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Frozens, now a puny player in vending, will grow to $221M business, says study.

The vending foods sector of the USA vending machine market will start selling popular brand name foods and frozen foods in a move to strengthen vending foods' share of business and make it more profitable. So says a new study released by the New York consulting and research firm Find/SVP.

Currently, refrigerated foods claim 92.5% of the total vended foods market. Sales of products from hot canned food machines account for 7.4%, while sales of foods from dedicated frozen machines represent a mere .1%.

Sandwich product sales accounted for an estimated 52% of all refrigerated food volume in 1992. The next largest refrigerated food product categories were ethnic specialties (including burritos, pizzas, and other ethnic foods) and salads, each claiming 9% of sales.

The market for vended foods is forecast to grow from an estimated $1.6 billion in total sales in 1992 to just under $2.4 billion in 1997.

Volume is expected to advance from 1.4 billion units in 1992 to 1.6 billion in 1997. It is anticipated that the number of machines on location will grow from 165,200 in 1992 to 195,000 in 1997.

Meanwhile, canned food purchases from dedicated hot food machines should continue their downward spiral. By 1996 sales are expected to reach a low of $95 million, at which level they will stabilize.

Yet, dramatic growth is projected for frozen foods. Find/SVP forecasts dollar volume increases from current levels of $900,000 to $221 million by the end of 1997. The number of frozen food machines on location should grow from 200 in 1992 to 20,000 by the end of 1997, calculates the research firm.

The leading processors in the vending industry include Bridgford Food Corp., Campbell Soup Co., ConAgra, Geo. A. Hormel & Company, Schwan's Sales Enterprises, Philip Morris Companies, Hudson Foods, Ruiz Food Products, Wal-Mart Stores, Inc., Multifoods, Steward Foods, Inc., Sara Lee Corporation and Tyson Foods.

Operators report that to make vending food a profitable business, gross margins of 50% or more must be achieved. However, at the present margin of 38%, food is the perennial loss leader.

"This explains why so few vendors offer food. Of the estimated 10,000 vending operators in the United States, the leading 1,000 are selling an estimated 75% of all vended food products," said Catherine Roberts, author of the study.

Operators attribute the low profit margins in vended foods to high costs for equipment, product, labor and maintenance, in addition to relatively low price points, poor consumer perception of vended foods, and a high degree of waste.

Five trends characterize the direction that vended foods are heading in. There is an increased demand for branded food products similar to those offered at the retail level; a new awareness of the potential of branded frozen foods; shifts in location types away from plants and factories toward offices and universities; the need to raise consumer perception with regard to the quality and freshness of vended food products, and the introduction of new automated money handling systems, designed to increase the convenience and patronage of vended food machines.

Green Giant Lends Name To ADM's Harvest Burgers

Pillsbury Co. of Minneapolis, Minn., is giving Archer Daniels Midland Co. a hand in marketing Harvest Burgers. Currently available in only nine markets, the plan is to distribute the frozen product to at least half of the USA's grocery stores by next Oct. 1. They will be packed under the Green Giant label.

The soy protein-based meat-substitute patties, which should appeal to health- and diet-conscious consumers, have been promoted in television commercials ADM has been running on Sunday morning news programs for the past few years.
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Title Annotation:Warehousing World; frozen foods; FIND/SVP Inc. study
Publication:Quick Frozen Foods International
Date:Oct 1, 1993
Words:614
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