At the end of 1990 there were about 5.4 million vending machines at work in Japan (see Table 1). Vending sales that year were ¥ 5.8 Trillion. This is equivalent to about three percent of total retail sales. With 6 million vending machines (1989), only the USA has more than Japan. However Japan tops the league in vending machines per 1,000 capita - 44 in Japan, 24 in the USA. It also leads in sales per machine - ¥ 1,075,000 in Japan, US$4,081/¥ 530,000 in the USA.

Almost half of Japan's machines sell beverages, mainly soft drinks, including not only carbonated drinks but also fruit juices. They also sell sake, beer, wine, whisky, coffee, cocoa, tea, milk, and yogurt. Among other goods sold are cigarettes, peanut, chewing gum, cut flowers, hamburgers, bowls of piping hot noodles, complete meals, bread, pastries, ice cream, pearls, and panties.

Liquor vending machines occasionally spark controversy for making alcohol readily available to minors. Despite arguments to prevent this, the prevailing view has been that if the guidance of parents and teachers cannot solve problems of under-age drinking, the removal of liquor vending machines could not.

On a healthier note, you can also have your vital signs (heart, blood pressure), checked by vending machines. If you run out of stamps or need batteries for a tape recorder late night, go to a vending machine. Machines also sell tissue paper, contraceptives, sanitary products and toiletries. If you run out of change, vending machines will change notes or issue you with pre-paid magnetic cards. You can use these in vending machines of course and to make telephone calls, or buy train tickets.

Sometimes, a single vending machine can sell more than a small store. According to Kirin Brewery, canned drink sales from its machines are more than twice comparable figures at small convenience stores. Each machine averages annual sales of 25O to 300 cases (one case holds a dozen 25O-milliliter cans).

CANNED COFFEE - A MARKET CREATED BY VENDING.

Although vending machines sell a wide range of products, the driving force behind the industry is the sale of beverages, mainly soft drinks. Different estimates put the share of soft drink sales through vending machines between 40% and 50% of the market total.

The importance of vending machines in marketing soft drinks is responsible for some of the industry's unusual features. It has also led to the development of one major product in Japan that is virtually unknown elsewhere in the world - canned coffee.

Traditionally soft drink sales peaked during the long hot summers and fell away during the cold winters. Vending machines therefore were in full use during the hot weather and idle in the winter. Marketers prefer even demand to dramatic peaks and troughs. New machines and new products solved this problem.

Ueshima Coffee Co. (UCC) hit the jackpot when it developed a canned coffee drink in 1972. Developments in canning technology made this possible. Firms such as Toyo Seikan were able to line the cans with materials that avoided any taste contamination.

In many respects, coffee is an ideal beverage for a soft drink manufacturer in Japan. It is popular as a chilled or iced drink in summer as well as a hot drink in winter (and indeed year round). When UCC began to put canned coffee in vending machines it soon became a hit. Other drinks makers, notably Coca Cola, the market leader, soon followed suit. So did Pepsi Cola, Nestle, and all the major food, drink, and brewing companies. Today canned coffee sales, 90% of which go through vending machines outstrip those of carbonated soft drinks such as Coca Cola.

Virtually all new soft drink vending machines installed over the past five year have been able both to heat and chill their columns. So in summer you can buy chilled coffee, tea and soft drinks. In winter hot coffee, tea, cocoa, and soup are all available.

The success of canned coffee sparked the introduction of canned milk tea, black, tea, green tea, barley tea, lemon tea, oolong tea and fresh fruit juices. Canned Coffee meanwhile, comes black, white, espresso, mocha, blue mountain, 'au lait,' 'Viennese,' sweet, and unsweetened.

The development of vending machines and soft drinks has gone hand in hand. As machines that can operate 6, then 12, 24 or 36 columns of cans progressively appeared, so has the range of soft drinks they sell increased.

Today, no company can compete successfully in the soft drink market unless it has a wide range of products to fill vending machines. This year, for instance, Suntory have introduced no less than 32 new soft drinks.

The flexibility beverage vending machines provide has drawn them into office use. Many companies now provide an array of vending machines to provide employees with refreshments at subsidized prices.

Canned drinks are not everyone's ideal way to drink a cuppa. So there are also machines that will grind your selected blend of coffee beans. They filter it through a paper filter, to the strength you like. You can add sugar and creamer to taste. These 'mill and drip' machines need a little more maintaining than do the can machines but they do operate on a consistent and reliable basis.

GIVE THE CUSTOMER CHOICE

Stocking what the customer wants is basic to vending machines as it is to retailers. Each year, new drink vending machines provide even bigger choices

As an example, Fuji Denki Reiki Co.'s ¥ 2.2 million RCI-R2000 vending machine handles 3O different drinks, including fresh-brewed coffee, instant coffee, juice, cocoa and soup. With various combinations of ice, sugar or milk, the number of selections grows to 96. Four sizes of cup quadruple the choice.

