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Japan’s Billion-Dollar Vending Industry: What the U.S. Can Learn


Japan’s Billion-Dollar Vending Industry: What the U.S. Can Learn

When it comes to vending machines, there’s no country that does it quite like Japan. The country has five million vending machines – that’s one for every 23 people. Reports show that Japan’s vending machines generate $33 billion in annual revenue. Clearly, they’re doing something right. 

I was genuinely amazed when I visited the country recently, and was struck by the sheer density of vending machines in Japan’s cities, as well as by the diverse product offerings. Japanese consumers have their choice of fresh drinks and hot meals, as well as the latest in both technology and apparel. The sheer range of products available contributes to the market’s success. Meanwhile, the U.S. vending machine market, while still growing, really kind of pales in comparison. 

But the reality is, it’s entirely possible for the U.S. to replicate Japan’s vending machine success. To do so, we must look at the key strategies employed in Japan and explore how these insights can be adapted to fuel growth in the U.S. market. 

Embracing product diversity 

Diverse product offerings in particular have driven Japan’s success in the vending machine industry. On-the-go shoppers in Japan can access products like umbrellas, 24-hour hot meals, and even luxury items such as wagyu and caviar. Given that Japan’s work culture is known for long office hours, the convenience of accessing everything from a machine is deeply ingrained into Japanese life. You’ll often find many vending machines bunched together so shoppers can pick multiple products and form a meal. And there’s no stigma about buying food from a vending machine instead of cooking at home. 

While vending machines have also become a convenient option for busy Americans, the diversity of products they offer is considerably less than what Japanese consumers have access to. American vending machines largely focus on shelf-stable food and drinks. Also, these American offerings often skew towards unhealthy snacks rather than the healthy meals available in Japan. The American market clearly has a lot more room to expand in the range of products available. 

The American market should take particular note of the cultural preferences of its target markets. For instance, New York is the number one coffee-drinking U.S. state, so vending machines in New York should prioritize variety in coffee beverages, while southern states could think about including fresh iced tea. They could also introduce seasonal and limited-edition products such as pumpkin spice drinks in the fall and partner with local brands to provide fresher, more relevant offerings.

Leveraging technology 

How often have you tried to buy something from a vending machine, only to find it’s broken, jammed, or out of service? It’s happened to me more times than I can count. American vending machines just don’t have a reputation for mechanical integrity. To offer a more diverse range of products, the American market needs to follow Japan’s commitment to better technology and deliver reliable services.

Japanese vending machines are known for their dependability. This is largely due to the diligent inspections, 24-hour operations, regular restocking, and strict adherence to hygiene standards that these machines undergo. Many of these procedures are now optimized by technology such as sensors that monitor internal temperatures or sound an alarm if a part requires maintenance. RFID tags within the machines can notify owners in real time when products are running low. 

Not only does the technology facilitate better maintenance, but it also enhances the customer experience. From a consumer perspective, most Japanese vending machines feature interactive interfaces such as digital touch screens. Recently, a Tokyo-based company debuted an “AI-cafe robot” that allows users to select from seven types of coffee beans via an app before receiving a fresh coffee. Some of these vending machines even double as Wi-Fi hotspots, which all enhance the customer experience and drive sales.  

Distribution is critical

The Japanese market excels at strategically positioning machines in high-traffic areas like train stations, shopping centers, and office buildings. No public park is complete without at least one line of vending machines. Japanese vendors have established a comprehensive distribution network and have implemented effective restocking and maintenance. This ultimately leads to greater customer satisfaction.

Vending machines in America simply aren’t as omnipresent. Apart from schools or gas stations, I don’t expect to encounter a vending machine on a street corner the same way I would in Japan. U.S. vending machine operators should work to secure the right locations by considering more collaborations with manufacturers, suppliers, marketers, and government agencies. Partnering with official bodies can boost visibility, remove red tape, and unlock more accessible vending locations. 

Unsurprisingly, Japan has already taken the lead on this. The municipality of Ako and a Tokyo-based pharmaceutical company called Earth Corp recently partnered to develop an emergency vending machine scheme. In this plan, vending machines unlock during earthquakes and other natural disasters and distribute free food and supplies.

Final thoughts

I don’t think it’s too far-fetched to imagine American vending machines becoming as culturally relevant as they are in Japan. As we look forward, it’s worth considering the possibilities opened up by Japan. 

By offering a wide range of products, utilizing innovative technology, ensuring efficient distribution and maintenance, and paying attention to cultural preferences, the U.S. can create a vending experience that truly meets consumer needs and desires.

Author’s bio

Ben Gaskill is the co-owner of Everest Ice and Water Systems. With over 25 years of experience in Sales, Sales Management, and Training, Ben has a successful background in high-level sales strategies, business development, and calling on C-Level through end users selling both Capital Equipment and an extensive product line.

vending machine

Why are Vending Machines Failing to Gain Traction in India? Wherein North America Dominating the Market Holding 31% Revenue. 

The invention of the vending machine is just one example of India’s recent tremendous technological advancement. People prefer employing the newest devices that help the vending machine industry because of high-tech technology.

Certain locations are more likely to have vending machines, including metro stations, airports, hotels, restaurants, and offices.

