Frozen food machines, which reduce spoilage, allowed operators to provide food to locations not large enough to support a traditional refrigerated machine.
Frozen machines also proved a useful selling tool since they were relatively new compared to other vending machines.
Frozen food posts biggest gain ever
The gain in frozen machines at the expense of refrigerated machines was a key factor in the 12.4 point gain in frozen food sold in 2004. In 2004, frozen food as a percent of total food sold marked its biggest 1-year increase ever, as indicated in chart 9b, marking the first time frozen food represented the majority of food sold in vending.
Shelf stable food also posted a big gain in 2004, grabbing 16 percent of all food sold, the most ever. The gain in shelf stable food and frozen food reflected operators' focus on minimizing food waste in 2004.
Also contributing to the gain in frozen food sold was an increase in integrated food systems in 2004, although this remained a small percentage of all food machines. Integrated food systems heat and serve food from a frozen state.
In 2004, integrated machines were introduced with Kraft Foods and Tyson Foods branding. These machines proved useful selling tools in large locations.
Operators found integrated food systems useful in locations that did not have second shifts. These machines were considerably more expensive than other food machines; hence, the application was limited to very large locations.
The larger operators continued to sell more fresh food than their smaller competitors. Large and extra-large operators continued to market freshly prepared food as a key selling point.
Price increases were smallest in the food segment in 2004 among all vend product categories. Operators did not come close to matching increases at retail, nor did they cover higher product costs.
Manual foodservice rises
During recessionary periods, manual foodservice typically increases as a percentage of total industry sales due to extra-large operators' gains in the total customer base. This continued to be the case in 2004 as the vending industry only posted a moderate sales gain.
In 2004, extra-large operators were the only operators for which manual foodservice increased as a percent of total sales. The large accounts that these operators serve usually require on-site manual feeding as a condition for having vending machines. Manual feeding in and of itself, like vended food, is usually not a profitable business.
Automatic Merchandiser only tracks manual food sales for companies that also provide vending, which does not include the majority of manual foodservice providers in the U.S. Vending operators involved in manual feeding did not perform as well in 2004 as dedicated manual foodservice operators, based on information from The National Restaurant Association.
The NRA noted that managed foodservice increased at a faster pace than the total foodservice, which posted a projected 5.5 point revenue gain in 2004. The vending industry, by contrast, increased manual feeding sales by 2.38 points, according to Automatic Merchandiser.
This indicated that on-site manual feeding, like OCS, has become a specialty that requires a dedicated commitment.
Milk continues to grow
For the second straight year, milk led all product segments in percentage growth in 2004, posting a 10.3 point gain. This represented the result of several years of aggressive marketing by the dairy industry, which targeted the vending industry for growth.
In addition to marketing support from dairy processors, milk vending has benefited from the development of new packaging (pint-size, PET bottles), extended shelf life formulations and national branding.
Improvement also reflected better product distribution. Much vended milk is produced by local dairies. Operators noted that product availability was more consistent in 2003 and 2004 than in earlier years.
Milk was the only segment in which vending out-performed retail. The vending industry's 10.3 point gain nearly doubled the 5.6-point gain for total retail milk sales in 2004, as reported by the Beverage Marketing Corp.