Food and Beverage Vending Trends in the U.S.

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While food and beverage vending has suffered from years of significant sales declines, Packaged Packs believes the industry is turning the corner. We forecast 1.5% market growth in 2015, on the heels of vending machine innovation that promises higher food and beverage quality, increased consumer interaction, increased cashless payment acceptance, and more aggressive competition with foodservice.

Technological innovation holds the keys to future growth. Social and interactive vending, touchscreens, and wireless supply-side networking are a big part of the equation, offering tremendous upside for consumer engagement. But virtually every vending macro driver is heavily influenced by technological change, from cashless payments to health and quality vending enhancements. And while the strength of vending lies in snacking convenience, growth will come from delivering health, freshness and quality. Sales of fresh food are growing, and natural vending solutions bring the promise of higher-quality, higher-status food and drink to the market.

Food and Beverage Vending Trends in the U.S provides industry participants with the wealth of analysis and guidance they need to stay abreast of trends shaping this evolving market. Report coverage includes market sizing and forecast for U.S. food and beverage vending as well as analysis of the following market drivers:

• Consumer vending expenditure trending analysis; snack-driven consumer spend share analysis; vending product segment sales trending; snack/confectionary product sales leadership trends; and vending location trends.
• Macro trends shaping food and beverage vending, including converging technological applications; health, freshness and quality; cashless payments, and snacking.
• Food and beverage vending competition: office coffee service; coffee pods/k-cups; micromarkets; restaurants; and convenience stores.
• Food and beverage machine vending usage and selected purchases: comparing usage of vending machines for food/drink with usage of fast food restaurants, family restaurants, casual restaurants, coffeehouse/donut shop/yogurt place/smoothie places, and convenience stores; and assessing purchases of chocolate candy, cereal bars, nutrition bars and ice cream by channel and demographic assessment of vending machine users.
• Vending usage motivators: assessing whether consumers would use vending machines more often if offered additional products and/or services. Variables discussed include healthy food options; convenient location; credit/debit card acceptance; coffee and coffee drink quality; and tea drink variety and quality. Demographic analysis and filtering is conducted according to vending users and non-users, convenience store prepared food users, and snack/beverage store users.
• Vending and refreshment programs and strategies at ARAMARK Corp and Canteen Vending Services Inc.

Chapter 1: Executive Summary

Report Scope

Market Size and Forecast

Macro Trends Shaping Food and Beverage Vending

Competitive Context

Vending Machine Food Usage

Consumer Vending Usage Motivators

Food and Beverage Vending Contractors

Chapter 2: Market Size and Forecast

Summary analysis

Market size and forecast

Graph 2-1: Food and Beverage Vending Revenue, 2006-2015

Trailing foodservice sales

Restaurant and foodservice sales to grow by 4%

Household food & beverage vending spend lags household foodservice spend

Table 2-1: Household Spending at Vending Machine/Mobile Vending & Foodservice Facilities, 2006-2011

Bright demographic spots

Lower- and middle-income consumers and Hispanics drive vending sales

Table 2-2: Consumer Share Analysis: Number of Households, Total Household Income, Foodservice Facilities

Spending & Vending Machine/Mobile Vending Spending: By Demographic, 2011

Importance growing

Table 2-3: Vending Machine and Mobile Vending: Consumer Spending Share:By Demographic, 2007 vs. 2011

Vending spend by daypart: historical snacking strength in decline

Table 2-4: Consumer Spending on Vending Machine and Mobile Vending: By Day Part, 2006-2011

Market composition by product segment

Graph 2-2: Food and Beverage Vending Revenue: Sales by Product Segment, 2006-2011

Table 2-5: Food and Beverage Vending Revenue: Percent Growth by Product Segment, 2007-2011

Beverages

Table 2-6: Cold Beverage Vending Sales, 2006-2011

Hot drink vending struggles; opportunity calls

Table 2-7: Hot Beverage Vending Sales, 2006-2011

Milk sales fall again

Candy, snacks and confections

Table 2-8: Candy/Snack/Confection Vending Sales, 2006-2011

Small for large

Top snack/confectionary brand trending

Table 2-9: Top 20 Snack/Confectionary Vending Products, 2007 vs. 2011

Price increases differ by product

Table 2-10: Top 20 Snack/Confectionary Vending Products in 2011:

Price per Ounce & 2007-2011 Price-per-Ounce Trends

Vended food

Table 2-11: Vended Food Sales, 2006-2011

Fresh food a bright spot

Ice cream

Location/site analysis

Table 2-12: Vending Machine Locations, 2007-2011

Chapter 3: Macro Trends Shaping Food and Beverage Vending

Summary analysis

Technology

Reinventing the vending machine

But the presence of technology does not equate to quick uptake

Pepsi interactive vending machine off the ground

Gifting option

Random Acts of Refreshment?

