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Novelty Gumballs, Confectionery Products Promote 50¢ Pricing, Pique Patron Interest

Posted On: 5/20/2007

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U.S.A. -- Nothing is as simple as it used to be in bulk vending, including ball gum and confectionery products. Still considered the backbone of the industry largely because this segment offers the highest potential profit margins, operators now must choose their gum and candy selections with the same care they give to encapsulated merchandise. The name of the game is increasing sales, and the game is no longer a "no brainer."

Over the years, this staple category has expanded in terms of choice to an almost dizzying array. One could say that there is now a profitable and vendible confectionary product for virtually every location and customer. This is both good news and bad news for operators. There now are more choices in bulk-vendible ball gum and confections than ever before, but marketing them effectively requires more time, effort and route strategy. That is to say, when filling a machine or rack of machines with candy and gum, it's a game of chess, not checkers. 

According to experts, a key strategy with confections requires operators to think beyond traditional locations and products. Adult locations, such as night clubs, bars, office buildings, car dealerships, hospitals and public buildings, all represent potentially profitable locations for one or more single- or dual-head venders, experts report, and are excellent "filler" locations that can provide steady income between large stops. This is particularly important when considering the recent rise in overhead costs, particularly that of fuel.

A successful strategy also requires a route program that mandates a constant rotation of products. While the 25¢ vend price of the last decade has put branded candies within reach, the appeal of brands alone does not ensure sales. Even products like M&M's or Mike and Ikes -- time-honored favorites among adult locations -- still need to be regularly refreshed.

"We use chicle products and 850-ct. ball gum," said Steve Schechner of Capital Vending and Distribution (Florence, AL). "They're good for adults in factory breakrooms and in car dealerships." Schechner noted that his locations are somewhat atypical and primarily include workplaces like factories and other locations with predominantly adult patronage.

Still, as Schechner pointed out, just because they are a "captive audience" doesn't mean they have to buy from his bulk machines. "The idea is to keep rotating product in the machines, so it doesn't get stale," Schechner said. "So we'll go from ball gum to a chicle format and back again. This way, there's always something different and people don't get bored with it."

Phil Brilliant of A&A Global Industries agrees.  "The idea of 'new' is important for anything in this business," he said. "Candy rotation is very important -- I think that entire racks should be rotated frequently, both of candy and capsuled items."

Brilliant suggested that operators put a program in place that mandates a regular rotation of standard confectioneries, including pressed dextrose confections and jellybean-type and pan candies. "The operators that I have spoken with who rotate product on a regular basis swear by it," he said. "We always say that most stores have the same foot traffic, so you have to constantly make it interesting."

Dan Case of Tejas Distributors (Round Rock, TX) has taken an aggressive attitude toward product rotation. "We watch volumes sold in locations and we're always looking at different options and price points," he said, "like Oak Leaf's new Mega Blast and M&M's and Bonz from Concord Confections. We also use branded products like Willy Wonka from Nestlé. Sometimes you can't get a premium price on these, but you get more business because of name recognition; branded items seem to do well."

Manufacturers of confections are aware of this trend. Recent years have seen a rapid expansion of products that aim to provide choice and keep up with the latest consumer trends.

Oak Leaf recently launched its new Mega Blast ball gum, which is designed to vend at a 50¢ price point. The large 475-ct. mix comes in "intense flavors" that include banana, watermelon, strawberry, blueberry, lime, orange, grape and cherry.

Another addition is Carousel/Ford's Chunky Chews gum, which could be considered a novelty product because of its size; the chicle-format pieces are four to five times larger than tradition chicle gums. Each vend provides four to six pieces of the extra-sour and sugar-free confectionary. "It's extremely sour and has a very strong, long-lasting flavor," said Ford's George Stege. "It's also sugar free, because 72% of the U.S. gum market in retail is in this category. I think it's time for bulk vendors to get involved with sugarless products. They may be more expensive, but that provides a reason to enter 50¢ vending. With a 50¢ price point, you maintain the same profit margin as with regular sugar-based gum."

Manufacturers, however, are not abandoning industry staples in favor of products with high novelty quotients or higher price points. If the industry is moving toward a premium 50¢ price point for ball gum, it is doing so slowly. Ford, for instance, also recently introduced a new blueberry gumball, which Stege describes as a straight addition to the company's line of 850-ct. selections.

Still, higher price points for confections provide an additional consumer choice -- and this, experts believe, is key in today's highly fragmented and competitive marketplace.

"As far as product is concerned, operators need more product at the right price point -- and that will be 50¢ for gum and candy," said Stege. "I think it will be difficult for an operator to maintain a profitable business, given the current economic climate, at a lower price point. Though, products must offer a high perceived value to the customer."

However, Stege cautioned, charging a higher price point for candy puts the operator in competition with a location's retail sales. Young consumers, quick to calculate value, will realize that marginally more money may get them substantially more product at the retail counter rather than from a bulk vender.

"If bulk provides the same items at 50¢ as retail hand-to-hand sales at 65¢, then they can't compete," explained Stege. "I think the vendor needs to find unique items that are not available from a store in order to maintain his business; it takes a unique product to sell for 50¢. We're trying to provide an alternate that the consumer will recognize as a value."