The machine can also turn out fresh-brewed coffee in 18 seconds instead of the 25 seconds required by more conventional machines. The seven-second difference means a great deal when people have to wait in line for their turn in front of vending machines.

COIN-IN-THE-SLOT BEEF

Each year, there are new uses for vending machines. This year Hamilton Japan Co., a meat packer based in Kobe, will start selling U.S. beef through vending machines.

Hamilton plans to sell beef for 30% less than Japanese market prices by raising and processing the beef in Nebraska and shipping it to Japan ready-frozen.

Steaks will cost ¥ 1,000 per 500 grams and meat for grilling ¥ 600 per 35O grams.

The company plans to install vending machines at department stores, gasoline stands and other indoor places.

The machines keep the meat below minus 18 degrees Celsius. The company plans to set up 1,000 vending machines by next year. It targets sales of 1,500 tons of beef or ¥ 3 billion in the first 12 months.

If vending machines can sell food, why not have them cook it too ? That way hungry customers can enjoy a freshly cooked meal.

Nichirei Corp., a food processor, has done exactly this. They have developed a vending machine equipped with a microwave oven for heating precooked frozen food.

The machine, which Nichirei claims is the first of its kind, can accommodate 10 packages each of five frozen food selections, such as apple pie and shrimp pilaf. Nichirei plans to install 1,500 machines in two years. Targets include convenience stores and fast food stores. Both are short of staff due to a labor shortage in Japan. The vending machines can take the place of staff who used to heat meals in Japan's convenience stores.

A BLOSSOMING MARKET

From fresh food to fresh flowers is one tiny step. Flower vending machines selling cut flowers appeared in 1989. They have helped attract customers who would not normally enter flower shops to buy gifts. Most of the people using flower vending machines have been men who might feel embarrassed visiting a flower shop.

Sales vary with the season and weather conditions, but can reach over ¥ 300,000 a month. Trading house C. Itoh operates flower vending machines in some Tokyo department store. These can hold up to 5O decorative boxes with cut flowers and two floral arrangements in baskets. The machines are temperature-controlled to less than 10 degrees Celsius.

A GEM OF A VEND

One vending idea is a real gem. In March 1987 the Tasaki Pearl Co. installed 'Jewelry Pochette' vending machines in Tokyo and other cities to sell pearl jewelry. The first machine sold over Y1.5 million worth of pearly goods in its first two months. Each machine carries a selection of items costing from about ¥ 2,000 to ¥ 35,000. The main customers for such machines are men. They find it embarrassing when asked questions about what they want and why by salesgirls in stores.

Probably in no other country would anyone dream of filling a roadside vending machine with expensive jewelry! A high price tag is clearly no barrier to vending sales. Machines can sell expensive as well as inexpensive items.

THE HOTTEST THING IN VENDING

A vending machine in Shirahama (in Wakayama) sells water from a hot spring. About 100 litters of water from nearby Tsubaki Spring costs ¥ 100. The water is 32 degrees centigrade and contains sulfur.

For passing drivers who want hot water, containers are available at an electric appliance shop near the vending machine. About 200-litters of hot spring water is necessary to fill a decent sized Japanese-style bath tub in the home.

POWER HUNGRY MONSTERS

Not only have vending machines numbers been increasing,

they have been getting larger and cleverer. New models have microcomputers to control their systems. These keep both hot and cold drinks at their ideal temperatures no matter how cold or hot the weather. Some can also clean themselves.

This sophistication uses a lot of electricity. New machines often burn 700-900 Watts. Those they replace might have needed only 400-500 Watts.

The nation's beverage vending machines alone consume the total output of a 1-megawatt nuclear power plant - a rising total !

In 1990, exceptionally hot summer weather caused surges in electric power demand that strained the nation's generating capacity. The government appealed to the public to economize and raise the temperature setting on their air conditioners. Vending machines however could not heed calls for power economy. Luckily power supply managed to keep pace with demand, but only just. The prospect of a soft drink vending machine blowing the nation's fuse was ridiculous. But it came dangerously close to reality.

SPECIAL FACTORS HELP GROWTH

In law abiding Japan, where vandalism is almost non existent the risk for machine operators are small. Occasionally newspapers carry stories about attempts to break open and steal money from vending machines. Usually the machines fare better than the criminals in these rare encounters. On at least one occasion, a would-be thief came to an unhappy end as the machine he was vandalizing tipped over and crushed him beneath it.

Low crime levels and a high level of respect for other people's property are factors that help the industry grow.

