Rising employment and new business growth have fueled demand, while purchase costs within the market have risen; together, these factors have stimulated steady price growth in the three years to 2014
Los Angeles, CA (PRWEB) January 07, 2015
The hot beverage vending machine rental market has a buyer power score of 3.4 out of 5, reflecting moderate negotiation conditions for buyers. “Buyer negotiation power has declined in the three years to 2014, though, due to rising purchase costs and higher demand,” according to IBISWorld business research analyst Kayley Freshman-Caffrey. During this period, the cost of nonalcoholic beverages swelled, eroding already thin profit margins. In turn, suppliers have raised 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. The resulting supply deficits have shifted negotiating power further in favor of the supplier over recent years.
Still, buyers have maintained a slight upper hand in negotiations with suppliers, 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. Top suppliers include Aramark Corporation and Compass Group PLC. This fragmentation 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 negotiating power.
Buyer power varies across vender types. “Buyers can often save when using a hot beverage distributor as their vending machine rental provider, but doing so will lock them into a narrow line of products,” Freshman-Caffrey says. 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, these suppliers often offer ample opportunities for buyers to save overall by bundling goods and services. 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, tabletop and bean-to-cup hot beverage vending machines. Suppliers also provide maintenance and repair services for their machines. This report excludes the rental or purchase of vending machines that are used for food or cold beverages.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.