VendingMarketWatch Blog

In working on our upcoming State of the Vending Industry Report, it has become clear that good things are happening in today’s highly challenging business environment.

There is no doubt that new technology is creating a lot of excitement, even in a recession. And while I’m a big supporter of technology, I don’t believe that technology in and of itself will return vending to the relevant role it once played in consumers’ lives.

Coffee service, by contrast, has held its own during the recession. Why? Because today’s office coffee presentations are relevant to the consumer. Today’s brew-on-demand systems excite the consumer and beat the pants off of alternative retail options when it comes to overall value.

We as an industry must think long and hard about what this means to vending’s future.

Convenience has always been vending’s leading equity. But it has never been enough in and of itself to win the sale.

Once upon a time, vending banks offered lots of food selections. As economics have changed, the food machines have been removed, relegating vending to snacks and beverages. This isn’t enough to restore vending to its former glory.

Vending has a unique equity in the convenience it offers consumers. It needs to find a way to better leverage that equity, and the food business holds a big part of that puzzle.

Recently I heard from a reader who took an exception to a comment I made in one of my “editor’s notes” on 06-13-10 concerning what I thought to be a high commission in a vending contract for a public account.

The reader took exception to my implication that the successful bidder did not give a fair and accurate accounting of themselves. He raises a valid point.

More importantly, he has caused me to consider what the proper course of action our industry should be taking with regard to vending contracts that appear questionable.

The commission in question struck me as excessive. And since there are now auditing tools to ensure honest sales reporting, I suggested that the newspaper that reported the story ask the customer how they audit the sales.

The reader took exception to my statement because it called into question the bidder’s honesty.

He has a valid point: I do not know all the facts. While I did not specifically call the bid dishonest, I suggested the newspaper ask the contract holder to explain how the sales are accounted for. Which in essence questions the honesty of the bidder.

Which leaves us with a question. Should the industry encourage customers to use new auditing tools that improve sales reporting? I believe making customers aware of these tools will improve the industry’s reputation.

Dishonest sales reporting is not rampant throughout the industry, but it does exist.

To the extent that it exists, much of the problem rests not with the vending industry, but with customers who don’t have a way to make sure sales are reported accurately.

Some customers assume the collections are accurate, or that there is no way to ensure that they are.

Auditing tools exist to improve the accuracy and transparency of sales reporting.

Is it not in the industry’s interest to make customers aware of this?

The most advanced technological solutions take time to find an application. I’m pleased to say that the Starbucks “E-Cup,” a Starbucks interactive brewer with cashless capability, has found a niche, and that niche is going to become more prevalent in the future.

Automatic Merchandiser reported on the “E-Cup,” in a feature article in March 2009. The “E-Cup” has a USA Technologies’ ePort card reader that accepts both magnetic stripe and contactless cards.

I recently came across the first “E-Cup” in Cleveland, Ohio at a biomedical facility that houses a several research and development companies. The “E-Cup” was a perfect solution for this account.

This is a new building. The building wants to attract biomedical companies from all over the world to this modern medical facility.

The building, which is in the process of finding tenants, is not in a position to have a manned cafeteria. Hence, the owners realized that vending would be necessary.

The owners also understand the importance of high quality coffee for the clientele they are trying to attract. One of the decision makers was intent on having Starbucks coffee available.

They also needed a system that would allow the tenants to pay for their own coffee. Hence, the “E-Cup” was the best solution, noted Chris Terrell, general manager for Aramark Refreshment Services in Northern Ohio, which services the account.

This biomedical building represents the future for Cleveland, a one-time heavy manufacturing region that has lost most of its traditional industrial manufacturing. In its place, health care and new technology companies have gradually become dominant industries.

The employees in these types of accounts are well educated people who work irregular hours and often have a taste for the best meals and refreshments.

The owner of this account has made every effort to make the amenities attractive to the professionals they want to attract. The Starbucks “E-Cup” was part of this initiative.

The technology that our industry is developing is all going to serve its future.

We are living in challenging times, and the refreshment services industry has been specifically singled out for discriminatory taxes to help local and state governments meet budget shortfalls. Government officials have proposed taxes on soda and other refreshments, claiming to seek funds to battle obesity but in reality are looking for badly-needed revenue.

Opposing these proposals is tricky, since the industry is easily vilified as holding undue influence when it opposes discriminatory taxes.

Nowhere was this more apparent than in the city of Philadelphia, where the mayor recently sought to saddle consumers with a soda tax.

The Philadelphia Inquirer opposed the soda tax for many of the same reasons that the industry did, but it made sure to criticize the industry for its lobbying. The newspaper didn’t want its readers to think it doesn’t share their disdain for “big business” using its influence to affect policy decisions.

One of the more troubling developments in this skirmish was the revelation that the beverage industry offered to shell out $10 million to support  health and recreation programs.

The Inquirer reported Harold Honickman, owner of the Canada Dry Delaware Valley Bottling Co., said the industry is willing to donate $10 million to pay for city health and recreation programs. In a May 20 editorial, the paper noted, “Instead of pay to play, it’s pay to go away. If Council raises real estate taxes while backing away from the soda tax, it will be showing its disregard for everyday Philadelphians. Bending over for deep-pocketed constituents is no way to run a city.”

Three days later, after council shelved the soda tax and jacked up property taxes, Inquirer columnist Karen Heller commented that “Maybe we could get more of his (Honickman’s) ilk to show up – Comcast’s Brian Roberts or Urban Outfitters’ Richard Hayne – though, apparently, a tax is what it takes.”

The danger here is that government entities will see taxes as a way to solicit industry contributions. Donations of this sort set bad precedent. They not only invite new tax proposals. They also portray the industry as well-funded at a time when profits are hurting for most industry members.

The beverage and refreshment services industries need to strategize their opposition to discriminatory taxes. There are good reasons against these taxes, and the industry should base its opposition on them.

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