---
title: "The Wind is Coming: FMCG Giants Move Early as Vending Machines Are Poised for a Full-Scale Boom in China"
description: "Vending machines, with their high technical content, novel sales methods, vast market potential, and genuine products, are set for broad development. As per capita GDP in China approaches the $10,000 threshold, the industry is expected to explode, with major FMCG companies like Nongfu Spring and Coca-Cola already expanding their vending machine networks."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2015-11-20"
language: "en"
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# The Wind is Coming: FMCG Giants Move Early as Vending Machines Are Poised for a Full-Scale Boom in China

> Vending machines, with their high technical content, novel sales methods, vast market potential, and genuine products, are set for broad development. As per capita GDP in China approaches the $10,000 threshold, the industry is expected to explode, with major FMCG companies like Nongfu Spring and Coca-Cola already expanding their vending machine networks.

Preface: Vending machines, with their high technical content, novel sales methods, vast market potential, and genuine products, determine their broad development prospects. Moreover, they are connected to new consumption methods like electronic shopping, creating enormous business opportunities. Vending machines are known as "super salespeople who never clock out." This retail format has appeared in 65 countries and regions worldwide. In bustling areas of many domestic cities, people can already see vending machines frequently. Many believe that a promising thing also implies huge potential "business opportunities" in the market.

Trends

**1. Per Capita Consumption Exceeding $10,000 is the Tipping Point for Vending Machine Explosion**
Japan: The popularity of vending machines in Japan dates back to the period of high economic growth after the war. During this time, a large population migrated to cities, and being able to buy desired products on the street at any time met people's demands, gaining consumer favor. Vending machines are affectionately called "mini-shops" in Japan.

The products sold by "mini-shops" range from coffee, cigarettes, and various alcoholic beverages to some daily necessities, including newspapers, rice, stamps, postcards, batteries, and videotapes. According to the Japan Vending Machine Manufacturers Association, as the world's largest vending machine market, Japan had 5.03 million vending machines by the end of 2014, with beverage vending machines, the most common, accounting for 51% of the total. Over 6,000 types of products are sold through vending machines, with annual sales of 7 trillion 112.2 billion yen. Each year, beverage sales alone amount to approximately 159.3 billion RMB. On a per capita basis, there is one vending machine for every 23 people, and the average person spends 56,000 yen on vending machines.

United States: On a per capita basis, the U.S. currently has one vending machine for every 50-60 people, with about 6 million machines nationwide. Annual retail sales through vending machines total nearly $50 billion, making it an important branch of the U.S. retail industry.

China: The domestic vending machine industry has expanded rapidly in recent years, with an average annual growth rate of nearly 30% over the past three years, far exceeding other industries. Currently, China has about 100,000 vending machines, with retail sales of around 2 billion RMB in 2014. Relative to a population of 1.3 billion, this figure is negligible. In terms of per capita penetration, vending machines have huge market potential in China. Although the industry is developing rapidly, due to historical and practical reasons, the distribution and development levels vary significantly across regions. East China and South China are currently the most penetrated and mature markets for vending services. In terms of placement, most domestic vending machines are in places you don't see. Over 50% of machines are in factories, schools account for about 28%, and the rest are on streets, subways, office buildings... With changes in China's macro economy and the development of internet technology, the future development trend of the vending machine industry is becoming increasingly clear. **"When per capita GDP reaches $10,000, demand for vending machines will explode. Currently, 7 of China's 35 provinces and municipalities have reached this level. The tipping point for explosive growth in China's vending industry is not far off. AC Nielsen predicts that in the coming years, the Chinese market will add 50,000-100,000 vending machines annually, and 350 million people in coastal cities will regularly use vending machines."**

**2. Traditional Channels Under Pressure, Multiple Food and Beverage Giants Open New Sales Methods**
Due to changes in the external environment in 2015 and unexpectedly bad weather, the domestic FMCG industry has been in a state of "it never rains but it pours." FMCG companies have released recent financial reports, almost all showing declines. Especially in some traditional channels, due to rising costs, some FMCG companies have fallen into a dilemma of "no volume, no profit." Traditional FMCG channels are nearly saturated, and with limited room for market growth potential, rapidly growing emerging channels, especially those that are self-built and directly controllable, have attracted more attention. FMCG companies are increasingly focusing on the vending machine industry.

