Hungry for a hot dinner with little time to spare? Soon you might be able to turn to your office vending machine for more than snickers and soda. In a shift designed to combat declining revenues, vending machine producers are spicing up their offerings in a hope to bring in a new demographic with different tastes.
2011 marked a ten-year low in vending machine income, falling nearly $4.5 billion off of a record high just four years earlier. The decline in revenues seems to have a twofold reasoning behind it. First of all, vending machines are located for the most part in workplaces, specifically manufacturing centers. Since the manufacturing sector has struggled to recover from the recession, the customer base for vending machines has shrunk along with the industry as a whole.
The second factor is that the composition and financial security of those ready access to vending machines has also changed. Vending operators specialize in candy and soda. These are superfluous goods that people generally only feel comfortable purchasing if they have disposable income and job security, and evidently right now a lot of people are not as comfortable spending on these items as they have been in the past.
Vending operators are reforming the business in a few ways and firms that were previously foreign to the vending market are getting into the business. Intel (INTC) and Kraft Foods (KFT) are teaming up to introduce a machine that is much sleeker and modern interface. It allows for users to sample different items and because of it aesthetic appeal is much more attractive for more upscale businesses to install. It will also feature more modern amenities such as being able to pay for items with your Smartphone.
Other companies are making strides to allow consumers to purchase a meal from their machines. While it is already popular around the world, the vending line “Let’s Pizza” will soon be introduced in the United States. Consumers will have the option to purchase a full-scale pizza with customizable toppings, delivered hot in about two and half minutes. Pizza lovers and people with the late night munchies can rejoice.
Business Section: Investment Ideas
How will these changes to the vending machine business model affect companies who supply vending machines and those whose products fill their shelves? Listed below are food, beverage, and digital companies whose products are among the most distributed by these easy access machines.
2. Pepsico, Inc. (PEP, Earnings, Analysts, Financials): Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap at $108.34B, most recent closing price at $69.27.
3. Kraft Foods Inc. (KFT, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and markets packaged food products worldwide. Market cap at $68.65B, most recent closing price at $38.72.
4. Dr Pepper Snapple Group, Inc. (DPS, Earnings, Analysts, Financials): Engages in the manufacture and distribution of non-alcoholic beverages in the United States, Canada, and Mexico. Market cap at $9.08B, most recent closing price at $42.87.
6. J&J Snack Foods Corp. (JJSF, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures nutritional snack foods, as well as distributes frozen beverages to the food service and retail supermarket industries in the United States, Mexico, and Canada. Market cap at $1.06B, most recent closing price at $56.24.
7. Intel Corporation (INTC, Earnings, Analysts, Financials): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap at $135.74B, most recent closing price at $26.98.
Written by Dan Connelly
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