Pressure on space within stores also encourages the growth of vending. Many shops expand their sales area into the street with a line up of vending machines. This also provides an extra bit of customer service, something Japanese retailers are always eager to do. High population densities deliver a ready passing market to make the investments worthwhile.

VENDING BY REMOTE CONTROL

For the retailer, operating a bank of vending machines outside his store has become quite a sophisticated exercise. Vending column management is as crucial as shelf space management to profits.

If there are several banks of machines around the neighborhood, all the more difficult to keep them tanked up with the right mix of products. With many new brands launched each year, knowing just what to stock to maximize profits is a headache only technology can solve.

Technology comes to the rescue again. The telephone can connect new machines via telephone lines to remote control centers. Computers can monitor sales, stock, and program refills.

New machines can also transmit data by radio. This Spring, market leader Coca Cola started using a radio data transmission system, called Teleterminal. This monitors its vending machines and speeds up ordering re-fills.

Coca-Cola is trying to solve several problems at one stroke. They hope to overcome the labor shortage, raise operational efficiency and improve services to retailers. If successful, the experiment could revolutionize the industry.

Teleterminal sends data from portable terminals to the head-office computer by radio. The service comes from Japan City Media Inc. (JCM), set up last year by a group of 49 firms, including Tokyo Electric Power Co. and NEC Corp.

Proponents say the new system has distinct advantages. It can send data both ways. The initial investment is also lower than for telephone systems. Transmissions have high accuracy, since there are noise suppression and re-transmission functions built-in.

Coca-Cola will first use Teleterminal to monitor its 62,000 vending machines in the Tokyo area. It will install radio transceivers in each machine, enabling them to exchange information with the company's head office computer, via JCM's base station.

Each machine will be able to send information about its inventory, small change and any malfunctions. The host computer will also be able to call up the vending machines for real-time sales data.

Soft drinks sold through vending machines are subject to wide seasonal fluctuations and unpredictable runs on particular brands. Dispatching workers to check on the stock of each machine is inefficient. Knowing what to bring and how much will speed servicing up and save labor costs.

In addition, installing a point-of-sales system in vending machines could help to rationalize production. Makers will be able to allocate production to keep pace with real-time demand for each product.

There is more. Coca-Cola are also developing a next-day delivery system for retail outlets, using Teleterminals.

Sales staff will use portable terminals to send orders directly to the host computer. The head office will process the order data as it comes in, allowing the company to guarantee next-day delivery.

Under the current system, salesmen phone orders to branch offices. These compile the data and send it to the head office. The head office then arranges the best delivery schedule and instructs each of the 29 branch offices accordingly.

This complicated procedure, used by all soft drink bottlers at the moment, holds back delivery until two days after the ordering.

Small retailers, who often have little or no storage space, like frequent, small-lot deliveries. Next-day delivery would allow them to cut inventories virtually in half.

BIGGER AND BETTER

The introduction of larger vending machines will eventually lead to a reduction in their total numbers. New machines with 24 or more selections will replace older models with a mere 6 or 12 selections. Although growth in numbers has been slowing (See Table 2), the need to replace older machines gives the manufacturers steady business - provided they continue to innovate.

The biggest problem facing the industry is, ironically, the labor shortage. Workers to stock and service the machines are getting harder and harder to find. As a result machines have been going out of stock of popular drinks and suffering more frequent breakdowns.

However sales through vending machines seem sure to continue increasing. In 1964, sales through vending machines were less than 1% of retail. Today they are over 3% and have been growing steadily for over a decade. The growth is real, not inflationary. The price of a soft drink in a vending machine has been Y100 since 1974. The introduction of POS-systems should also help increase sales.

The vending industry in Japan owes its success to technology. As new consumer needs, retail opportunities or problems have arisen, the makers have swiftly deployed suitable technologies. In this way, Japan's unusual vending industry provides a case history of how technology can create and develop markets to meet the every day needs of society.

Related Articles:
Vending via the Mobile Internet (June 2001)

Also: Defibrillators via vending machines, Click here (April 2007)

Postscript for 2007

Canned Coffee is still a huge market through vending machines, though there is pressure now from sales of the same products through 24 hour convenience stores (which also have PET bottled beverages). It is still true to say that a soft drink cannot become a major brand unless it succeeds in vending machines, and also that the vending machine industry owes much to success of soft drink makers in creating excellent canned products.

These are the companies you should explore. Some probably have European branches, though these may be handling other products and not vending machines. Google can probably help you!

Fuji Denki Reiki ( a subsidiary of Fuji Electric )
Sanden Corporation
SANYO Electric Vending Machine Co., Ltd. ( this may have been sold to Fuji)
Toshiba,
Kubota Vending Services Co., Ltd.  (subsidiary of Kubota Corporation)
Matsushita.