers aged 14 and above. Almost three quarters (73 percent) were vending users and the balance were non-users.

As indicated in other studies, the most positive perceptions consumers have of vending have to do with convenience and ease of use. Negative perceptions focus on lack of healthy products, lack of variety and poor value.

Speaking of value, Dabadie said it’s important to remember that value is not defined solely by price, but also by the benefit the product provides.

Health awareness is a big concern among consumers. Dabadie said 60 percent of the respondents claim to be following a healthy diet. Overall, consumers have low expectations from vending in the area of healthy offerings.

Vending consumers largely recognize that healthy choices are an individual responsibility, but this doesn’t absolve the vending industry of responsibility in making healthy choices available. Most consumers believe the vending industry has a role to play in promoting healthy food.

Asked if they agreed that vending machines include healthy choices, 26 percent said they disagreed, 23 percent said they agreed, and 51 percent said neither.

Concern about children’s health was also an issue in how consumers view vending. "Parents recognize they are challenged, not only for themselves, but for their kids," Dabadie said.

Consumers who plan to use vending machines less often in the future were largely unaware (82 percent) of the technological advances being made in vending. A 71 percent majority also said vending prices are higher than prices in other outlets, and 63 percent said vending offerings are of lower value than those in other retail outlets.

"We are not currently seen the way we want to be seen," Dabadie said.

Consumers in general are buying more water, fruit, juice and iced tea, Dabadie said, and less cookies, candy, salty snacks and soft drinks.

Brand loyalty was another theme that Dabadie stressed. The research indicated that many vending consumers associate good value with branded offerings. "Brand is critical," Dabadie said, adding that 69 percent said that it’s an important part of the purchase process.

In the area of alternative payment methods, Dabadie said the research revealed an opportunity to improve consumer perception of vending by offering card payment. Three quarters of the consumers said technology would increase the likelihood of their using a vending machine.

Dabadie offered his listeners some suggestions to better position themselves. "Image is very different from positioning," he said.

He offered the following suggestions:
1) Demonstrate the value vending can give consumers.
2) Develop a retail store mentality to drive sales.
3) Be aware that the perception that vending and healthy don’t go together is damaging the industry, and it is incorrect.
4) Freshness and nutrition information in an easily accessible format will help change perception and broaden the appeal to non-users.
5) Incorporate the latest technology. Consumers do not know about it. It can expand vending usage.
6) Expand the variety of ethnic offerings.