Growing per capita disposable incomes and rising consumer confidence will drive impulse purchases of sugary foods, which traditionally generate a large share of revenue. For this reason, industry research firm IBISWorld has updated a report on the vending machine operators industry in its growing industry report collection.
The vending machine operators industry suffered recessionary losses and failed to keep pace with shifting consumer tastes. As a result, the industry’s revenue has fallen since 2009. During this time, consumers cut discretionary spending on many foods traditionally sold in vending machines. This includes candy production, for which overall demand fell over the past five years. Consumers that did not eliminate spending on these goods, however, were likely to purchase such items from less expensive outlets, like grocery or big-box stores. According to IBISWorld Industry Analyst Omar Khedr, “Consumers’ heightened price sensitivity persisted in the aftermath of the Great Recession, limiting impulse purchases at vending machines.” In 2010, the industry recorded its steepest annual revenue drop for the period.
Consequently, a number of operators reevaluated their product offerings to capitalize on growing markets for healthier snacks and beverages other than soft drinks. During the past five years, snack food demand, which includes relatively healthy foods such as nuts, granola bars and pretzels, has increased. “The recent growth of industry player Canadian Healthy Vending illustrates the strong potential of this vending market,” says Khedr. Also, although most operators generate more revenue from soft drinks than any other product, per capita soft drink consumption has dropped every year over the past decade. Therefore, operators have begun devoting a greater share of machine space to other popular beverages, such as teas and energy drinks. As a result of these trends, and the postrecessionary recovery in disposable incomes, revenue has begun to recover. In 2014, revenue is expected to grow.
Looking ahead, IBISWorld expects the industry to build on these recent successes during the next five years. For instance, growing per capita disposable incomes and rising consumer confidence will drive impulse purchases of sugary foods, which traditionally generate a large share of revenue. Moreover, demand for candy and chocolate is also expected to rise moderately during the period. However, while much work remains to be done with regard to tailoring the nation’s fleet of machines to accept cashless payments, greater consolidation and increasing dominance of major players will hasten this process. As a result, revenue is expected to rise in the five years to 2019.
For more information, visit IBISWorld’s Vending Machine Operators in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
The vending machine operators industry comprises establishments that own, stock and service automated machines that retail merchandise, primarily confectionery, snack foods and soft drinks, but also cigarettes, newspapers and other goods. This industry does not include revenue from soft drink producers that operate their own vending machines.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Posted On: New York, NY December 25, 2014