Vending revenues grew by 2.4 percent in 2014 to reach an industry aggregate of $20.2 billion, the highest in five years.
The increase was driven largely by taking advantage of growth opportunities such as micro markets and technology, which outweighed the challenges of rising product costs and school vending regulation.
Aggressive adoption of micro markets among some operations has added upward revenues. While this year’s Automatic Merchandiser State of the Vending Industry report shows less than half of vendors operate a micro market, the number is increasing. Significantly increased revenues were linked to micro market adoption. Operators report that the micro market segment is driving 8.9 percent of their revenues.
Technology is another area that is pushing vending operators farther into the black. It’s allowing operators to eliminate under-performing products, identify growth areas and run their businesses more efficiently. More than half of operators now use a vending management system or VMS.
Technology at the point-of-sale has flattened, but its adoption is still higher than in any previous year. More than half of operators installed at least one credit/debit card reader last year, bringing the percentage of machines with this payment option to 11 percent. Large- and extra large-sized operators are 30 percent more likely to have high numbers of cashless payment acceptors installed on vending machines.
The increase in product costs reported by operators were partially offset by operators raising prices, eliminating unprofitable accounts and rearranging routes.
One of the most significant challenges felt by the industry in 2014 was the required change in products allowed in vending equipment located in public schools. The Healthy, Hunger-Free Kids Act of 2010 required the U.S. Department of Agriculture to establish nutrition standards for all foods sold in schools – beyond the federally-supported school meals programs. The requirement gives a limit for sodium, total sugar and calories in all snack items.
All school vending machines had to be stocked with products meeting the requirements for the 2014-2015 school year. Operators with a large quantity of school accounts reported revenue losses between 30 to 40 percent from that segment. A majority, 82.7 percent of operators, report having locations request healthier products be placed in the machines. This is a trend that is not receding. According to industry data from Cantaloupe Systems, nutrition-focused snacks accounted for $2.9 million dollars in vending revenue last year; they constitute two percent of sales by dollar revenue.
In the coming year, adaptability is key for operations looking to grow with and in the vending industry. Operators must provide solutions as consumer preferences for what they eat and how they pay continue to change. However, with the increase in vending revenues, it’s clear that the vending industry is indeed thriving.
For VMW News, I’m, Emily Refermat.
Full report: www.vendingmarketwatch.com/12084666
