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KN29041

KEY NOTE AUTOMATIC VENDING DECEMBER 2001

Overview

Editor: Emily Pattullo
ISBN: 1-84168-279-9

This report covers: automatic vending, automatic retailing, e-purse, coinless machines,refreshment machines, beverages, confectionery vending, tobacco sales, cigarette machines, other products, in-cup beverage vending machines, snack machines,

Companies covered include: Automatic Products (UK), Crane Merchandising Systems, DarenthMJS, Deutsche Wurlitzer, FAS UK International, Mars UK, N & W Global Vending, The Vending Corporation, Westomatic Vending Services, Azkoyen UK, Dixie Narco, Autobar, Bunzl Vending Services, Compass Group, Sinclair Collis, SSL International, 24 Seven Vending, Aramark, Associated Vending Services, Drinkmaster Holdings, Midland Vending Services, Nestlé Vending, Sodexho UK, Eurogran International, BT RedCARE, Nichols Foods, Girovend, Vianet,

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EXECUTIVE SUMMARY

Automatic vending continues to experience healthy sales growth. In 2001, sales of vended products were estimated to be £2.99bn, an increase of 4.9 percent at current prices on the previous year's value. In the five years from 1997 to 2001, sales at current prices have increased by 25.6 percent. Sales have been boosted by the siting of more machines in a wider range of locations, and the availability of a wider choice of branded products. By 2001, there were an estimated 1.1 million vending machines in the UK, compared to 886,369 machines in 1997.

The three core markets for vended products are refreshment products; cigarettes and tobacco products; and other products. The largest market sector is refreshment sales (which includes drinks, snacks, confectionery, sandwiches, and meals), accounting for 61 percent of all vending sales in 2001. These sales have grown at a faster rate than the market as a whole between 1997 and 2001, helped by more snacking and grazing, more machines, and more branding. The largest product vended is coffee but confectionery and snacks are growing at the fastest rate, along with health drinks, water, and juices. Although the number of cigarette machines in place was in decline between 1997 and 2001, sales of cigarettes and tobacco products through vending machines increased. Some of this value growth was due to rising taxes, but larger pack sizes have also helped. Cigarette sales accounted for an estimated 33.1 percent of all vending sales in 2001. The remaining sales — 5.9 percent of the total — were represented by a range of other products, led by condoms, sanitary protection, and personal care and health products.

The trend towards increased snacking and grazing and eating on the move has led to the siting of more machines in non-traditional sites, such as shops, transport terminals, sports and leisure centres, and garage forecourts. Businesses and other organisations have increased their vending systems as they have cut back on staffed catering facilities. The majority of machines are still floor-standing machines, but table-top and other compact machines are increasing in popularity. Coin-operated systems still account for the majority of machines, but cashless vending is increasing.

Major suppliers to the industry are machine manufacturers, machine operators, and suppliers of merchandise and disposables. The manufacturing sector has a few leading UK suppliers but penetration by overseas companies is increasing. The operator sector is much more fragmented, with many local and regional companies. Many operators have also moved into the supply of merchandise, which offers better returns. They are joined in the merchandise sector by many food and drink brand owners. Mergers and acquisitions were a feature of the industry in 2000 and 2001.

Automatic-vending sales should continue to show healthy year-on-year growth between 2002 and 2006 as more machines, and a wider choice of products, are available to consumers. Higher-priced items should become more commonplace in the vending sector. Cashless-payment systems, using smart cards and mobile phones, and improved monitoring systems, also using mobile phone technology and the Internet, will increase their penetration.

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Last updated by Jacob van Eldik 22th january 2002