This year, many companies have started to stake their claims early. Brand companies led by Nongfu Spring have taken the lead, deploying nationwide. As of the end of August 2015, Nongfu Spring's vending machine fleet exceeded 5,000 units. Zhong Shanshan's goal is to deploy a total of 30,000 units by the end of 2016. By upgrading traditional channel partners, Nongfu has not only developed mutual relationships but also further enhanced overall market share.

Coca-Cola regards vending machines as an essential part of global channel management. Currently, Coca-Cola has about 5,000 vending machines in China. Master Kong piloted about 300 units in Shanghai in 2015, already taking shape. Wahaha, Uni-President, and Jinmailang are also not idle; they are rumored to be quietly training and forming "vending pilot troops." Sanquan, a frozen food company, has also begun testing boxed meal vending machines in some convenience stores.

There are precedents for upstream product manufacturers entering the self-service vending field. In Japan, the world's most developed vending machine market, upstream product manufacturers have a strong influence on the entire self-service vending industry, with almost the entire market closely related to relevant companies. Currently, of Japan's 2.56 million beverage vending machines, over 70% belong to beverage manufacturers like Coca-Cola. In recent years, with changes in the economic environment and consumer habits, and saturation of original market channels, upstream product manufacturers have turned their attention to the emerging vending machine channel. For them, eliminating intermediate channel distributors can yield more profits.

**3. The Internet Wings for the Takeoff of Vending Machines**
"I want to buy a drink, but I don't have enough change." This was a common annoyance for customers in earlier years, but now, taking out a phone and using Alipay with a "chirp chirp" or scanning with WeChat Pay makes the drink readily available. Diverse payment methods have brought consumers great convenience, and with this convenience, people's perception of vending machines has begun to change. People have become trusting and willing to use vending machines, which has sounded the horn for industry development. According to statistics from the China Vending Industry Network, in the past two years, emerging payment methods represented by mobile payment have gradually become one of the mainstream payment methods in the vending machine industry.

"The vending machine (market) is definitely going to take off; a new technology has arrived." In the view of Youbo CEO Wang Bin, this new technology points more to mobile payment. On Taobao's "Double 12" last year, in subway stations, hospitals, campuses, and office buildings, all vending machines with Alipay functionality from 18 brands including Youbo, Miyuan, and Yichu participated in the "buy a drink for one cent" activity. For example, Youbo's partners in mobile payment include WeChat, Alipay, Baidu Wallet, and even telecom operators like China Mobile and China Telecom participate through points redemption. When these big companies are striving to allocate resources to O2O business, the originally closed offline purchase channels are rapidly transforming.

The strong mobile internet atmosphere has broadened everyone's imagination, and traditional industries like vending machines have found new directions. Consumers can also view or purchase products through companion apps on their phones, which means more interaction with the vending machine. Vending machine companies can use incentives like rebates to obtain more consumer demand data and provide more feedback to beverage suppliers.

Internet-connected, touchscreen vending machines are not just for show; they also allow a machine to better function as a "medium," introducing interactive advertising and promotions. According to Mintel data, 500 new beverage products were launched last year, and these new products often rely on offline retail channels to test consumer reactions—compared to convenience stores, vending machines are a lower-cost channel.

