Poor returns blamed on increased VAT after vending machine sales drop

By RJ Whitehead

- Last updated on GMT

Poor returns blamed on increased VAT after vending machine sales drop

Related tags Alcoholic beverage

Japan’s vending machine stockers have been seeing sluggish fortunes over the last year as overall sales dropped by 5% last year, down from 2013’s US$42.9bn.

Also revealed in the latest annual study of Japan's vending performance by its industry body, vending machines numbers dipped by 1.1% to 5,035,600 from 5,094,000 in 2013. 

Vending are ubiquitous in Japan, where they can be found selling water, soft and functional drinks, coffee, and sometimes cans of ready-to-eat soup. Elsewhere, machines for beer and other alcoholic drinks are also common, while there are also machines selling snacks and ice cream, groceries like eggs and other essentials.

Beverages stay in the lead

As usual, beverages have generate the lion's share of vended sales, though soft drinks, worth US$15.4bn, witnessed a fall last year of 2.1% from 2013 figures, and machine numbers dropped by 0.6% to just over 2.2m. 

The volume of beverages dispensed in cups also declined, from 2013's US$1.25bn to ¥147.0 billion ($1.21 billion) in 2014. The number of cup beverage venders in use fell 2.5%, from 179,400 machines in 2013, to 175,000 last year. 

Sales of beer and sake took a nosedive last year, with the number of machines falling from 30,300 to 26,600 last year, and sales dropping by 12.2% in volume to US$284m. 

More positively, food and snack vending machine numbers remained static last year, with 69,000 machines on location, and volume holding steady at $446.8m. Sales through food-ticket venders increased from by US$200m in 2014, or 8.8%. There were 28,500 of these ticket machines in the field in 2014, compared with 27,500 in 2013. 

VAT to blame for part of decline

A VAT increase from 5% to 8% in April last year had one of the biggest negative impacts on the vending channel, according to market analyst Euromonitor. 

Vending operators selling soft drinks, the largest product category within vending, responded to the VAT increase in two different ways: some companies raised prices by JP¥10, while others, afraid that higher prices would put consumers off, kept the prices unchanged​,” said Euromonitor. 

The VAT increase also resulted in vending machines being perceived as relatively more expensive to purchase, causing vending performance to decline in 2014.

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