Canadian Vending

News
Industry report suggests opportunity amid falling revenue


December 30, 2014
By Canadian Vending

Dec. 30, 2014, New York – There is good news and bad news, says the latest
update on the Canadian vending industry from research firm IBISWorld.

Dec. 30, 2014, New York – There is good news and bad news, says the latest update on the Canadian vending industry from research firm IBISWorld.

The vending machine operators
industry suffered recessionary losses and failed to keep pace with
shifting consumer tastes, but higher disposable income and growing consumer confidence are providing sales opportunities, says the report, released in late December.

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, said the company in a news release.

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“Consumers' heightened price sensitivity persisted in the aftermath of
the Great Recession, limiting impulse purchases at vending machines,” said IBISWorld industry analyst Omar Khedr in the release.
In
2010, the industry recorded its steepest annual revenue drop for the
period.

Consequently, a number of operators re-evaluated 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,” said 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.