AKRON, NY — Few people in the bulk vending business have as much experience as George Stege. As head of Carousel/Ford Gum & Machine Co. Inc., Stege has witnessed the transformation of the industry from a penny business run by part time operators to its current state of full time operators and multi-state operations.
Over the past several months, Stege’s firm introduced many groundbreaking products, such as sugar-free pomegranate chicle gum as well as the recently introduced Sour Extinguishers, a concept tablet-shaped candy comprised of three increasingly sour color-coded pieces and one Sour Extinguisher.
VT recently sat down with Stege to discuss the state of the gum and candy segment of the bulk vending industry.
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VT: How is the health of the candy business in bulk vending?
STEGE: It has been stronger, but I don’t think there’s been a lot of innovation done with candy products for bulk vending over the past few years. There aren’t a significant number of new items that have come out through traditional retail channels capable of working in a bulk vending machine.
Do you mean branded items crossing over from retail sales?
Yes, both branded and non-branded. I think most manufacturers of retail items don’t consider bulk vending a significant market. Not enough of a market to supply to it, anyway.
Do you see this changing in the immediate future?
Carousel is trying, and I think others will be trying, to introduce items for the current 25¢ price point as well as the 50¢ price point. We recently debuted two new candy items – Sour Extinguishers and Tutti Fruitti – that could sell at both price points. And we’ll be coming out with some new chocolate items for the higher 50¢ price point.
Are you sensing a real potential for higher-priced items in bulk vending?
I do think there’s a lot of potential, particularly at the higher price point, because that opens the market up to other types of candy. For instance, some of the chocolate items that we’re developing are targeted for 50¢ vend. They aren’t worth bringing to market for any less. I think operators need unique items, and I think they need value-added items. Operators are seeing rising costs, and many will have to increase their vend prices. I think it’s the obligation of suppliers to come up with products consumers will accept at the higher price point.
Are current price points limiting manufacturers in what they can offer for a 25¢ vend?
With the cost of product and the margins the operator needs, the manufacturer is really limited to pressed dextrose and sugar-based items to meet a 25¢ vend price. And the cost of sugar is significantly rising and so is dextrose. So I think you’ll see candy move from a traditional 25¢ to a 50¢ vend price point.
Will placing a higher price on the candy encourage product development?
I think it’s the obligation of suppliers to come up with products consumers will accept at the higher price point. They are going to have to provide unique opportunities for the consumer to believe there is value at 50¢. That’s where the exotic flavors fit in and that’s where sugarless fits in. By the way, the trend toward sugarless at retail is very apparent.
Sugarless implies an adult market. Are we also talking about expanding the range of bulk vending locations with products targeting a mature demographic?
Value-added products, such as sugarless gum that also cleans your teeth, are more prone to sell to adults. Healthy gums containing herbs and energy gums also fit into that category. So do things like green tea gum. I think you have a better chance of placing machines in large office buildings or health clubs with those kinds of products.
With capsule products moving to 75¢ and up, do you see any correlation with candy in terms of trends that make higher price points viable?
I do see one significant trend on the toy side. Licensing has proven its worth with toys and I think licensing will eventually drift into candy as well. I can see licenses of well-known commercial items, things like Starbucks coffee gum. I can even see some cartoon characters. And there are other opportunities that exist with health products, such as multiple vitamins, but that’s not a license per se.
So, even though things may be slow now, you’re still hopeful for the future?
Overall, I think there’s a future for the industry, but we need to be creative with new and value-added items in order for the industry will to grow. A different colored gumball is just not going to do it.