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gest cold beverage category was large non-carbonated drinks. This would include ready-to-drink iced teas, cof- fees, water and favored waters. These are similar to trends seen in the U.S. Liquid Refreshment Report released by Beverage Marketing Cor- poration. Bottled water has had an especially notable year, with volume growing by 7.9 percent. Carbonated soft drinks remain on the decline across all retail segments according to the Beverage Marketing Corporation, but this is not the case in the vend- ing industry, which saw that segment increase between 10 to 13 percent in revenues compared to the prior year. Milk sales remain low in vend- ing machines with 47.5 percent of operators reporting that in 2015 they didn't even offer milk. Of those that did offer milk, nearly 12 percent of operators reported increasing milk sales in 2015, which was higher than the 8.8 percent that decreased milk sales. The rest, about 31.9 percent, reported no change. Operators diversify In 2015, operators continued their trend of offering additional services, beyond traditional workplace refresh- ment. More than 9 percent are uti- lizing their staff, product inventory, logistics or other business acumen to expand their businesses (11B). Opera- tors report supplying repair services for vending equipment or coffee brewers, acting as a distributor for certain brands, catering, wholesaling and subsidized product delivery via free vend vending machines among the other services contributing to their annual revenues. Challenges: preferences, hiring A primary challenge for operators is the very individualized preferences of consumers. Operators report a lack of appreciation for the service they provide. Consumers today overlook convenience, traveling to competi- 33.2% 6.1% 36.3% 3.5% 15.8% 5% 2015 CHART 13: PERCENTAGE OF EACH TYPE THAT MAKES UP PLACED VENDING MACHINES ● Cold beverage ● Hot beverage ● Snack ● Food ● Combo ● Frozen only CHART 12: PROJECTED SALES BY CATEGORY, 5-YEAR REVIEW IN BILLIONS PRODUCTS 2011 2012 2013* 2014 2015 % CHANGE Candy/snacks/ confections $5.57B $5.22B $6.56B $7.24B $8.0B 10% Ice cream/frozen 0.42 0.59 0.63 0.59 0.4 -32 Sundries/toiletries NA NA NA 0.20 0.1 -61 Milk 0.34 0.49 0.57 0.39 0.2 -48 Vend food 1.14 1.38 1.69 1.30 1.5 14 Hot beverages 0.98 0.89 1.00 1.05 0.8 -24 Cigarettes 0.11 0.33 0.28 0.25 0.0 -84 Cold beverages 8.23 7.34 7.88 7.61 8.4 11 Other 0.47 0.94 0.91 1.55 1.5 -4 SERVICES 2011 2012 2013* 2014 2015 % CHANGE OCS 1.70 2.14 2.52 2.68 1.4 -47 Micro markets 5.38 3.33 2.32 1.79 2.1 19 Water service N/A 0.35 1.01 0.39 0.4 6 Manual foodservice 1.53 1.9 24 Bulk vending 0.40 0.5 19 Music 0.22 0.4 79 Games 0.16 0.6 293 Janitorial supplies 0.02 0.1 765 Other 0.85 2.0 134 Vending 12.12 11.4 -6 * Numbers adjusted based on revised Chart 11 OTHER services are contributing $2 billion to the annual industry revenue. 34 Automatic Merchandiser VendingMarketWatch.com June/July 2016 STATE OF THE INDUSTRY