Remember when you could by a can of Coke for $.50 or a bottle of Pepsi for $1.00? Those days are {mostly} long gone. For several years, suppliers big and small have been sending out a similar message: cost of goods increases on the supply side is forcing them to increase retail pricing in vending machines.
Increases in cost of goods drives higher vend prices
In recent years, increases in raw materials costs have been driving unpopular vend price increases. This includes but is not limited to increases in the wholesale price of sweeteners, concentrate, PET, HFCS, fuel, and labor. These higher costs affect the general market and are reflected by the retail prices that you see in Grocery stores, C-Stores, Restaurants, etc.
Bottlers and vending operators understand that no one likes to see the price on the vending machine go up. While sales do rebound, there is a noticeable drop in the short term following an increase. Interestingly, due to the nature of vending, i.e. largely a cash/coin operation (something that is changing), the percentage increase is often substantial ÛÒ to the tune of 20-25%. ÛÏStrangeÛ price points impact the mechanical operation of the machine. Price points of 1.05, 1.10, and 1.20 often create nickel and dime shortagesÛ_which in turn contributes to an increase in ÛÏout of changeÛ service calls. Pricing in increments of 25 cents is much preferred, and because suppliers know that a 25 cent hike is a big deal, they will often hold pricing steady for as long as possible.
To avoid increases, suppliers focus heavily on cutting costs and improving operations efficiencies so they can continue providing the low cost ÛÏmilkmanÛ service ÛÒ because when you think about it, thatÛªs what vending machines are ÛÒ modern day door-to-door beverage and snack delivery services. They bring product directly to their customers, and they even stock and service the machine on site. Most businesses these days have an up-charge for that luxury, but in the world of vending, we all love that elusive $1.00 bottle. To the suppliersÛª credit, many vending machines are still lower than what you might find at a C-Store, theater, or restaurant.
Subsidized Pricing - $1.00 bottle does exist, sort of
In most regions of the country, the standard vend price for a 20oz carbonated soft drink (CSD) is $1.50. If you live in an area with deposit fees and such, that price might be higher. Yet still, there are pockets in the Southeast where $1.00 bottle is still common ÛÒ but those pockets are growing smaller. One way to ensure a low vend price, if for example you did not want to charge your employees an exorbitant price, is through subsidy. Some vendors will allow you to choose a price lower than their cost of goods provided that you are willing to pay for the difference ÛÒ and in the case where you are filling your own machine ÛÒ you could simply purchase product and sell it for a loss in order to offer the discounted price as a perk.
Consumer demand for alternative products increases price
Vend prices in machines are also changing because the product selection is changing. A machine that once held all carbonated soft drinks now sells water, VitaminWater, PowerAde or Gatorade, and energy drinks, all which come at a higher price point. Moreover, our preference for promoting healthy eating ÛÒ which foods we are willing to consume and which we will avoid at all costs ÛÒ is increasing. People are concerned about obesity, diabetes, and other health issues that are impacted by diet. There is a growing demand for beverages and food items that meet certain nutritional standards, and many companies following USDA trends like Smart Snacks in School by promoting wellness programs and ensuring customers and employees have access to healthy choices in their machines. And those healthier items can come at a slightly higher price.
Frequently Asked Questions About Vend Price Increases
Why are vending machine prices increasing?
Vending machine prices are increasing primarily due to higher costs of raw materials such as sweeteners, concentrate, PET, HFCS, fuel, and labor. These increased wholesale costs force suppliers to raise retail prices to maintain operations.
How do price increases affect vending machine sales?
Price increases often cause a noticeable short-term drop in sales. However, sales typically rebound over time as customers adjust to the new prices.
Why are vending machine price points often set in 25-cent increments?
Price points in 25-cent increments are preferred because unusual prices like $1.05 or $1.10 can cause coin shortages and increase service calls for change replenishment. Suppliers try to avoid these issues by using quarter-based pricing.
Is it possible to keep vending prices at $1.00 despite rising costs?
Yes, in some cases vendors offer subsidized pricing where the customer pays the difference to keep prices low. Additionally, if you stock your own machine, you can sell products at a loss to offer $1.00 pricing as a perk.
How does changing product selection impact vending prices?
The inclusion of alternative beverages like water, VitaminWater, energy drinks, and healthier snacks, which generally cost more, contributes to higher vending prices. Consumer demand for healthier options influences these changes.
What role do health and wellness trends play in vending price increases?
Health and wellness trends encourage the stocking of nutritious products that meet standards like USDA Smart Snacks. These healthier items often come at a higher cost, which is reflected in vending prices.
What efforts do suppliers make to avoid price increases?
Suppliers focus on cutting costs and improving operational efficiencies to delay or minimize price increases. They aim to maintain the convenience and value of vending as a modern door-to-door delivery service.
