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

Operators raised both can and bottle prices every year for the past four years, indicated in chart 13c. In 2011, the increase was greater for cans than for bottles, a reversal from 2010 when bottle prices increased more than can prices.

Vending operators attributed the growth in cans at the expense of bottles to consumer preference for lower prices during the recession. This finding is consistent with BMC’s contention that consumers are gravitating to lower price offerings.

Vending operators also noted that container deposit fees did not apply to cans as much as bottles.

Glassfront beverage machines continued to expand at the expense of closed front machines in 2011, indicated in chart 13a. Glassfront machines allow operators to offer a greater product variety.

But while glassfront machines gained placements, they remain a minority of cold beverage machines. Hence, vending operators have not been positioned to take advantage of the disproportionate growth in non-carbonated beverages that has characterized the liquid beverage refreshment business in recent years.

Premium beverages such as ready-to-drink (RTD) tea and coffee, sports beverages and energy drinks advanced particularly forcefully during 2011, BMC reported, while carbonated soft drinks and fruit beverages stagnated.

Energy drinks, a small market segment, grew faster than all other segments with a 14.4 percentage point volume increase in 2011, BMC reported.

RTD coffee, also a small segment, charted the second fastest surge at retail, growing by 9.4 percent growth.

Bottled water continued the recovery it posted with a 3.5-point gain in 2010 following two years of decline, posting a 4.1-point gain in 2011.

Carbonated soft drinks, still by far the biggest liquid refreshment beverage category, continued to lose both volume and market share, BMC reported.

Candy, snacks and confections struggle

Candy, snacks and confections, the largest vend product segment after cold beverages, performed in accordance with overall vending sales in 2011, posting a 1.5-point decline. As with cold beverages, the candy, snack and confection category lost sales despite retail price increases. Hence, turns fell more than dollar volume did.

Fiscal 2011 marked the third straight year vending operators raised candy, snack and confection prices, but the increases for the top selling products were progressively less each year, indicated in chart 14d. This demonstrates operators found it increasingly difficult to raise prices during the recession.

Operators interviewed noted that winning permission to raise prices from location managers was easier than ever in 2011, due to higher prices at retail. Getting the end users to accept the higher prices, however, has been a struggle.

Data provided by Management Science Associates (MSA), which tracks line item dollar and unit sales in this segment, indicated unit sales posted larger declines than dollar sales for the second straight year in 2011. This explains why the segment continued to lose volume despite price increases and no change in machine placements.

Candy once again lost market share to snacks in 2011, indicated in chart 14b, continuing a trend from the previous five years. However, in each of the last three years, the loss was less on a percentage basis. This indicates the decline in candy sales is bottoming out.

Operators began reducing candy at the expense of snacks several years ago when snack manufacturers increased snack product variety. The trend accelerated in 2006 and 2007 when candy manufacturers increased prices.

Some operators noted that the reduction in candy facings hurt total candy/snack sales since candy items historically sell faster than snacks.

Larger size candy, intended to rejuvenate candy sales, failed.

In April of 2012, Automatic Merchandiser published an article documenting the decline in both large size candy and large size snacks in vending. In comparing sales of these items for 2009, 2010  and 2011, MSA found operators gradually removed more large size items every year, despite the fact that price points increased each year.

Large size candy items never gained the volume that large size snacks achieved. In 2011, MSA found 74 percent of machines carried large size snacks while only 14 percent carried large size candy.