Vending machines offer major growth for fruit, vegetables - The Packer

Vending machines offer major growth for fruit, vegetables

09/08/2010 09:52:29 AM
Bruce Blythe

As the country’s anti-childhood obesity movement builds momentum, Gil Sanchez is taking the vending industry to school.

Sanchez said business is growing “tremendously” for his company, Vend Natural Inc., which distributes vending machines that dispense fresh-cut fruits and vegetables to schools, military bases and other institutions.

Vend Natural, Ventura, Cal., has about 400 machines in 25 states, primarily on the East Coast, and Sanchez plans to expand elsewhere. Amid first lady Michelle Obama’s “Let’s Move” campaign against childhood obesity and stricter nutrition rules expected from Congress, there’s an increasing demand for alternatives to potato chips, candy bars and other standard vending machine fare, he said.

“It’s a market that’s growing constantly,” Sanchez said.

Courtesy Del Monte

Vending machines are part of the solution for childhood obesity, he said. About 96% of his machines are in schools.

Vending machines will be an expanding revenue source for fresh fruit and vegetable growers in coming years, and so far, the market is largely untapped, industry representatives say.

Through its website, the Produce for Better Health Foundation encourages districts to join a growing list schools that have the machines. About 250 schools, mostly in major cities including Atlanta, Miami and New York, are listed on the site.

In terms of overall revenue, vending machines generate about $6 billion a year in the U.S., according to industry data.

Fruit and vegetable growers have an “incredible opportunity” to supply vending machines, said Lorelei DiSogra, vice president for nutrition and health for the United Fresh Produce Association, Washington, D.C.

“Pretty much every school in the country has vending machines,” DiSogra said. “Many schools are trying to get ahead of the curve and ensure the foods in vending machines are a lot healthier. We are well-positioned to capitalize on the opportunity.”

Fresh Del Monte Produce Inc. is one of the top vending suppliers of fresh produce. The Coral Gables, Fla.-based company supplies Vend Natural’s East Coast machines, Sanchez said. Fresh Innovations, L.L.C., based in Washington state, supplies the West Coast.

Fresh Del Monte supplies products to “hundreds” of vending machines across the U.S., Dennis Christou, the company’s vice president of marketing, said. “That number continues to grow rapidly as students go back to the classroom.”

He declined to provide specific figures on the number of machines the company supplies or vending machine sales.

Vend Natural’s machines are manufactured by Des Moines-based Wittern Group, which is hiring more workers and ramping up production to keep pace with rising orders, the company said.

“Schools are demanding this equipment,” said Phil Masters, a vice president with privately held Wittern Group. “They’re throwing out the candy machines, the soda machines.”

Masters said the company expects to make more of the machines, which cost $3,000 to $6,000 and include features that allow bananas, for example, to be stored at different temperatures than other products.

Growth in fruit and vegetable vending machines hasn’t come without stumbles, Sanchez said. A principal at one school asked Vend Natural to remove its machine, saying kids lining up to buy fruits and vegetables disrupted lunch hour.

“I get more resistance from schools than I do from kids,” he said.

Sanchez said he’s generated about $6 million in sales since launching the company in 2007. A Vend Natural distributorship, which is similar to a fast-food franchise, costs $50,000, Sanchez said.

He’s sold almost 30 distributorships so far, with a goal to sell at least one a month.

Among specific products, Vend Natural is shifting from serving pineapples in chunk form to “spears,” which are cleaner to handle, Sanchez said. The company also recently phased out clamshell packaging for apples and grapes in favor of bagged products.

Products range from 75 cents to $2, and a typical machine will sell around $300 a week, he said.

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