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Industry Census Reveals Healthy Growth In All Bulk Vend Segments

Posted On: 9/24/2003

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NEW YORK CITY- With the publication of the VENDING TIMES Census of the Industry 2003, operators across all coin-op market segments are once again getting an unbiased look at the industry. For those in bulk vending, the news this year was once again good.

According to figures reported in the Census, bulk vending made gains in virtually every category and market segment. Despite a somewhat sluggish economy and depressed retail sales, this is good news indeed. While the gains in the majority of categories were not dramatic, they were solid. And if the numbers are not reflective of a booming industry, they certainly reveal one that is certainly weathering an economic squall.

According to the Census, the Capsule Vender category of the industry showed increase in both the number of Total Machines on location and the annual average volume per machine. In 2002, the industry saw 690,000 capsule venders in the field, an increase from the 2001 figure of 675,000. Annual revenues also rose significantly, topping $250 per machine, marking an impressive increase of the $242 posted in 2001. Total Dollar Volume of all capsule machines was estimated at a significant $172,500,500, showing a healthy rise from the previous year's $163,350,000.

Some industry experts see these figures as consistent with the trends toward increased price points, influx of so-called "premium merchandise" that broadens industry demographics and acceptance of bulk vending into an increasing number of locations. With demographics and locations now spread across a wider range of age groups and locations, industry observers say, bulk vending in this category continues insulate itself from economic declines in any particular market segment. 

Ball Gum Venders (a category which also includes "chicle" and wrapped tab gum) also showed an increase of total machines on location from 2001 to 2002. For instance, in 2001, the Census estimated a total of 898,000 machines on location while 2002 saw that number increase to 910,000. Annual average volume per machine remained steady, as it had for the previous two years, at $115. However, Total Dollar Volume did increase from 2001's $103,270,000 to $104,650,000 in 2002, which can be attributed to the increase of total machines placed on location.

Nut/Pan Candy Venders also showed a healthy increase in all respects. The Total Machines on location rose from 408,000 in 2001 to 420,000 in 2002 with estimated Annual Average volume rising modestly from $202 to $204 per machine. As to be expected, Total Dollar Volume also rose accordingly during that same time period, inching up from $82,416,000 to $85,680,000.

The niche category of Novelty Capsule Venders, which includes kinetic type equipment, showed a healthy increase from an estimated 20,000 machines on location in 2001 to 25,000 in 2002. Total Dollar Volume in this category rose from $8,500,000 in 2001 to $10,750,000 in 2002, representing a better than 26% growth in sales. As would be expected, the Annual Average volume per machine also increased, pushing up from 2001's estimated $425 to $430 in 2002.

However, the most dramatic increases came in the category of All Other, which includes "special purpose and multi-purpose machines, including stickers, sports cards."  This particular segment of the market, that includes the flat vend segment, enjoyed what can only be described as robust growth of more than 43%. Total Machines on location grew from 100,000 in 2001 to 126,000 in 2002, while Annual Average volume increased substantially from $130 to $148 during the same period. Total Dollar Volume also rose dramatically, moving upwards from 2001's $370,536,000 to $392, 228,000 in 2002.

The numbers in this category reveal additional good news when looking back to the more distant millennium year of 2000. In that year, the total number of machines on location was estimated at just 85,000. That would suggest an approximately 30% increase from 2000 to 2002. Even more dramatic are the estimated Total Dollar volume for those same years. In 2000, the Total Dollar volume was calculated at $10,525,000 while in 2002 that number was placed at nearly double with $18,648,000.

These numbers would bolster the often very vocal claims by flat vend advocates that this particular industry market segment has now established itself firmly in the mainstream. Even as the flat vend segment continues to define itself and expand in terms of pricing, market demographic and trends, its overall growth continues at a healthy pace.