**Summary: Non-Plan Standard Goods Vending Machines Are the Future Mainstream Sales Channel**

**First, let's talk about non-plan goods, which are those with high consumption frequency, high purchase frequency, and are purchased without prior planning. These goods have extremely high requirements for purchase convenience. Standardized goods refer to products whose size, shape, and dimensions conform to certain proportions or styles. Due to limitations in vending machine product tracks and dispensing compartments, product standardization facilitates sales through vending machines.**

The innovation in payment methods has broken through the price limit of vending machine products. According to U.S. statistics, products priced above $1.5 are not suitable for vending machines, mainly due to poor payment experience. However, modern vending machines with mobile payment and other emerging payment methods can completely break through this limitation. Consumers will no longer give up buying slightly higher-priced goods due to poor payment experience, especially daily necessities and consumables from well-known brands, such as toothpaste, shampoo, and the like.

Additionally, conventional retail channels are basically saturated, and vending machines have become a new growth path for business. With nearly 20 years of rapid economic growth, domestic retail has achieved leapfrog development. Department stores, supermarkets, convenience stores, online, and product supply companies have penetrated almost every relevant mature channel. Currently, it is difficult to find particularly valuable sales channels in the market. As a channel that has only grown rapidly in recent years, vending machines have enormous space in terms of market capacity and sales potential.

Finally, the application of internet and intelligent technology has improved the product sales experience of vending machines. Machines are no longer cold machines; some humanized technologies are better serving users. Some foreign machines even provide sales terminology services, with common service phrases like "Thank you, welcome again..." used throughout the entire product sales process, greatly improving the user purchase experience while laying the foundation for future vending machine development.

In general, compared to other retail channels, vending machines still have some objective limitations, but due to their unique characteristics, they are the most imaginative channel among current retail channels. I believe vending machines will have greater development in the future.

Operations

**1. Three Operating Forces of Vending Machines in China**
The first force is represented by large-scale operating companies like Youbo (38,000 units) and Miyuan (20,000 units). These companies have large scale, numerous devices, wide coverage, and high overall market share, accounting for half of the industry's sales. Therefore, their every move has a huge impact on the industry. A distributor once joked, "When Youbo and Miyuan move, the industry shakes three times," showing the enormous influence of these two companies on the industry!

The second force is the vending machine business segment of beverage companies represented by Nongfu Spring. Although it started late, due to the strong financial strength and market influence of beverage companies, it has developed rapidly over the past year or so and has gradually become one of the important segments of the industry market. In the future, it is not ruled out that more related companies will intervene. Uni-President and Master Kong currently each maintain a "vending elite force," and the future development of this force is difficult to directly assess.

The third force is the small and medium-sized operator market, which has expanded rapidly in the past two years. In the first half of 2015, with further changes in the national economic environment and the guidance of the mass entrepreneurship policy, the growth rate of the domestic small and medium-sized operator market achieved leapfrog development for the first time, with the overall market growth rate exceeding that of large operators for the first time. At the same time, in terms of market output value, although individual small and medium-sized operators are not outstanding, they also account for "half of the market output value" in overall scale, so this force cannot be underestimated.

**2. "Free" Vending Machines Help Asset-Heavy Businesses Achieve Mass Entrepreneurship!**
A device costing tens of thousands of yuan is a significant investment for both enterprises and individual entrepreneurs, especially for those needing planning, expansion, or just starting out. The procurement cost of vending machines is undoubtedly a hurdle in front of their project operations. Traditional solutions involve self-financing (such as financial leasing, bank loans, venture capital, etc.), but with the rise of the vending industry market, this situation is gradually changing. "Free" vending machines are becoming increasingly accessible, and the trend of diversified equipment sources for operators is gradually forming.

Food and beverage companies have been involved in the vending industry for many years, but previously, due to the overall market environment, they had not entered this field on a large scale. With the start of Nongfu Spring's "staking claims" campaign this year, many food and beverage companies have gained a new understanding of the vending machine industry market. Nongfu's entrepreneurial vending service provider model has also been recognized and accepted by many companies. Providing necessary "weapons and ammunition" to partners, and quickly occupying the market through the rapid growth of partners, has become the choice of many companies. According to a sampling report from the industry network on operators in East China, over 85% of operators have come into contact with channels where food and beverage companies provide free equipment, and over 30% of operators have already introduced related equipment. Many operators believe that in the future, in addition to self-purchased equipment, similar equipment supplement channels will become an important "foreign aid" for adjusting their operating structure.

