Healthy Vending Rules Make Niche Vending A Problem

We’ve all seen the headlines, “Such and Such Place Considers Healthy Vending Requirements.” A quick search shows more than 60 news items in the past 90 days concerning healthy vending on VendingMarketWatch.com alone. While a number of them involve taxing traditional items to encourage different vending product choices, most involve some kind of healthy vending rule. The news reports are of local governments or school districts mandating that half or more of the products sold in vending machines in their buildings must meet a nutritional guideline. Announcements abound of organizations awarding schools or businesses for making changes in vending fare. And many items include the national “calories count” program enacted by the bottlers that show calories on the front of cold beverage machines.

How is all this affecting the independent vendor?

These rules are most heavily affecting the operator that serves schools. Elementary and grade schools have led the initiative to require different snacks and beverages in their vending machines, often banning certain products altogether. Automatic Merchandiser and VendingMarketWatch figure about 2.5 percent of the full line vendors or candy/snack/beverages operations get 50 percent or more of their revenue from grade schools, and these mandates are their big concern. Add to that, the strict snack and food rules that the U.S. Department of Agriculture plans to put on school vending machines nation-wide, including high schools, and revenues are likely to suffer even more.

Many of these “school” operators were able to increase the number of locations they served in 2012, averaging 30 per operator. And while their sales increased in 2012, according to upcoming state of the vending research, it lagged behind what vendors reported overall.

Operators serving schools are in a precarious situation. They can be profitable with the right product mix and by adding accounts - for the meantime - but the dark cloud of proposed legislation hangs over their businesses. Many have wondered if they can even survive such a aggressive product restriction since sales will drastically decrease. Therefore, it’s important to remember to diversity your locations. There’s no telling when one segment will be faced with challenges, such as the manufacturing segment over the last decade, and the school segment today. No longer can vending operators afford to keep all their eggs in one basket.