Pilot program off the ground

Coca-Cola Interactive Vender in testing stage

Coca-Cola Freestyle

BevMax

EatWave Vending goes hot and cold

Health & Quality

Graph 3-1: Consumer Food Health Attitudes & Behaviors, 2007 vs. 2012

Healthy corporate food promotion policies nearing majority status

It’s in the employer’s interest

And consumers say they want healthier vending

Table 3-1: Consumer Food/Drink Vending Usage Motivators: All Adults,

Food/Drink Vending Machine Users & Nonusers, 2012

Vending is finding its healthful role

Healthy vending at Stage 2 of 5-stage trend cycle

H.U.M.A.N. Healthy Vending

Vend Natural

Fresh Healthy

Healthy products

Quality products

Upscale Sprinkles Cupcakes burnishes vending quality halo

Let’s Pizza: Green Shoots for Food Vending?

The Smart Butcher

Frozen steps up its game

Schwan’s-branded frozen food vending

Cashless payments

Less than 4% of vending machines are cashless

We would use them more if they took payment cards

Table 3-2: Consumer Food/Drink Vending Usage Motivators: All Adults, Food/Drink Vending Machine Users & Nonusers, 2012

Cash wariness fuels debit card use

Table 3-3: Use of Debit Cards to Avoid Carrying/Paying with Cash & Because It Is More Convenient Than Using Cash, 2012

Credit, debit, prepaid & gift card usage trends

Table 3-4: Consumer Debit, Credit and Prepaid Card Usage Trending, 2008-2012

Cost barrier to cashless acceptance

Generational issues

Table 3-5: Consumer Debit, Credit and Prepaid Card Usage: By Age, 2012

Two vendors; two cashless successes

Coca-Cola expands traditional card/Google Wallet acceptance

In a post-regulatory world, do vending and debit make the match?

Regulations clamp down on debit interchange fees

Mobile cashless vending

Smartphone share of mobile phones passes 50%

Table 3-6: Consumer Mobile Phone Ownership, Smartphone Ownership & Ownership Share, 2012

Mobile payments catching on

ISIS paving the way

A challenge to the payment networks

The tip of the mobile payments iceberg

Open wallet approach

Table 3-7: Isis: What’s in the Wallet & How It Works

Off the ground after delays . . .

. . . And to a vending machine near you

Health regulation and labeling

Regulation

Calories Count health labeling initiative

Chicago vending gets a makeover

Call for vending snack regulation

Snacking

Healthy choices in the minority

Part of the routine

Portability, please

Graph 3-2: Restaurant Snacking Influencers, 2010

Demographic context

The more things change, the more they stay the same

Graph 3-3: Consumer Snacking Attitudes & Behaviors, 2007 vs. 2012

Snacking at restaurants

Table 3-8: Family/Steakhouse & Fast food/Drive-in Usage for Breakfast, Lunch, Dinner & Snack: 2004-2012 .

Limited-service players offering fresh snacks right around the corner

Starbucks rolls out more than 15 indulgent snack-centric menu items

Table 3-9: Starbuck's Snack-Centric New and Returning Menu Items, 2012

McDonald’s continues to downsize sandwiches into wraps

Table 3-10: McDonald's Snack-Centric New and Returning Menu Items, 2012

Dunkin Donuts developing snackable breakfast items

Table 3-11: Dunkin Donut’s Snack-Centric New and Returning Menu Items, 2012

College snacking

Chapter 4: Competitive Context

Summary analysis

Office coffee service

Where coffee is king

Graph 4-1: Office Coffee Service Revenue, Dollar Share by Product Category, 2007-2012

Branded coffee solidifies comeback

Table 4-1: Office Coffee Service Revenue, Percent Share by Product Category, 2007-2012

Industry segment analysis

Table 4-2: Office Coffee Service Accounts, by Industry Served, 2007-2012

Single cup brewers

Coffee opportunity: morale, retention and productivity

Coffee does helps employees through the workday—at least employees think so

Coffee helps them through the workday

Table 4-3: Coffee Helps Keep Me Productive Through The Workday, Selected Demographics, 2011

For many, high-quality coffee is an important workplace perk

Table 4-4: Coffee Helps Keep Me Productive Through The Workday, Selected Demographics, 2011

Rise of the K-Cup

The office coffee pot is still king—but for how long?

