A Coffee and Healthy Snack Faceoff
April 4, 2013
Coin-op Operators Make a Play in a Competitive Market
Sweet and salty snacks, along with soda, continue as mainstays of vending machine operators’ offerings. However, the outlook for alternatives to these staples—namely, coffee and healthy items—is a positive one.
While consumers may traditionally have avoided purchasing coffee from vending machines because of what one source deemed “a poor quality image of lukewarm watery brews,” the tides are beginning to turn. Alexander Capio, director of marketing at Fresh Healthy Vending in San Diego, Calif., said this trend is largely attributable to the popularity of coffee itself, as fueled and exemplified by the appearance of specialty coffee shops and espresso bars on seemingly every corner. “For many people, these kinds of places have created such a love affair with coffee that if they aren’t in a place where it’s available, they’ll go for the machine,” he explained.
Fresh Healthy Vending foresees steady increases in the sale of coffee in general, with locations that previously demonstrated little interest in vended coffee (e.g., museums and recreation complexes) contributing to sustained growth. However, Capio pointed out, the company’s success in this category is predicated, and will remain contingent on, practices designed to successfully compete not only against cafes, specialty coffee stores, and espresso bars, but also with convenience stores and quick-service restaurants whose menus tout a seemingly limitless collection of coffee options, from flavored varieties to fancier drinks like cappuccino. Accordingly, Fresh Healthy Vending’s coffee vending machines feature a bean-grinding component and dispense organic coffee sourced from a local provider. In addition to regular brewed and decaffeinated brewed coffee, available selections encompass plain and flavored lattes (e.g., French vanilla), espresso and cappuccino. Fresh add-ons, such as milk and cream, replace old vending machine standbys like powdered milk and non-dairy creamer.
David Lepedzhyan, founder and general manager of Vend For U.S. in Van Nuys, Calif., and Kim Hellner, customer service and sales manager of Courtesy Vending/Evergreen Vending in Portland, Ore., corroborated Capio’s comments about the future of vended coffee sales and how the business is benefitting from the coffee craze. Although preconceived notions about quality and other obstacles will prevent some individuals from ever purchasing coffee from a machine, Lepedzhyan noted, a far greater number are now inclined to do so—and will readily pay as much for it as they might in a café or restaurant.
“We had one customer that until the business was sold had our machines on site and was charging $2.50 per cup for coffee,” Lepedzhyan said. “They had no trouble selling it.”
Like Fresh Healthy Vending, both Vend For U.S. and Courtesy Vending/Evergreen Vending leverage quality and variety to take direct aim at non-vending competitors and appeal to coffee connoisseurs. Vend For U.S. obtains coffee beans from local roasters or gourmet coffee purveyor Coffee Bean & Tea Leaf. All machines available through the operator grind beans only after a customer has ordered his or her coffee; one machine brews coffee using the French press method employed in some specialty foodservice establishments. The machines can be configured to dispense café mocha, lattes, cappuccino and French vanilla flavored coffee.
“It’s simple; to keep people drinking vended coffee, you need to provide a restaurant caliber beverage,” Lepedzhyan said.
For its part, Courtesy Vending/Evergreen Vending offers premium coffee; its menu includes flavored coffees as well as cappuccino and lattes. And taking a leaf from the likes of Starbucks, all coffee menu items are available in multiple sizes—in the operator’s case, 8 and 12 ounces.
On the healthy food side, initiatives by local and state governments, coupled with media buzz, are pushing the sales envelope. For example, some cities have enacted ordinances dictating that a portion of items sold in vending machines meet prescribed nutritional guidelines, and the California State Legislature currently has on the table a bill stipulating that by January 15, 2015, 50 percent of the food offered by a vendor in a vending machine on state property, as defined, meet accepted nutritional guidelines. The bill would then require 75 percent compliance with accepted nutritional guidelines by January 1, 2016, and 100 percent compliance by January 1, 2017.
“From all of this, requirements that schools change what they put in vending machines, and (First Lady) Michelle Obama’s Let’s Move anti-obesity campaign, comes increased demand,” Capio stated. Private entities of all sorts “are looking at what schools and public entities are doing, and realizing that they have to emulate them.”
Fresh Vending carries more than 500 healthy products. Its hit list of popular items varies depending on location, but a desire among many consumers to enjoy healthy snacks that resemble traditional favorites—for instance, potato chips and cookies—has rendered baked chips and organic cookies perennial top sellers. Fruit crisps and applesauce in a bag are gaining ground for their novelty appeal.
Meanwhile, Lepedzhyan and Steve Marx, president of Royal Vending in Maple Grove, Minn., credited a portion of the uptick in healthy vended snack sales to enhancements initiated by manufacturers. “Manufacturers have done a lot of mainstream advertising, which is making a major difference in terms of sales,” Lepedzhyan said. “We do great with Odwalla bars, for example, because they have been well-promoted. It’s the same principle that has pushed energy drinks” to the forefront.
“A few years ago, people would ask for healthier items to be put into vending machines, but then, they would never buy them because there weren’t many choices and many of the available items just didn’t taste that great,” Marx observed. “Now, there is a much broader base of products from which to choose, and they are better. It’s still an uphill battle, because people do want their junk, but there absolutely is a much bigger market for healthy now because of the big buzz, and I don’t see that changing.”
The executive added that with a few exceptions, healthy snack trends mirror snack trends in general. Consequently, Royal Vending’s most popular healthy offerings fall into the salty category. Baked chips and “popped” (as opposed to fried) chips outsell other salty fare.
At Courtesy Vending/Evergreen Vending, baked chips and baked crackers are also big. So, too, are Luna and Clif bars, whose all-natural, organic ingredients Hellner said render them especially popular given the “vast number” of natural foods enthusiasts who reside in the operator’s service area (as far south of Portland as Eugene, Ore. and as far north as Longview, Ore.) The sales momentum of many products varies from venue to venue; for example, healthy snacks with a novel, fun twist-such as all-natural gummy bears-are in highest demand at facilities that cater to families. “Parents want to give their kids something that is better for them than candy, but they want what comes out of the machines to be fun, too,” Hellner claimed.
In fact, novelty sells even to adults who are seeking healthy items in vending machines. M.S.S. Vending, in East Orange, N.J., has had good luck with fig bars, noted Michael Schwartz, president. –