U.S.A. - In a year marked by turbulence in the bulk vending industry, even the normally sedate market segment of ball gum did not escape the hurly-burly. Among the significant developments in 2004 was the purchase of Concord Confections by confectionary giant Tootsie Roll Industries. And, too, for the first time in several years, bulk vending actually saw a decline in the number of ball gum venders out on the street. According to the VENDING TIMES Census of the Industry, the total number of machines dropped from a 2002 high of 910,000 to approximately 909,000 in 2003. And, while total dollar volume did increase from $104,650,000 to $106,353,000 during the same time period, the drop-off in equipment , no matter how small , was still a cause for concern for many, despite the fact that the cashbox per machine rose slightly from $115 in 2002 to $117 in 2003.
This reduction in equipment, said industry insiders, was primarily due to the continued growth in the capsuled and high-bounce ball segments of the marketplace. "Maybe, since we're dealing with older teenagers, gumballs and candy in general seem to be less and less of our sales," said Danny Paszkiewicz of Cardinal Distributing. "We've seen capsules and toys take the lead. Even among the smaller customers there's a tendency to buy more capsuled, rather than candy, items."
Increased competition in the field has also served to force gum from the vending forefront. With operators promising desirable accounts increasingly larger cashboxes, they find themselves having to deliver on those promises by constantly pursuing the blow-out items in capsules and flat vendibles. And gum, while more profitable per vend, still tends to vend at a slower rate. The sales may be steady, but they are generally less than the latest hot capsuled item.
However, according to Paszkiewicz, it is not all doom, gloom and burst bubbles on the gum side. As he readily pointed out, his company still stocks several thousand cases of ball gum of all different varieties, and maintains that gum is still the single most profitable item for many operators. "Of course gum is a profitable item, but manufacturers are also constantly coming out with new products. Sometimes it seems like there's too many; there must be 100 different flavors out there now," he observed. "And operators continue to pick the basics, instead of carrying a lot of different inventories."
According to several small operators interviewed, gum is also making something of a comeback with the recent resurgence of one- and two-head stands. A growing number of operators have taken to filling out their territories by adding single- and double-head racks to off-set increases in "road costs," such as fuel. Aiming for increased location density within certain areas, these operators have turned to good ol' reliable ball gum to get into new locations such as barber shops, hardware stores or comic book emporiums.
"These little locations aren't interested in a lot of equipment," said one operator. "You have to keep it simple: It's a gumball machine; it sells gum. Keep it simple and keep the machine clean and you'll have those locations forever. And they add up."
One operator who has seen his gum sales increase dramatically is Tyler Sumners of Service Vending (Aurora, MO). Those familiar with the Service Vending's operation know the firm's reputation for aggressive pricing. Among the first to move into 50¢ vends, the company is currently in the vanguard of 75¢ vends.
This pricing strategy, according to Sumners, has had the unexpected result of boosting his gum sales. "Right now, ball gum is the only 25¢ item we offer on a bulk rack, so we've seen a nice increase on ball gum sales," he explained. "There are still 1.1-in. capsuled toys on the bottom shelf, but those are 50¢, so the price increases enhanced 25¢ sales to ball gum. If you walk up to a rack with 25¢, the only offering we have is ball gum."
How much of an increase in sales did Service Vending reap with the switch to higher-priced capsuled merchandise? According to Sumners, it is in the neighborhood of 35%. "It's substantial and has remained that way," he said. "It wasn't the intent, but that's what happened. Seeing that increase motivated us to go forward. When we raised prices, the softer sales on toys maybe scared us a little bit, but when we saw that increase in gum, we were like, 'Hey this is nice.'"
Sumners has also followed up on gum sales, as the company pays close attention to product selection. With more flavors and "concepts" currently available than ever before, Sumners' firm has adopted a test marketing strategy similar to the one it employs with capsuled merchandise. "We've learned to test gum the same way we test toys," he explained. "We buy one pallet, put it out and test it to make sure it's a winner. Because, if you pick the wrong flavor and you only have one gum head on the rack, you shoot yourself in the foot."
Other operators have also adopted Sumner's strategy of test marketing gum. It is, they say, the logical choice. With fewer gum machines and more product choices, it benefits the operator to find the right flavor to fit a location.
Despite changes in the industry, it remains clear that ball gum isn't going anywhere, at least not in the near future. What is also equally clear is that operators are starting to pay more attention to this perennial favorite. Gum is no longer the "no brainer" of bulk vending. It remains that first "foot in the door" for new locations and a segment that can bolster a bottom line for operators who take the time and expend the effort.