eVending takes great pride in manufacturing vending equipment right here in the United States. Des Moines, Iowa is home to our manufacturing plant employing some of the hardest working Americans we know. There are important benefits to manufacturing in the United States.

Providing jobs by manufacturing in the U.S. is an important benefit that should not be overlooked. According to the National Association of Manufacturers there are nearly 12.5 million manufacturing workers in the United States, accounting for 8.5% of the workforce. The Alliance for American Manufacturing notes that between June 2017 and June 2018, 285,000 manufacturing jobs were created. Manufacturing jobs are very important for our economy as a whole, and on a individual level, certain demographics rely heavily on jobs within the manufacturing sector and this sector provides millions of Americans with stable employment.

When businesses manufacture in America it is much easier and cost efficient to transport their products to retailers and consumers. Plus, it takes a significantly shorter amount of time verses waiting for container shipments from overseas.  Popular Mechanics talked with different American manufacturers and found that it is often more cost effective to ship their products from the U.S than accept cheaper labor overseas. They also found that manufacturing in the U.S. helps them keep a closer eye on the market and better connect with the consumer.  An employee from Stihl said “Manufacturing here gives us the ability to quickly and easily adapt to changing supply and demand and respond to the customer with new innovations.”

eVending believes strongly in the American labor force and is dedicated to making products in the U.S. Manufacturing in the U.S. helps eVending have a closer pulse on the market in order to adapt when necessary and eliminate costs associated with shipping products overseas.  Take a tour of the eVending plant and get to know the company better.

Trends in Healthy Vending Selections

The American diet has been through many transformations over the years, its most recent shift driven by growing health concerns.

Over the past few years the beverage industry has seen some shifts in consumer preference trends. Within the past year healthy beverages have taken the spotlight, many of which are focused not only on low calories but also health benefits such as low sugar and sodium.

As you can imagine, the increase in health conscious individuals has introduced greater demand for less sugary drinks and sodas. Consumers are now showing patterns that indicate a higher demand for water and other low calorie and nutritious options. While soft drinks still hold a large chunk of the refreshment category, data shows that their hold may be slipping as their volume and market share go down. Vending Times reports that the “volume slipped by 1.5% from 12.8 billion gallons in 2014 to 12.6 billion gallon sin 2015, which lowered CSD market share to less than 40%.”

One of the biggest threats to carbonated soft drinks is bottled water. According to Vending Times, bottled water is projected to take over as America’s largest beverage category by volume by 2017 if not by the end of this year. They also note that bottled water sales increased by 8.9% in 2015 and now total $14.2 billion (wholesale).

Other drinks that are making splash in the market are sports drinks, many companies are taking not and have begum developing new healthy beverages to satisfy the evolving demands of consumers. Pepsi has even announced its launch of products like organic Gatorade, according to Business Insider. Additionally, niche categories including selections like energy drinks and ready-to-drink coffee are outperforming most traditional mass-market categories such as carbonated soft drinks and fruit beverages. Other changes being made to beverages include downsizing cans and bottles to offer consumers a more moderate serving size. Lucky for you, eVending machines are equipped to handle many shapes and sizes of products keeping you equipped and ready to handle the ever evolving beverage industry.

The state of vending machine operators industry in the United States and industry performance

A long trend of declining revenue has made for a slow decade for the Vending Machine Operator industry in the United States. Within the past five (5) years revenue has declined each year except for 2012. According to IBISWorld Inc. revenue has decreased at an annualized rate of 0.8% to about $7.3 billion within the past five years, and a 1.1% decrease so far in 2016. The status of the industry has been a result of changes in the eating index, new nutritional restrictions, and the rise of micro markets and convenience and grocery stores among other things.

Although the outlook may be somewhat discouraging, with downward revenue trends being expected to continue, there is a silver lining as these decreases are expected to occur at a slower rate. Over the next five year period, industry revenue is expected to decrease at a rate of 0.6% to an estimated $7.1 billion, according to IBISWorld. In the coming years, key external drivers will both positively and negatively affect the industry’s profit margin; these include an increase in per capita disposable income, a rising healthy eating index, and rising prices for corn and sugar.

Changing laws pose a big threat to industry operators. Since its implementation in 2014, the USDA’s Smart Snacks in School has introduced new challenges for operators who have machines in primary and secondary schools. The nutritional restrictions have created a limited selection that operators can supply, and unfortunately the approved items are not popular among the students. These restrictions have caused many operators with school locations to experience a 30-40% decrease in revenue. If more laws similar to these continue to be passed some vending operators will be forced to find healthy selections that will be profitable, or exit this industry segment.