Pods/K-cups closing gap; office usage significantly influenced by personal purchases

Table 4-5: Coffee Types/Methods Used by Consumers Drinking Coffee at Work, 2011

Matching upward trend in single-cup brewer placements

Table 4-6: Office Coffee Service Single Cup Brewer Placements, 2007-2012

Coffee usage frequency influences office coffee procurement choice

Pods/k-cups may pose price barrier for frequent coffee drinkers

Gap between vended coffee and pods/k-cups closes among high-frequency coffee drinkers

Table 4-7: Coffee Types/Methods Used by Consumers Drinking Coffee at Work,

by Coffee Usage Frequency, 2011

Generational differences

Table 4-8: Coffee Types/Methods Used by Consumers Drinking Coffee at Work, by Generation, 2011

Satisfaction with office coffee procurement methods

Free vending on top?

Table 4-9: Satisfaction with Coffee Types/Methods Provided by Employer, 2011

The morning dilemma

142 million opportunities to sell coffee every morning: but office locations lose out

Pre-work coffee drinking siphons away workplace drinking

Micromarkets on the rise

How it works

365 Retail Markets

More than 1,000 in operation

Replacing vending

Growth factors

Easy payment

Greater variety

More food vending items

More reasons for employees to stay onsite

Customer handling and review

Self-checkout nothing new

Challenges

Minimum patronage threshold

Theft concerns

Sales and profitability

Restaurants, convenience stores and other food retail

Familiarity and ease of use drive restaurant decision

Convenience is King

Among restaurants, convenience comes in many forms

For employees, what does it mean?

Restaurant food retail density analysis provides insight

Why it matters

As urban as it gets: Aon Corporation

400 restaurant choices!

A giant in Rural America: Tyson Foods

Setting up shop on the suburban fringe: General Motors

Suburban sprawls: Baxter International and Allstate

Table 4-10: Restaurant Selection Density, Selected Fortune 500 Locations

Not just companies, but schools, too

Convenience stores

Category summary

Foodservice getting lots of attention

Graph 4-2: Convenience Store Prepared Foods Market Size & Forecast, 2007-2014

Prepared foods foodservice share

Graph 4-3: Convenience Store Foodservice Sales: By Category, 2011

Food item sales analysis

Graph 4-4: Convenience Store Prepared Foods Sales, Sales Share & Annual Change: by Food Type, 2011

Prepared foods & dispensed beverage purchases

Snack and beverage restaurant concept encroachment

JambaGo

Seattle’s Best vending machines to alter consumer expectations

VIA raises instant coffee quality bar

Seattle’s Best to transform coffee vending

Chapter 5: Vending Machine Food Usage

Summary analysis

Vending usage in context

Vending food and beverage choices

Vending machine usage in context: a competitive foodservice field

But vending machines hold their own against convenience stores

Women provide health and wellness opportunity

Table 5-1: Foodservice Channel Usage: By Gender, 2012

Youth more important to vending than to other foodservice channels?

Table 5-2: Foodservice Channel Usage: By Age, 2012

Equal income opportunity

Table 5-3: Foodservice Channel Usage: By HH Income, 2012

Racial/ethnic appeal

Table 5-4: Foodservice Channel Usage: By Race/Ethnicity, 2012

Work and school status weighs heavily on vending machine use

Table 5-5: Foodservice Channel Usage: By Work Status, 2012

Regional differences

Table 5-6: Foodservice Channel Usage: By Region, 2012

Vending food and beverage choices

Chocolate makes waves; cereal bars and nutrition bars can play a larger role

Cereal/granola bar purchase 28 times more likely from supermarket than vending machine

Table 5-7: Personal Purchase of Cereal/Granola Bars, Energy/Nutrition/Meal Bars

& Chocolate Candy: By Retail Channel, 2012

Key chocolate candy vending consumers

Table 5-8: Vending Machine Chocolate Candy Purchasers: By Demographic, 2012

Key cereal/granola bar vending consumers

Table 5-9: Vending Machine Cereal/Granola Bar Purchasers: By Demographic, 2012

Packaged and RTD tea purchasing by retail channel

Table 5-10: Personal Purchase of Packaged Tea & Canned/Bottled

RTD Tea: By Retail Channel, 2012

Tea’s healthful properties a hit with consumers

Table 5-11: Tea Types Purchased in Last 12 months: Health Significance, 2011

Foodservice upside

Specialty tea—or specialty tea mainstreaming?

