From The Land of Coffee Beans
posted 07.10 '2013Last September I was kindly invited to the Expovending & OCS Latin America show that took place during 2 days in Sao Paulo.
The EVA has always been willing to maintain strong relationships with its partners from the other continents, because our association is persuaded, that even though the vending markets can be quite different, we can learn from and benefit from each other’s experiences. Therefore, this trip to Brazil was a big opportunity to present the market trends in the European vending industry and also to discover the specificities of the Brazilian market.
We should not forget that in Europe 70% of the vending business is made with coffee and hence visiting the worldwide biggest exporting country in terms of coffee beans was for me a great experience. Brazil is well known for its football culture, for its carnival, its Cachaça, but we often misremember that Brazil is also the country of coffee! Nonetheless, despite having this black gold in front of the door and 200 million inhabitants, the Brazilian vending market is still very small. Indeed, there are only about 100,000 vending machines, including chilled vending machines, freestanding and table top hot drinks machines as well as so called office coffee service (OCS) machines. The reasons for these low figures are manifold:
1. Vending is still quite a new concept in Brazil and therefore it is still expending. The market, in general, offers a lot of opportunities, but it will take time.
2. The vending operators suffer from the protectionist policies of the Brazilian government. Hence, import taxes on European goods are taxed by 88% on the initial selling price. This is a huge barrier for vending players who want to grow their business and it is quite surprising that the World Trade Organization (WTO) does not take any action.
3. Free vend has become quite popular at the workplace and consequently business is only profitable for big or mid-size operators.
Regarding the vending market as itself, there are about 1000-2000 mid-size operators in Brazil and most of the machines, like in Europe, are at the workplace. Many of them offer office coffee services with instant coffee machines. Bean to cup machines were not popular in the past, but the trend is going upwards. In terms of machines, operators only use a small range of brands, mostly Italian ones for hot drinks machines and American ones for snack and cold drinks. Brazil does not have any serious manufacturer of vending machines.
As in Europe, 80% of the business is made with coffee, 10% with cold drinks and 10% with snacks.
Compared to European operating companies, Brazilian mid-size operators place their machines in companies with employees on site to refill them. For 30 machines on site, an operator would employ about 4-5 employees to take care of the machines. Differently than in Europe, vending machines in blue collar sites are placed in a large room in which the employees have their lunch. So you will find all types of machines to meet the employees’ expectations in terms of meals. Therefore a whole room is dedicated to the lunch break, with TV screens, tables and the vending machines therefore replace the canteen. That is a concept that still need to be implemented in many companies in Europe. At these machines, people can purchase by using coins, banknotes, lunch passes or pre-paid cards, so it makes everything easier.
When I saw these vending concepts I thought that this is still not really happening in Europe. People still go either to the fast food restaurant or to the canteen. If you dedicate a large room for lunch breaks, offering nice snacks and drinks in a cozy environment, I am quite certain that many people would enjoy it. Everything is a question of marketing.