Nongfu Spring Service Provider Cooperation Model
**Entrepreneurial Vending Service Provider:**
**【Conditions】**
1. Willing to take Nongfu vending business as the entrepreneurial direction and make it the sole job; priority given to those with experience in fast-paced industries such as express delivery and transportation, with more than 3 years of work experience; regional HR arranges home visits.
2. Serve 40 or more machines (starting with 20 initially); monthly sales per machine exceed 3,000 yuan.
3. Have an individual industrial and commercial household or company transportation/distribution business license; have a health certificate; be equipped with urban distribution vehicles with legal operating certificates.
4. All products must be purchased from Nongfu; no purchasing from other channels.
5. Deposit of 3,000 yuan per machine; warehouse can receive full-truck shipments from the city warehouse.
6. Be equipped with computers and network facilities, and transmit documents as required by Nongfu.

**【Cooperation Model】**
1. Within 15 days of signing, pay a deposit to Nongfu; deposit amount = XXX yuan × number of machines.
2. Nongfu grants credit to the distributor; credit amount = deposit amount.
3. The distributor places orders with Nongfu at retail price using the credit line.
4. On a fixed date each month, the distributor remits the funds collected from the vending machines in the previous 10 days to Nongfu.
5. On the 5th of the following month, Nongfu informs the service provider of the previous month's service fee; the service provider can deduct the previous month's service fee when remitting the next month.
6. At the end of each month, Nongfu issues an invoice to the service provider; invoice amount = amount shipped from Nongfu - service fee discount. Service fee calculation: fixed monthly fee XXX yuan, plus service fee of XXX yuan per bottle replenished.

**Exclusive Vending Distributor (with own locations):**
**【Conditions】**
1. Monopolize location resources, with the ability to develop locations quickly within 1 month;
2. Have vehicle replenishment capability, with monthly sales per machine exceeding 3,000 yuan;
3. Have certain financial strength; beverage distribution experience is not necessarily required.

**【Cooperation Model】**
1. Within 7 days of signing, pay the initial agreed working capital to Nongfu; Nongfu provides machines for placement after 30 days; initial agreed working capital = (XXX yuan + monthly rental fee per vending machine × 6) × number of vending machines placed.
2. The distributor places orders at Nongfu's distributor ex-factory price, orders from the company, and the agreed working capital offsets the payment.

Compared to earlier years, the development thinking and business forms of large operating companies have changed significantly. Many large operating companies have developed multi-business models to adapt to market changes, with equipment leasing and agency operations being the most common. Early equipment leasing mainly involved fixed rents, but with market development, a revenue-sharing model has also formed. For example, the operating company provides equipment for free, the operator or entrepreneur operates independently, and a certain percentage of turnover serves as the equipment rental income for the operating company. In addition, there are also packaged operation businesses: one type is where you have the locations and machines, I operate them, and share profits with you. Another type is where your machines and locations are operated by me, with profit sharing. Either way, these models indirectly promote market development and effectively balance market demand, allowing many enterprises and investors with resources but lacking operational capabilities to enter the industry.

Youbo Franchise Model
Currently, there are three main ways to join Youbo: rent, buy, or convert.