Target young and old

The ethnic tea connection

Key bottled/canned RTD tea vending consumers

Table 5-12: Vending Machine Bottled/Canned RTD Tea Purchasers: By Demographic, 2012

Ice cream purchasing by retail channel

Table 5-13: Personal Purchase of Ice Cream: By Retail Channel, 2012

Key ice cream vending consumers

Table 5-14: Vending Machine Ice Cream Purchasers: By Demographic, 2012

Chapter 6: Consumer Vending Usage Motivators

Summary analysis

Incent with health

Convenience

Debit and credit

Coffee and tea

Convenience store/gas station prepared foods users & snack/beverage store users

Introduction

Yes, more healthy options

Give me convenience

Ditch cash and coin

Coffee and tea

Table 6-1: Consumer Food/Drink Vending Usage Motivators: All Adults,

Food/Drink Vending Machine Users & Nonusers, 2012

Table 6-2: Percentage of Consumers Who Would Use Food/Drink Vending Machines More Often If they Sold

More Healthy Options: Selected Demographics, 2012

Table 6-3: Percentage of Consumers Who Would Use Food/Drink Vending Machines More Often If they Sold

More Higher-Quality Coffee & Higher-Quality Coffee Drinks: Selected Demographics, 2012

Vending machine use incentive: tea variety and quality

Table 6-4: Percentage of Consumers Who Would Use Food/Drink Vending Machines More Often If they Sold

Wider Variety of Tea Drinks & More Higher-Quality Tea Drinks: Selected Demographics, 2012

Vending machine use incentive: Payment convenience & location convenience

Table 6-5: Percentage of Consumers Who Would Use Food/Drink Vending Machines More Often If They Were

More Conveniently Located & Took Credit/Debit Cards: Selected Demographics, 2012

Incenting c-store & snack/beverage store users to use vending machines more

Table 6-6: Consumer Food/Drink Vending Usage Motivators: Food/Drink Vending Users

& Food/Drink Vending Users Age 18-29 Who Use Convenience Stores & Snack/Beverage Stores, 2012

Table 6-7: Consumer Food/Drink Vending Usage Motivators: Food/Drink Vending Users

& Food/Drink Vending Users Age 18-29 Who Agree/Strongly Agree They Eat Very Healthy, 2012

Table 6-8: Consumer Food/Drink Vending Usage Motivators: Food/Drink Vending Users

& Food/Drink Vending Users Age 18-29 Who Agree/Strongly Agree They Eat Several Small Meals Per Day, 2012

Chapter 7: Food and Beverage Vending Contractors

Summary analysis

ARAMARK Corp

Canteen Vending Services Inc.

ARAMARK Corp

Foodservice operations

Key North American sectors

ARAMARK Refreshment Services

RefreshSTYLES Area Décor

Breakroom promotional tools

Customizing health: Just4U for Vending

Convenience stores & vending

Filterfresh acquisition

Waste-to-Energy and Terracycle sustainability initiatives

Small business service innovation

Giving clients choices

Equipment upgrades help drive bottom line

On-site foodservice

Event catering

Strategy: Workplace Productivity, Value-Added Services, Contract Design

Workplace productivity

Canteen Vending Services Inc.

Compass Group PLC

Compass Group North America (CGNA)

Foodservice strategy

Room for growth

It Takes You – Eat Local

Leveraging role of single-source provider

Key North American sectors

Canteen Vending

Canteen Office Coffee Service

Canteen’s aggressive acquisition path

Coffee Distributing Corp brings strong northeast office presence

Other acquisitions

The Starbucks connection

Market Central

Health and wellness initiatives

2bU

Choice Plus

Table 7-1: Canteen Vending: Choice Plus Snack Criteria

Balance

Micromarketing: Avenue C Vending

Fresh foods “Fresh to You”

Appendix

Methodology

Market size and forecast

Other sales estimates

Consumer survey methodology

Menu item trend analysis

Report table interpretation

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