Whole Health: Got Change?

JEFF WELLS

Growth in the $68 billion snack market has quickly migrated from potato chips and soda to pita chips and all-natural juice. Supermarkets have seen this shift, particularly at the front end, where $4 organic dark chocolate bars are merchandised next to the M&Ms.

And now, there's a new platform for these better-for-you munchies. Healthy vending machines, as they're being called, have started popping up at hospitals, college campuses and health clubs across the country as off-hour or fill-in food outlets. Capitalizing on consumers' desire to eat better without sacrificing snacking, the new machines offer products like dried fruit, rice cakes, 100% juice, and many organic and natural versions of indulgent favorites, like sandwich cookies. With their colorful graphics, LED displays and credit card readers, the new machines also offer an antidote to their drab competition.

According to market research firm First Research, the vending machine operator industry consists of 5,000 companies that bring in a combined revenue of around $6 billion. It's a mature market, and although sales for healthy vending companies aren't being tracked, that segment is widely believed to be the best growth opportunity in the industry.

Sean Kelly, chief executive officer of Los Angeles-based H.U.M.A.N. Healthy Vending, said he has 100 machines in operation right now, and plans to place 500 more by the end of this year. Overcoming perceptions both inside and outside of the industry has been the most difficult part, though this year should be his best yet, he said.

“There's such an impulse buy associated with the traditional vending machines,” said Kelly.

Beyond overcoming people's habits, healthy vending companies face operational challenges that their traditional competitors don't. Procurement usually involves going through several distributors instead of one. The emphasis on “fresh” also means that machines require more upkeep, with perishable products needing to be swapped out before they go bad.

To supermarket operators, such shrink control problems should sound pretty familiar.

“We really have to manage what we order and how we order so we keep waste to a minimum,” said Gil Sanchez, president of Vend Natural, located in Ventura, Calif.

Big-name manufacturers have taken notice and are customizing their offerings. In December, Vend Natural partnered with Del Monte Fresh Produce Co. to offer a custom line of fresh-cut fruits and vegetables.