Report expecting vending industry to grow
Nov. 7, 2013, Los Angeles – The Canadian vending machine industry is expected to grow 1.3 per cent this year with more growth coming over the next five years, a new report finds.
In previous years, the industry suffered recessionary losses and failed to keep pace with shifting consumer tastes. As a result, the industry's revenue has fallen at an annualized rate of 1.5 per cent since 2008. The Vending Machine Operators in Canada Industry Market Research Report found that during this time, consumers cut discretionary spending on many foods traditionally sold in vending machines.
Candy and chocolate had demand fall at annualized rates of 1.6 per cent and 0.7 per cent, respectively, over the past five years. However, consumers that did not eliminate spending on these goods were more likely to purchase these items from grocery or big box stores.
“Consumers' heightened price sensitivity persisted in the aftermath of the Great Recession, limiting impulse purchases at vending machines,” says Hayden Shipp, an IBISWorld industry analyst, in a news release.
In 2010, the industry recorded its steepest annual revenue drop of 8.4 per cent 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.
Snack food demand has increased over the past five years for items such as nuts, granola bars and pretzels.
The recent growth of industry player Canadian Healthy Vending illustrates the strong potential of this vending market. 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.
Operators have thus 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 post-recessionary recovery in disposable incomes, revenue has inched upward since 2011. In 2013, revenue is expected to grow 1.3 per cent to about $650.3 million.
Looking ahead, IBISWorld expects the industry to build on these recent successes during the next five years. For example, growing per capita disposable incomes and rising consumer confidence will drive impulse purchases of sugary foods, which traditionally generate a large share of revenue.
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,” says Shipp. Revenue is expected to rise during the next five years.
For more information, visit www.ibisworld.com.