**Rent: Suitable for novices with little vending machine experience and unwilling to bear risk**
Deposit: 5,000 yuan per machine
Iceberg machine rental: 600 yuan/month
Network and platform service fee: 50 yuan/month per machine

Break-even point: 2,280 yuan (reference standard: 35% product gross margin, 150 yuan electricity fee)

_Analysis: Renting is suitable for novices, especially those just entering the industry. Whether a location can make money, how much cost and effort vending machine operation requires—these questions cannot be simply answered. Leasing provides a shortcut for trial operation, helping small and medium operators invest and operate most quickly and practically, quickly establishing basic business experience and verifying whether the industry has investment value._

_In addition, based on early market feedback, Youbo also offers a flexible "rent-to-buy" policy:_

_Rental fees and deposits paid during the lease period can be directly converted into the down payment for the equipment. After deducting some fees, the remaining balance can be paid in installments. This "completely lossless" conversion method minimizes the cost for novices to enter the industry._

**Buy: Suitable for operators with fixed site resources and certain capital reserves**
For purchasing equipment, Youbo currently offers two policies: full payment and installment payment, providing personalized franchise services for operators of different strengths.

【Full Payment】
Iceberg machine full payment amount: 27,800 yuan/unit (including shipping)
Installation fee: 300 yuan/unit
Network and platform service fee: 50 yuan/month per unit
Advertising subsidy: 200 yuan/month per Iceberg machine in the first year; from the second year, participate in advertising profit sharing.

Full payment allows one-time acquisition of complete equipment ownership and self-financing leasing, which is undoubtedly the best choice for merchants with strong financial capabilities.

【Installment Payment】(taking a five-year installment plan as an example:)
Iceberg machine minimum installment amount: 327 yuan/month in the first year, 527 yuan/month thereafter
Down payment: 3,000 yuan
Installation fee: 300 yuan/unit
Network and platform service fee: 50 yuan/unit/month
Advertising subsidy: 200 yuan/month per Iceberg machine in the first year; from the second year, participate in advertising profit sharing.

Analysis: Youbo installment plans offer 1-5 year options. Except for not obtaining equipment ownership during the installment period, other subsidies are the same as full payment. For the five-year installment plan, the first year only requires 327 yuan per month, suitable for steadily expanding companies, reducing asset investment, and is undoubtedly a good choice.

**Convert: Suitable for small and medium-sized operators already in operation**
PS. Franchisees who initially chose "renting" can also convert to purchase without loss of fees paid.

Earlier equipment manufacturers were more traditional, usually one hand for money, one hand for goods, but now some changes have occurred. Some manufacturers have begun to implement equipment revenue-sharing systems: you provide complete credit information and pass manufacturer review, and pay a certain deposit, then I provide a certain number of devices for you to operate, with a certain proportion of operating income as the return for the manufacturer's equipment. Of course, if some operating companies are unwilling to cooperate with manufacturers in this way long-term, they can agree with the manufacturer to return income in installments until the equipment payment is settled. Of course, some small and medium manufacturers directly invest equipment as capital in some operating companies, which, although not many, objectively exists.

**3. Revenue and Profit: More Than Just Selling Goods**
The operating income of vending machines mainly includes three parts: sales revenue, advertising revenue, and slot fees. Advertising revenue refers to income from operators soliciting body advertising on machines, while slot fees are similar to the entry fees supermarkets charge suppliers. According to data, if advertising revenue and slot fees are fully included, the annual operating profit of a 21-slot vending machine can reach about 15,000 yuan.

A vending machine operator in Shanghai, due to distinctive site selection and operations, achieved an average monthly turnover of 75,000 yuan with only 3 vending machines, with a gross profit margin of 36%.

As a fast-investment device with obvious returns and easy maintenance, vending machines have enabled more and more ambitious people to taste the sweetness of being a boss and quickly accumulate initial capital. In foreign countries and Hong Kong, many people treat vending machines as a second career, which not only does not affect their main job but also steadily increases income, killing two birds with one stone. Abroad, a middle school student saved his parents' pocket money to buy two vending machines. By the time he graduated from university, he was the owner of a network of over 30 vending machines.

