Convention Report: Confections Hold Up In Recessions

Dec. 4, 2008
Commodity price increases have become more frequent in recent years

Commodity price increases have become more frequent in recent years, and many vending operators have not been able to raise prices fast enough to cover their costs. One tactic that many have considered is to reduce facings for confections, which have witnessed some of the bigger cost increases.

Operators need to consider what impact their selections have on consumer buying. During the recent National Automatic Merchandising Association expo in St. Louis, Mo., consultant Gary Terrell examined the impact of price increases on confection sales at retail in a seminar.

Terrell, a consultant with Bachtelle & Associates in Tustin, Calif., acknowledged the country is in a recession and further cost increases are expected. He said the most recent recessions were in 2000 and 2003, and during these periods, confection sales at retail posted steady increases. He further noted that confection sales rose 4 percentage points in the last three years.

While retail prices of confections have increased, home penetration for these products remains at consistently high levels.

Terrell further noted that during recessions, confection sales typically outperform other product categories. “Sales will continue to grow during the recessionary periods.” Terrell acknowledged that operators need to raise prices to protect their margins. He said that sales usually suffer immediately after prices increase, but this is a short-term reaction.