In response to the decreasing sales from snack, food, and beverage machines the industry has turned some of its attention to using technology to generate sales, as well as continuing to pursue non-traditional machine markets. As it stands in 2016, of the $7.9bn in the industry, movies and games has 29.8%, food has 29.6%, beverage has 29.9%, and other products have 10.7% according to IBISWorld.

Technology such as touch screens, cashless / mobile payment, and remote monitoring systems will help companies are the future and will create a more enticing customer experience which will hopefully drive sales. Recent advances in technology will help to improve operators’ profit margins, as they will be able to monitor machines more closely and make decisions to eliminate underperforming machines.

Competition / Major Players
IBISWorld determined the market share concentration in the industry to be medium with the top four industry operators being estimated to represent 47.1% of total industry revenue, the remaining 52.9% being held by small to medium sized companies. Major players with the largest market share are Outerwall Inc. (21.2%), Compass Group PLC (12.5%), and Aramark Corporation (9.0%).

Over the five years leading up to 2016, market share concentration has been on the rise as costs continue to increase while revenue declines. IBISWorld determined the most important key success factors for businesses in the industry are:
• Having an exclusive sales contract
• Ability to pass on cost increases
• Economies of scale and scope
• Proximity to key markets
• Easy access for clients
Internal competition in the industry is high and the trend is steady, according to IBISWorld. More and more companies are beginning to diversify the products they offer, as well as changing the machines to cater to the rising healthy eating index. IBISWorld says that sleek, well-branded machines with easy customer interfaces and technology will help spur revenue growth for operators.
Overall, the industry outlook has been looking up as the continual decline in industry revenue is expected to slow. Improvements in technology will give operators tools to remain profitable. Industry companies need to continue to focus on meeting the demand of healthy vending and embracing technology to drive efficiencies and increased sales.

An Up Close Look at FDA’s Calorie Disclosure Rule

The FDA Calorie Disclosure Rule for vending machines is directed by Congress and stems from the Affordable Care Act (ACA) that was approved by President Barack Obama on March 23, 2010. The section 4205 amendment of the ACA was implemented to “help make calorie information for vending machine foods available to prospective purchasers in a direct, accessible, and consistent manner to enable them to make informed and healthful dietary choices,” according to the Federal Register.

It is important to note, the Rule applies to vending operators, rather than the food manufacturers and it applies to vending only, not micro markets or OCS. This rule requires that vending machine operators who own or operate 20+ machines, or who voluntarily elect to be covered, comply with the guidelines as defined in the FDA Calorie Disclosure Rule.
The FDA’s Final Rule, issued in December of 2014, will go into effect on December 1st this year. The rule requires that operators provide the calorie content of food products in one of several locations:
• On a sign in, on or adjacent to the vending machine so long as the sign is easily read and in close proximity to the article of food or its selection button
• On the front of the product label- the font must be in a type size at least 50 percent of the size of the largest printed matter
• On the product’s Nutrition Facts panel, if it is visible while the product is inside the vending machine- provided the calories displayed represent the total calories per package item
• On a digital display, if the vending machine has one
eVending’s snack and refrigerated / frozen vending machines are equipped with two line digital displays. Using a machine planogram approach, the products’ nutritional information is entered into a text file along with the selection number and product name. The product name (up to 20 characters) as well as calorie and fat calorie information (up to four digits each) can be included in the text file. The information can be programmed into the machines through a two-step process.
1. Create a text file with the information in DEX format
2. Upload the DEX text file to the machine’s control board by attaching a laptop to the vending machine with a GVC control board cable.
This feature will ease the transition in complying with the FDA’s new rules and regulations by providing you with a tool that can display the calorie content of the products in your machine.
In addition to the above described rules, the vending operator must disclose their telephone number and mailing address or email address by posting it on the vending machine. The information can be placed on the face of the machine or with the calorie declarations in, on, or adjacent to the machine.
The Final Rule will be enforced by the FDA starting December 1, 2016. The FDA can enforce the rules through its regulatory enforcement process. Failure to comply with the rule will render the covered vending machine food misbranded under the Food, Drug & Cosmetic Act (FD&C). Learn more about the FDA Calorie Disclosure Rule by visiting NAMA’s FDA Calorie Disclosure Online Resource Center.