Price growth will continue to be stimulated by rising employment, new business growth and rising purchase costs. However, the threat of substitutes will rise and begin to curb future price inflation.
Los Angeles, CA (PRWEB) November 12, 2014
The hot beverage vending machine rental market has a buyer power score of 3.4 out of 5.0, reflecting moderate negotiation conditions in favor of buyers. Buyer negotiation power has declined in the three years to 2014, though, due to rising purchase costs and demand. During this period, the cost of nonalcoholic beverages has swelled, eroding already thin profit margins. In turn, suppliers have had strong incentive to raise their prices to compensate for rising costs, reducing buyers negotiating leverage. “Meanwhile, rising employment and new business growth has stimulated demand within the market, causing the level of demand to rise faster than supply,” according to IBISWorld business research analyst, Daniel Krohn. The resulting supply deficits have shifted negotiating power further in favor of the supplier over recent years.
Buyers have maintained a slight upper hand in negotiations with suppliers of hot beverage vending machine rentals, though, thanks to the moderately fragmented nature of this market and the high availability of substitute products and services. Operators, distributors and food management companies compete intensely to maintain or gain new market share in regional and local networks. This nature has not only limited price growth, but also led to greater buyer leverage in negotiations. Meanwhile, competitive pressures from substitutes, such as energy drinks and single-serving brewing systems, have further preserved competition in the market. In turn, buyers have maintained a moderate amount of buyer power.
Buyer power varies across vender types. “Buyers can often save when selecting a hot beverage distributor as their vending machine rental provider, but doing so will lock them into a narrow line of products,” says Krohn. Small operators are generally confined to their local region, forcing them to keep moderately competitive pricing while still providing a wide range of beverage options. Meanwhile, national food management companies wield the most pricing power and, therefore, have higher prices but they generally have the greatest coverage and product offerings. Also, they often have ample opportunity for buyers to save overall by bundling goods and services. Major vendors include Nestle SA, Aramark Corporation and Compass Group PLC. For more information, visit IBISWorld’s Hot Beverage Vending Machine Rental procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of coffee and other hot beverage vending machine rental services. Vending companies rent or lease freestanding, table-top and bean-to-cup hot beverage vending machines. Suppliers also provide maintenance and repair services for their machines. This report excludes the rental of vending machines that are used for food and cold beverages.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
About IBISWorld Inc.
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