2012 State of the Vending Industry Report: Vending sales reflect a slow economic recovery

NAMA steps forward to promote technology

The innovation taking place in vending, coupled with a consumer more accepting of automation in general and a growing inclination to use cashless payment, prompted the National Automatic Merchandising Association (NAMA) to conduct an extensive consumer research study in 2011. The results of this study formed the basis of an industry growth strategy that included a social media marketing campaign to promote the vending industry.

The industry growth strategy also included a mobile marketing tour to seven markets with high populations of younger consumers, known as “Gen Y.” These “Gratitude Tour” events featured high tech vending machines and free products. The events grabbed a lot of media attention and introduced thousands of people to high tech vending machines.

The industry growth strategy also included a Facebook contest whereby consumers could “like” vending machines and compete for prizes. Thousands of consumers participated in this contest nationwide.

Regulatory issues remain

The most significant regulatory issue in 2011 was the federal calorie disclosure law under the federal health care reform law signed in 2010. The law requires a vending operator with 20 or more machines to post calorie counts at the point of sale. NAMA submitted suggestions to the U.S. Food and Drug Administration to make the rules manageable for vending operators.

The FDA missed its 2011 deadline for announcing final regulations for vending machines. The rules will not become mandatory until at least one year after final regulations.

As of spring 2012, it was not known when or if the FDA will release final rules. Some observers suspect the status of the health care reform law is uncertain due to a legal challenge.

Calorie disclosure nonetheless encouraged technology providers to develop touchscreens and calorie databases for vending machines.

The Obama administration continued to encourage health and nutrition in schools. In response, the food and beverage industry introduced front of pack nutrition labeling to make it easier for consumers to read nutrition information on product labels.

Following is a summary of the main vend product segments.

Cold beverages falter

In 2011, cold beverages, the largest product segment in vending, failed to sustain the comeback posted in 2010. This reflected the performance of cold beverages in all retail segments, according to the New York City-based Beverage Marketing Corp., which tracks beverage trends.

In 2010, the State of the Vending Industry Report noted cold drinks posted a 1.58-point gain, reversing declines from the previous two years. The gain in 2010 was driven by a mild resurgence cold beverages experienced in all retail outlets.

The Beverage Marketing Corp. reported that liquid beverage refreshment sales slowed in 2011 following the mild surge in 2010. BMC reported beverage sales increased by 0.9 points in 2011, compared to a 1.2-point growth in 2010. BMC attributed the slowdown to higher prices in 2011 as consumers resisted price increases.

One factor hurting vending in particular was a decline in machine placements in 2011, indicated in chart 13a. This reversed the uptick in beverage machine placements reported in 2010, reverting back to the previous 5-year declining trend.

The majority of machines removed in 2011 were can machines. The decline in these machines can be tied to a growth in glassfront machines, which carry both cans and bottles. The decline in can machines did not undermine cans’ market share of vending sales in 2011. Cans still accounted for 29 percent of vend beverage sales. Given the decline in can machines, sustained market share for this segment indicates can sales increased at the expense of bottles.

Chart 13c indicates operators raised can prices more than bottle prices in 2011. Operators noted they had more leverage in pricing cans since there were fewer retail outlets where consumers can compare vend can prices to prices in other retail outlets, as opposed to bottles, which are sold in most retail outlets.