Supporting anecdotal information from the field, the Census showed operators have continued to raise price points on their machines. The "Over 50¢" category made gains from 15% to 16% of dollar sales from 2001 to 2002, while 50¢ vends held steady at 34%. Meanwhile, the 25¢ category continued to lose ground, dropping from 50% in 2001 to 49% in 2002. This decrease, say industry experts, was related to the 25¢ category of capsuled merchandise, which has seen something of a decline in use by many operators. Faced with increased overhead, shrinking profit margins and what is perceived as a drop in viable 25¢ capsuled items offered, some operators are raising price points for capsuled merchandise and focusing on "premium products."

Growth was also seen in equipment and products that are increasingly moving into the mainstream of bulk vending. The once ancillary equipment, such as cranes and kiddie rides are being incorporated into the portfolio of bulk vending operators and those operators are reaping the rewards of this growing market segment. The higher-priced and higher-earning equipment, once seen as merely a way for a bulk vending operator to protect locations from competition or maximize space within select existing locations, are now seen as increasingly viable profit centers. Anecdotal reports from operators managing routes of all sizes would seem to indicate that "traditional" bulk vending operators are becoming more aggressive in expanding their equipment mix.

According to the Census, this expansion of equipment categories would seem a wise move. While figures are not available for this trend among bulk vending operators, "Prize-Dispensing Equipment," a category that includes cranes, shows it to be the second largest revenue source in the coin-operated amusement industry. Total Dollar Volume in this category rose notably from $725,000,000 in 2001 to $887,000,000 in 2002. This represents a growth of 22% in dollar volume that is consistent with a trend of double-digit growth extending back more than five years. Additionally, the category saw impressive double-digit growth in regards to the number of machines in the field, which grew by 16% between 2001 to 2002, from 93,000 in 2001 to 108,000 in 2002. Weekly averages also increased an estimated 5% during the 2001 and 2002 timeframe.

According to the Census, more than 75% of the cranes in the field were set at 50¢ vends, though $1 vends were becoming increasingly common in many upscale locations. And while these figures represent only cranes operated by full-line music and games companies, it can be assumed that the trends, if not the actual numbers, can be applied to those bulk vending companies operating similar equipment.

The Kiddie Rides segment was another ancillary equipment category for bulk vending operators that showed impressive growth. With a 16% increase in machines on location and a 20% increase in dollar volume between 2001 and 2002, the kiddie ride category continued to make strides. Although the Census examined only kiddie rides operated by music and games companies, the figures do represent a large trend. With every weekly dollar volume increasing from $72 to $75 between 2001 and 2002 and units on location jumping from 8,200 to 9,500 during the same time period, it's clear that both customers and locations are adopting the timeless amusements.


It is an industry cliché that bulk vending is "recession proof." What is remarkable, of course, is that bulk not only continues to hold its own, if not outright flourish, during a downward trending economy. Indeed, it seems to be doing so at a time when many operators are retrofitting machines to accommodate a price increase. A brief, unscientific survey of a few industry members revealed several theories regarding the obstinate growth of their industry. These include an expanded demographic that now includes the highly-valued and relatively affluent tween and teen markets as well as increased competition "on the street" as well as among suppliers of merchandise. And, of course, as more than one operator pointed out, even at 50¢ or $1, bulk vending merchandise is still "a deal and a half."

Among the most notable trends of the past few years has been an increase of "premium merchandise" that has not only allowed operators to raise prices, but also brought new, more savvy consumers to the machines in search of the latest toy fashion accessories and other items. More aggressive licensing deals that tap into mainstream popular culture along with items that appeal to such specialized markets as the growing Hispanic population have no doubt also played a role in the industry's continued success. One can also point to the growing sophistication among operators in their product selection, presentation and placement with an eye toward location customer base.

However, the real key to the industry's success, as one expert pointed out, lies in its ability to innovate and respond to the forces of the marketplace at a pace unheard of in other industries. Although difficult, if not impossible to quantify with calculations such as those used in the Census,  this industry attribute is no less real than the cash in the coinbox.