BRAZIL VENDING SHOW 2008Sao Paulo

Vending Industry in the United States

National Automatic Merchandising Association

► President & CEO, NAMA

► 28 Years in the Industry

► 8 years as a Vending Operator

► 20 years at NAMA

Richard Geerdes

US Vending – Market Overview

7,000,000 Machines on Location

$44 billion + Annual Sales in US Dollars

6,000 – 8,000 Operating Companies

US Vending – Market Overview

Operator Size

Less than $1 million annual sales 75%

$1 million – 4.9 million annual sales 18%

$5 million – 9.9 million annual sales 4%

More than $10 million annual sales 3%

US Vending – Market Overview

Location Mix

28% Manufacturing

27% Office

21% Retail/Public

11% Education

4% Health Care

9% Other

US Vending – Market Overview

Sales Mix

10% Hot Beverage

54% Cold Beverages

20% Snacks

7% Food

9% Other Products

Strategic Issue: LOW OPERATOR PROFITABILITY

2006 Data from NAMA:

Top 25% Total SurveyProfit before Taxes: 3.6% 1.5%

Return on Assets 14.8% 5.1%

► A capital-intensive business in a maturing industry

► New US economic model (fewer large locations; more technology – less people) does not favor traditional vending service providers

Strategic Issue: LOW OPERATOR PROFITABILITY

► Location Commissions too high

► Competition through Commissions and not service

(Industry as a commodity and not a value partner)

Strategic Issue: LOW OPERATOR PROFITABILITY

► Equipment Life being stretched

► Growth initiatives such as technology deferred

► Purchasing Power consolidation

Strategic Issue: CONSUMER PERCEPTIONS

US Consumer Perceptions of Vending © NAMA 2006

► Major US study conducted Summer, 2006 by NAMA

► Positive Perceptions: Vending is Convenient

Vending is Easy to Use

Strategic Issue: CONSUMER PERCEPTIONS

► Negative Perceptions:

√ poor awareness of healthy or fresh products

√ dislike of product selection

√ Poor value perception

√ Poor perception of technology and reliability

Strategic Issue: CONSUMER PERCEPTIONS

► A key finding is no surprise: the power of branded items

► Contrary to Operator expectations, consumer will walk away without making a purchase if they don’t find the brand they want to buy

US Vending – The Outlook

► A stable if evolved Economic Model to which Operators must adapt.

► Key leading companies to drive Profitability through creativity, technology and service

► Better growth of Cashless Payment Systems and technology of all kinds

US Vending – New Technologies

► Cashless Payment Systems

► Remote Machine Monitoring

► Guaranteed Delivery

► Energy Efficient Machines

► Touch Screens

V-Commerce Cashless ReadersV-Commerce Cashless Readers1 – PIN-pad Reader – a personal identification number (PIN) is entered using a PIN-pad; similar to data entry at an ATM. The unique PIN identifier authorizes the transaction.

2 – Contact Reader – magnetic stripe usually found on a standard sized plastic payment card platform that is swiped across a magnetic stripe reader. Similar to data capture with a credit card reader.

3 – Scan Reader -- a scanning device (handheld or fixed mounted) used to read a bar code printed on a plastic card or alternate media. The scanner reads the coded as it passes in front of a beam of light.

4 – Contactless Reader – a radio frequency identification (RFID) reader capable of Interacting with an embedded RFID chip in a form of media. Close proximity of media to reader initiates transaction.

5 – Biometrics Reader –a reliable format for identification through a distinct physical characteristic. Ensures that only an authorized user is conducting the transaction. 6 – Proprietary Reader – a special device designed to work with a private, closed system payment Scheme (for example: smart card, prepaid card, paykey, freedom pay, etc.)

7 -- Combo-Reader – utilizes two forms of identification verification (PIN-code and biometric or RFIDand biometric) to produce a highly secure authorization channel for transaction processing.

1 4 5 6 72 3

© Michael Kasavana

Source: Jim Turner USAT- 2006

Coins Bills Contact Cashless Contactless M-commerce Media Media Media Media

Remote Machine MonitoringRemote Machine Monitoring

Machine Handheld Curbside Remote Online Meters PC Polling Monitoring Activity

MACHINE METERS –sales and cash meter readings (manual process)

HANDHELD PCs – downloading of machine DEX data (digital capture)

CURBSIDE POLLING – remote retrieval of DEX data (pre-picking)

REMOTE MONITORING – telemetry transport of data (simplex: 1-way)

ONLINE ACTIVITY – web-based polling and reporting (duplex: 2-way)

enhanced accuracy, efficiency, and interactivity

© Michael Kasavana

Telemetry – measurement of characteristics (measurands) for transmission to a distant station for recordation and analysis.

Route Sales/Route PersonRoute Sales/Route Person

Number of Sold-OutsNumber of Sold-Outs

Number of Machine ServicesNumber of Machine Services

Average Collections Per ServiceAverage Collections Per Service

Brand Preference Analysis (menu mix)

Space to Sales Analysis (column allocation)

Machine Operations Report (malfunctions)

Two-Way Communications (interactivity)

Route Productivity (efficiencies/effectiveness)

Brand Preference Analysis (menu mix)

Space to Sales Analysis (column allocation)

Machine Operations Report (malfunctions)

Two-Way Communications (interactivity)

Route Productivity (efficiencies/effectiveness)

Inventory Tracking reporting to warehouse polling from curbsideOperations Monitoring downtime vandalism embezzlement digital display updates

© Michael Kasavana

Courtesy of 3M Touch SystemsCourtesy of 3M Touch SystemsCourtesy of 3M Touch SystemsCourtesy of 3M Touch Systems

Solara Technology USI Combo IISolara’s MapVend

© M

ich

ael K

asav

ana

US Vending –Technical Training Programs

► Route Driver Certification

Routine serving and maintenance

► Repair Technician Certification

Maintenance, refrigeration, electrical, electronics

► Quality Coffee Certification

Brewing, water and maintenance

►

US Vending – Standards & Regulations

► Safe Food Handling Practices

► Hygiene of Machines

► Electrical Operation – new requirement

Ground Fault Circuit Interrupter now on machines

► DEX & MDB - international standards for data collection and transmitting

US Vending – Standards & Regulations

► Safe Food Handling & Storage

► Cleanliness & Sanitation

► Electrical Operation (GFI)

► DEX; MDB; DTS international standards

US Vending – Tips for Success

► Customer Service (clean, filled, working)

► Recognized Product Brands

► Friendly Service People

► Machine Front Merchandising

► Operational Controls

► “Just in time” Inventory Control

www.vending.org

THANK YOU

National Automatic Merchandising Association