For those with poor unit benefits, salespeople, and laid-off workers, vending machines are also one of the best choices, with stable and reliable income visible and tangible from now to the future. Some far-sighted people have taken the lead and quietly earned a lot of advertising fees and wholesale-retail price differences.

Unlike other industries, the vending machine industry is currently in the market introduction stage, with almost no competition to speak of. Looking around, almost everywhere is an unclaimed domestic market.

According to analysis, as a new retail format, the operating costs of vending machines mainly consist of machine depreciation, site rent, goods procurement and distribution costs, and management costs including labor. The success of vending machine operations mainly depends on income levels, population structure, consumption habits, and government policies and support. Generally speaking, cities and locations with higher income levels, larger floating populations, and more young people who are receptive to new things and prefer fashionable consumption will have higher vending machine sales.

**4. Several "Dead Points" Restricting the Development of the Vending Industry**
The first reason restricting the development of the domestic vending industry is people's understanding of vending machines. For a long time, people's understanding of vending machines has remained at the equipment level, and most people even have lower recognition of vending machines than street stalls. Under such circumstances, the overall development of the vending industry is predictable.

Secondly, site selection restrictions are the second reason restricting the development of the vending industry. Products sold in vending machines are generally low-margin fast-moving consumer goods, and low-margin products determine strict requirements for product sales volume. Meeting sales volume also places high demands on site selection. Areas without concentrated foot traffic and target customer groups are almost not considered by operators, while suitable areas often require operators to pay considerable costs, thus forming a vicious cycle.

Third, the cost of vending equipment is also a major reason restricting development. Although modern intelligent vending machines have achieved intelligence and have many additional profit points, based on the current domestic situation, for small and medium operators that have not yet achieved scale, the initial huge investment in equipment is almost disproportionate to the output. Without huge capital investment, it is almost difficult to promote rapid enterprise development.

Fourth, the overall service level of the industry and the lack of industry-level service guidance organizations and institutions are also another reason restricting the development of the vending industry. Problems such as coins swallowed without dispensing goods, nowhere to complain, poor service attitudes, low quality of practitioners, and lack of access mechanisms have long been criticized by consumers. With no laws to rely on, no rules to speak of, anyone can do it, and any attitude can be displayed, the development level of an industry where consumers have no place to reason is naturally predictable.

In summary, the domestic vending industry still needs to go through a dark period, but overall, if these problems are well solved in the future, I believe the vending industry will usher in a new tomorrow.

**5. Opportunities for Distributors in Vending Machines**
**1. The future offline retail trend is a comprehensive retail format mainly consisting of KA + CVS + O2O + vending machines. Among this comprehensive format, the only area where distributors can get involved is likely vending machines.**

**2. If distributors enter the vending machine business, existing personnel, vehicles, and warehouses do not require additional investment. Machines can be operated at low cost through deposit-based leasing. This is a good point for sales growth for distributors facing intense competition and difficulty in increasing sales and profits.**

**3. Additionally, by building self-owned terminals, distributors can bypass terminal retail stores and directly face consumers. This is also a very effective means to enhance competitiveness under the internet B2B model. The more vending machines you invest in, the stronger your risk resistance.**

**Summary:**

The past 5 years have been the most turbulent period for the entire domestic retail industry. Large supermarkets have been severely impacted by e-commerce, while convenience stores have shown strong growth momentum. In the next 16 years, online and offline will accelerate integration, with new business models and concepts under big data, O2O, and B2B emerging one after another. Driven by capital, the retail industry will become increasingly concentrated. With the emergence of mobile payment and the introduction of intelligent vending machines into market operations, the popularization of vending machines is only a matter of time. 16-17 are two critical years for the vending machine industry. In the era of the big internet, everything is changing, and it is the general trend. For distributors, whether to change or not is no longer a matter of their own wishes. The wind is coming; before the blowout, distributors laying out vending machines may be a good opportunity.

**●****●****●**

Data sources: China Self-Service Vending Industry Alliance and China Vending Industry Network

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