According to Ms. Raterman, the upward trend in healthy vending has been buoyed by three factors: Michelle Obama’s Let’s Move program, encouraging better nutrition and more exercise for kids; a growing base of consumer knowledge about diet and health, and legislation mandating healthier foods in schools and more nutritional information on products.
For traditional vending operators, the healthy angle has been viewed as an important part of re-building margins. For instance, while researching vending partners, Ms. Raterman said snack company PopChips found that healthy products can increase a machine’s profitability by between 11% and 17%.
For smaller local or regional brands, putting a product in a vending machine won’t likely transform a business but it can make a difference. “One vending company described how small local brands with a story, values and/or packaging that’s interesting to the consumer can quickly go viral,” Ms. Raterman stated. “Being a small, flexible company meant Buzz Strong Bakery Cookies could adapt its products to fit in a vending machine. The company produced a cookie that is a bit smaller, and is also lower in sugar and sodium and more than meets school nutritional criteria. It is now the best-selling cookie for one of the leading vending companies.”
The most important thing to remember is that taste goes hand in hand with price. “Good taste is key to success and most vending operators won’t take on a new brand until they’ve tested it extensively and got good results,” she noted.
Adapting to healthy criteria is another component that’s part and parcel to healthy vending success. “Manufacturers who want to enter the vending space need to be flexible and open to changing their products to meet specific parameters,” said Ms. Raterman. “Most vending companies put potential healthy, better-for-you products through testing procedures and require they meet nutritional standards tied to schools.”
Helping consumers make more educated snack decisions isn’t entirely voluntary. Part of the U.S. healthcare reform legislation signed into law last year stipulated that businesses that own or operate 20 or more vending machines would be required to disclose the caloric content of the foods and beverages in the machines prior to purchase. At present, at least 43 states have developed nutritional requirements that go beyond federal criteria.
Smarter Vending, Prime Real Estate
Advancements in vending technology have proven to be as important as the availability of healthier snack options. Standard coin and bill slot models have gone high tech, and some are even branded to promote an array of products produced by a single company. And, as Ms. Raterman discovered, new technology can create opportunities and increase the value of purchases.
“Technology is driving significant changes in healthy vending and making it easier for healthy products, which usually sell at higher price points than is typical for vending,” she said. “Healthy and better-for-you products have helped to push the use of credit card readers on machines prompting the price threshold to increase. In some locations half of a machine’s revenue is from credit or debit transactions. From health-oriented graphics packages to credit card readers and LED screens that show nutritional product information, the industry is seeing a new era of machines.”
One company cited by the report as changing the face of healthy vending is Los Angeles, CA-based H.U.M.A.N. (short for Helping Unite Man and Nutrition) Healthy Vending—a company profiled by Nutraceuticals World last fall.
Traditional vending operators are adapting their businesses to accommodate a growing list of customers at schools, hospitals and corporations with wellness initiatives. The cardinal rule is know your customer.
“Healthy machines in hospitals can do two-to-three times as much business as traditional vending machines in the same locations,” commented Ms. Raterman. “Surprisingly, locations at gyms and health clubs get mixed reviews with many companies saying machines there can underperform—the target consumers often have very strong and fixed views about what they will eat and many bring in their own food or beverage products when they work out.”
Despite the growth expected for the healthy vending sector, Ms. Raterman warned that the channel is not without pitfalls. “It is, as yet, hard to predict how far toward health the pendulum will swing and which operators will find success,” she said. “Likewise, vending remains a different animal as compared to other healthy sales channels.
“Operators specializing in healthy call it a tough, customer-centric business, which involves a strong educational component and takes customized programs to make it work,” she continued. “Healthy brands have to be adaptable, price sensitive and prepared for initially low volume. And in the end, it always comes down to what people will ultimately buy when their hunger gets the best of them.”