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Automatic Vending Market Report 2003
Key Note Publications Ltd, Jan 2003
The automatic vending market is in a period of healthy growth. Consumer demands for convenience, more vending machines at more sites, and the improved quality of vended products, have all contributed to growing sales. In 2002, sales of vended products were estimated at £3.10bn, an increase of 3.7% at current prices on the previous year's value. The number of vending machines in the UK continues to increase year-on-year and, by the end of 2002, there were expected to be over 1.1 million machines in operation. This would represent an increase of 3.3% on the previous year's total.
Refreshment machines is the largest vending products sector and includes hot and cold drinks, snacks, confectionery, sandwiches and meals. Refreshments contribute 61.4% of all vending revenues, with sales of £1.9bn in 2002. Snacking and grazing trends have helped sales, along with the penetration of more familiar food and drink brands into the automatic vending market. The development of microwaved vending meals, vended coffee made from ground coffee, and improved fresh food from vending machines has also had a positive impact on sales.
The second-largest market sector is cigarette and tobacco machines. However, the number of these machines is declining as smoking bans are introduced in some public places. Concerns over the availability of cigarettes to children have also reduced the options for machine sites. Yet the value of sales has been increasing slightly due to increased taxes on these products. Cigarette sales through vending machines were estimated at £1bn in 2002.
The remaining £190m of sales in the automatic vending market comes from a range of other products, such as condoms, sanitary protection and personal care products through to newspapers, videos and toys. This `other machines' sector of the market is expanding as more products become suitable for vending.
The workplace is still a core location for vending machines. Many institutions have cut back on staffed catering resources and opted for a more cost-effective vending approach, while smaller companies and departments have been able to take advantage of changes in machine design and size. Compact machines and table-top machines are increasing in popularity. Hospitals and educational establishments are other prime targets for machines, and the range of sites is increasing rapidly.
Major suppliers to the industry fall into the categories of machine manufacturers, machine operators, and suppliers of merchandise and disposables. The manufacturing sector has a few leading UK suppliers, but penetration by overseas companies has been increasing in recent years. US and Italian companies, in particular, are major suppliers. The operator sector is much more fragmented, with many local and regional companies. Pressures on margins are greatest in the operator/distributor sector, but good margins can be made in the merchandise and commodity supply sector.
Automatic vending sales will continue to grow to 2007 as more machines, and a wider choice of products, become available to consumers. Cashless payment systems and improved monitoring systems will help increase penetration.
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