Nonetheless, it is a minor market when we explicitly discuss the vending machine industry in India. In contrast to residents of the USA or Japan, where vending machines are a common sight, Indians have different behaviors and routines.

How is North America performing in the Global Retail Vending Machine Market?

Increasing Establishment of Retail Vending Machines to Benefit the Regional Market

As per the analysis, North America is anticipated to dominate the market during the forecast period. Future Market Insights expects the region to accumulate 31% revenue by the end of 2022. Dominance can be attributed to the increasing establishment of vending machines across the region. As per the data issued by the Center for Disease Control and Prevention, in October 2019, the state of North Carolina announced the placement of 76.7% of its vending machine on its interstate highway.

Furthermore, the increasing trend of self-service technology in the region is projected to be another salient cause driving the retail vending machine market in North America. Various vending machine operators are aiming to launch their business in strategic locations across the region.

The global retail vending machine market is likely to secure US$ 55 Billion in 2022, and reach US$ 130 Billion by 2032. From 2022-2032, the market is expected to display a CAGR of 9%. The growth of the market can be attributed to the increasing demand for on-the-go food and beverages because of changing lifestyles of consumers.

What are the Factors Driving the Global Retail Vending Machines?

Growing Innovation in the Retail Vending Machines to Benefit the Market

The willingness to adopt innovative products among the expanding populace is expected to drive the market significantly during the forecast period. Various types of vending machines have been introduced to produce fast food for consumers, which will benefit the industry in the coming time. For instance, France Pizza ATM comes up with a Pizza vending machine that is able to hold 96 pizzas, accepts cash, has a touch screen, debit/credit card, and contactless payment.

Increasing adoption of a vending machines in a large number of fitness clubs around the globe for offering their clients supplements like soft drinks, protein bars, energy drinks, and others, is anticipated to boost the demand for vending machines, thus, expanding the industry during the forecast period. As per International Health, Racquet and Sportsclub Association 2019 Report, the global fitness industry has witnessed a rise in membership of 183 million with an anticipated revenue generation of US$ 94 billion in 2019.

Innovations such as interactive display systems, voice recognition, and big data integration, have made it more convenient and user-friendly for consumers, thus, casting a positive impact on the global vending machines market during the forecast period.

What are the Factors Hampering the Global Retail Vending Machine Market?

High Expenses Associated with Vending Machines to Hamper the Market

The reluctance of developing and underdeveloped nations to adopt vending machines owing to high expenses associated with such equipment is anticipated to hamper the market during the forecast period. The equipment demands high maintenance, and a high risk of robbery, which is likely to limit the industry growth during the forecast period. Other factors affecting the market negatively are the imposition of stringent rules and regulations regarding the sales of junk and unhealthy food, tobacco products, and others.

However, the growing demand for vending machines in various spaces, from offices to high-end restaurants, and crowded bars to public places, are expected to counter the hampering factors and drive the growth of retail vending machine during the forecast period.

What is the Role of Startups in Developing the Global Retail Vending Machine Market?

Byte Foods, 365 Retail Pro, Daalchini, Farmer’s Fridge, ZoomSystems, Swyft, Stockwell, Gobbly, Vengo Labs, and Vendekin, are some of emerging start-ups in the retail vending machine market. Startups have an innovative approach to marketing their products, which will benefit the market during the forecast period.

·         For instance, Vendekin, a start-up that helps in product dispensing of beverages and other products through cashless payment and also offers supply chain alerts and analytical reports to brands and distributors. It converts an existing vending machine to an intelligent one by providing the hardware that gets installed in the existing vending machine while the app for both consumer and distributor is installed on the users’ phone.

·         In May 2022, 365 Retail Pro acquired Sentry, an Australia-based vending management software company. Through this acquisition, the company intends to leverage Sentry’s vending machine and micromarket management platform that includes a full-featured web application as well as a driver and inventory management mobile app. Its most notable features include intuitive planograms and optimized merchandising, routing, market maintenance and picking systems—all supported by a complete back-office system. The deal will add value to the company’s expanding suite of consumer-centric solutions.

Competition Analysis

Key players in the global retail vending machine market include Azkoyen Group, Cantaloupe Systems, Westomatic Vending Services Limited, Royal Vendors, Inc., Glory Ltd., Sanden Holding Corp., Seaga Manufacturing Inc., Orasesta S.p.A, Sellmat s.r.l., and Fuji Electric Co., Ltd.

Recent Developments in the Industry include:

·         In July 2022, Azkoyen Group, a Spanish vending machine manufacturer has acquired Barcelona-based espresso machine manufacturer Ascaso. Azkoyen Group said that the acquisition will provide a new leadership position in the premium coffee segment. The company’s coffee business currently accounts for 75% of turnover for its coffee and vending division.

·         In October 2021, Dominus Capital and affiliates have completed their investment in Seaga Manufacturing, Inc. Seaga’s customized offering allows customers to enhance inventory management, demand planning, inventory costs, and shrinkage, all while providing safer products access.

·         In April 2022, Cantaloupe Systems announced a partnership with Vendors Exchange for seamlessly integrating the latter’s Universal Control Board into Cantaloupe’s Remote Price Change (RPC) solution, available with Seed ProTM. This would help customers easily identify and upgrade legacy machines in the field to accept price changes remotely.