Vending va-va-voom

By Treena Hein

Vending machines have been around a long, long time, and it’s safe to say, with our modern on-the-go lifestyles, that they are likely here to stay.

The very first vending machine was invented 2,000 years ago by a mathematician in what was Alexandria. Believe it or not, in exchange for coin, it dispensed holy water using a system of pulleys and weights. What we would recognize as the first modern vending machines appear in the late 1800s in big centres like London and New York, offering postcards and chewing gum. Some of the products that followed might be expected — snacks, cigarettes and common pharmacy items — but others, such as flight insurance, makeup, books, bicycle parts, shoes and flowers, are more bizarre.

The mainstay of the vending industry has always been beverages and food, including pop, coffee and candy, as well as fruit, cupcakes, instant noodles, fresh lettuce, caviar, bananas, French fries, sausages, eggs, milk, cheese, burgers, rice, hotdogs, ice cream and much more. A vending machine in Nanjing, China now offers live crabs, kept in a cool temperature to promote a sort of hibernation (if you receive a dead crab, the company offers to compensate you with three live ones). Mashed potatoes are currently available in vending machines in Singapore, and Le Bread Xpress now sells freshly baked baguettes through two machines in San Francisco. In the Netherlands, FEBO outlets are going strong, with over 60 shops stuffed wall-to-wall with machines offering many snacks, drinks and fully cooked meal items. A favourite is kaassoufflé, a dish of puffed pastry filled with melted cheese.

Current estimates put the worth of the U.S. vending sector at more than $25 billion a year, with five million machines across the country. This continued industry success is largely due to meeting consumer demand for healthy product choices. At the tradeshow of the National Automatic Merchandising Association (NAMA) held in late March in Las Vegas, presentations included “Using Behavioral Design to Create Experiences Where Healthy Choices are the Easy Choice” and “Better-for-You Insights & Product Recommendations: What You Should Know About This Profitable Category.” Smart vending firms are also offering easy and quick cashless payment, and making sure customers are getting what they want through analytics software that tracks sales at every machine, allowing operators to make real-time adjustments to the lineup and therefore maximizing profit.

Vend Natural uses all three strategies. The company started about 10 years ago and now has machines and micro-markets across 25 U.S. states in approximately 1,000 locations, mostly at educational facilities, with an interest in the Canadian market. Its machines not only offer cashless options and healthy snacks (tested for quality, taste and profitability), but also feature large touchscreen displays where consumers can access information about each product’s nutritional content and calories before they make a purchase. The firm changes about 25 per cent of its product inventory every year for several reasons, according to CEO Bill Carpenter Jr. Food companies are creating so many new healthy products worth a try, he says, and changing the selection is also a factor in repeat visits. “We treat it like a store, even though it’s a vending machine,” explains Carpenter. “We view it as a shopping experience, so we update the look and the selection of items, and build customer loyalty that way.”

Farmers Fridge is another healthy vending firm, with more than 100 locations in Chicago, including O’Hare airport, apartment buildings and various medical facilities. It offers premium salads and bowls (for example, ginger-sesame cauliflower and rice with edamame), protein snacks such as dark chocolate trail mix, and premium healthy beverages. Global fruit grower and processor Del Monte also offers firms a “vending line” of ready-to-eat fruit and vegetable products in clear containers.

Because the need for healthy choices in vending machines has become so important to the Canadian vending industry, five years ago the Canadian Automated Merchandising Association (CAMA) began development of a member program called SMART PICK. It launched in 2016. “In the past five to seven years, every response to an RFP includes a section on healthy choices,” notes CAMA executive director Marie Saint-Ivany. “Operators [must] meet nutritional mandates from school boards and other governing bodies…[and] traditional vending items like chips, sodas and chocolate bars, in many cases, do not meet these guidelines. Operators will tell you horror stories where they have been asked to remove these popular items from their machines, only to see revenue at these locations drop drastically.”

Saint-Ivany says that although the selection of items that meet these guidelines is improving, “it is still challenging for the operators to find enough variety to satisfy their clients and fill the machines.” SMART PICK includes a complete toolkit — a partial list of products that meet the program’s nutritional standards, an implementation plan, marketing strategies and tools (such as stickers) and an evaluation plan.

If you’ve never visited a micro-market, picture a small self-serve store, usually located in a workplace. Customers are offered a wide array of healthy snacks, drinks and freshly made meal items such as wraps and sushi. There is also no cashier — customers pay through an automated checkout system, with theft prevented by security cameras. Saint-Ivany believes the Canadian vending industry will experience a major micro-market growth spurt in years to come. “Many workplaces,” she notes, “cannot support or do not have the facilities to operate a manual foodservice cafeteria,” and micro-markets provide a suitable alternative.

Another growing vending industry trend is alcohol. In October 2017, for example, a firm called La Galere Markets asked Florida lawmakers to allow placement of its secure alcohol micro-markets in several condos in that state. Under security camera surveillance, only residents can enter these markets, with identity verified through fingerprint technology. In several U.S. states, bars and restaurants are now allowed to sell specially coded cards to patrons who then use them to serve themselves beer or wine from a self-serve area onsite.

BeerBox, a start-up owned by Anheuser Busch, has a different model, with its beer can-dispensing machines placed by concessionaires at events and other venues. In legal drinking areas, self-serve obviously works, but in areas where underage individuals are present, concessionaires must provide staff to check identification. The machines open each can upon dispensing (in the U.S., up to two beers are permitted per transaction) as containers are legally required to be open at public events.

The company piloted its machines at various festivals last fall in Philadelphia, New York and Las Vegas. BeerBox founder and CEO Bobby Gaafar says the company is now finalizing machine design details relating to offering different-size cans and different forms of payment, as well as sales-tracking analytics. A large rollout is planned for later this year at stadiums, arenas and bars. Gaafar says concessionaires will be able to offer whatever beer brands they feel would sell best, as well as non-alcoholic beverages.