Vendors lag retail in cold drinks
While cold drink sales fared better in 2004 than 2003, vending operators did not keep pace with retail in the carbonated drink sector; carbonated beverage sales posted a 2.7 point gain in 2004, according to The New York City-based Beverage Marketing Corp., which tracks beverage trends. One reason is that bottles have been more established in retail outlets than in vending in recent years.
BMC noted that diet sodas drove most of the growth of carbonated soft drinks in 2004. Overall, carbonated beverages have lost market share to noncarbonated drinks, BMC reported. In 2004, per-capita consumption of carbonated drinks suffered a 0.7 point decline, the sixth consecutive decrease.
Bottled water continued to lead all beverage segments in 2004, posting a 7.5 point sales increase over 2003, BMC reported. Vending operators unanimously agreed bottled water continued to post major growth, although the State of the Vending Industry Survey did not break out beverage product categories.
Many vending operators cited bottled water as their fastest growing product overall in 2004.
Medium, large and extra-large operators were more active in bottled water than small operators.
Candy, snack and confection sales posted a slight recovery in 2004 following a devastating setback in 2003, as reported in last year's survey. Much of the improvement in 2004 was driven by manufacturer price increases, particularly in candy bars, the segment's largest single revenue generator.
Operators continued to remove snack machines in 2004 as they culled unprofitable accounts. Operators have removed snack machines every year since the recession began in 2001. However, the pace of removal slowed in 2004, as indicated in chart 7a.
More stable work site populations in 2004, along with price increases, allowed the segment to recover some of the sales lost over the previous three years.
Candy bars continued a comeback for the third straight year in 2004, following two years of dominance in 2000 and 2001 by bagged chips.
The candy, snack and confection groupings were changed in this year's report, based on input from Pittsburgh, Pa.-based Management Science Associates Inc.
In 2004, the major chocolate companies attempted to support their comeback by introducing large size versions of some of their top selling products. Operators reported mixed results to the large-size candy offerings. The large-size candy required $1.00 price points to enable the operator to maintain his traditional profit margin.
Operators who reported success with the large-size candy noted that the product typically did not move as fast as the regular size version, but that the higher sales were enough to compensate for the slower turns. Most operators noted that the product performed best among male workers in blue collar locations.
Operators who did not find the large size candy successful blamed consumer reluctance to accept a $1.00 price point for candy in a vending machine.
Meat, cheese and nut snacks gain
Meat, cheese and nut snacks, while small categories compared to candy bars and bagged chips, posted a big increase for the second straight year in 2004. As noted in last year's report, these snacks fit into low-carbohydrate diets which were popular in both 2003 and 2004.
Many operators noted the success of low-carb offerings marked the first evidence of consumers choosing "healthier" options in vending machines.
Operators faced increased scrutiny about the nutritional content of snacks in 2004 due to legislative initiatives and ongoing media focus on obesity. While most operators did not field questions from customers, many noted that location managers asked for healthier alternatives, particularly in larger accounts.
Operators noted that meeting requests for healthier options was not difficult, thanks to the large number of options available. The candy, snack and confection segment has the largest product variety among all vending segments.