“山川异域，风月同天” (Though mountains and rivers separate us, we share the same wind and moon) — these words were printed on the boxes of supplies donated by Japan to China. Many netizens have said that in the face of the novel coronavirus, Chinese people have felt the friendliness and warmth of the Japanese people. Now that the epidemic in Japan cannot be ignored, Foreign Minister Hua Chunying recently posted a tweet saying, “救患若一、所忧同也” (In times of crisis, we are one; our worries are the same).

A large part of the reason the Japanese have so generously aided China is that they empathize. Japan is a country prone to natural disasters, frequently suffering earthquakes, typhoons, and other calamities, and they have considerable experience in dealing with special times. In a previous article, we introduced Japanese disaster-preparedness food.

[Image: Japanese vending machines. Source: Akashi Journal]

Today, we will explain Japan's food and beverage vending machine market. The popularity of unattended retail is gradually rising, with vending machines, automated pickup points, and other unattended retail channels constantly emerging. As everyone knows, Japan is a major vending machine country and has the highest density of vending machines in the world.

According to statistics from the Japan Vending Machine Manufacturers Association at the end of 2018, the number of vending machines in Japan was 2,937,800, approximately one vending machine for every 43 people, and the total annual sales of these vending machines exceeded $60 billion. What lessons can we learn from Japan regarding vending machines?

-01- What delicious food and drinks do vending machines all over Japan sell?

Anyone who has been to Japan may have noticed that whether on bustling city streets or quiet country lanes, there are rows of vending machines along the roadside. In Japan, vending machines are even more common than convenience stores.

What do Japanese vending machines sell?

Food and beverages are the most common, after all, satisfying hunger and thirst is a basic need. For foodies, being able to eat whenever and wherever they want is the greatest joy. Among Japanese vending machines, beverage vending machines account for the largest proportion. According to data from the Japan Vending Machine Manufacturers Association, as of the end of 2018, Japan had 2,423,800 beverage vending machines, accounting for 57% of the total number of vending machines. Both common and uncommon beverages can be purchased from vending machines. Several major Japanese beverage giants have their own beverage vending machines.

[Image: Proportion of various types of Japanese vending machines. Source: Japan Vending Machine Manufacturers Association]

The conspicuous handwritten logo and classic red-and-white color scheme make it clear at a glance that this is a Coca-Cola vending machine. Coca-Cola Japan is Japan's largest beverage company, with over 300 vending machine products. According to its official website, Coca-Cola Japan's soft drinks rank among the top in vending machines across Japan, with multiple products ranking first in sales.

[Image: Coca-Cola Japan vending machine. Source: Coca-Cola Japan official website]

[Image: Top-selling vending machine beverages from Coca-Cola Japan. Source: Coca-Cola Japan official website]

Food vending machines are the second most numerous, with 72,000 food vending machines in Japan at the end of 2018. When it comes to food vending machines, the most common in China are snack vending machines, which contain small packaged snacks like biscuits and puffed foods. In Japan, however, the variety of food vending machines is truly diverse: from fresh produce to cooked food, from small snacks to rice, and even freshly made instant noodles and udon, all can “roll out” of a vending machine.

Fruit vending machines are found in many places in Japan, allowing people to replenish vitamins at any time. Apples, bananas, and cherry tomatoes are neatly arranged on shelves in bags of pre-washed fruit. Take apples, for example: there are peeled and unpeeled ones, honey-flavored and caramel-flavored, all cut into pieces. After eating a small bag of apples, you become a refined boy or girl.

Convenience cooked food is also known as frozen food in Japan; people generally buy it at supermarkets and heat it at home. The emergence of cooked food vending machines allows people to enjoy hot, delicious meals immediately. For example, Japan's famous frozen food brand Nichirei has dedicated vending machine foods and operates 24 hours a day.

From Japanese rice balls and karaage chicken to Taiwanese braised pork rice, American burgers and fries, and Italian pizza, a single vending machine covers a variety of international cuisines. Imagine on a cold winter night, an office worker who has finished overtime buys a hot burger—how warm and satisfying that would be.

[Image: Products sold in Nichirei vending machines. Source: Nichirei official website]

In addition to these ready-to-heat meals, instant noodles that require slightly more complex steps like adding water can also be processed by vending machines. Nissin Foods, the pioneer of instant noodles, has launched vending machines where instant noodle lovers can directly enjoy a cup of noodles. This type of vending machine has two devices: one is a regular vending machine, and the other is a water-filling device. People simply insert coins, select a product, take out the cup noodle, and place it in the water-filling device to enjoy freshly brewed cup noodles.

[Image: Nissin cup noodle vending machine (left: water filling, right: cup noodle purchase). Source: Million Co., Ltd.]

Life is inseparable from daily necessities. Sometimes, when cooking, you suddenly realize you've run out of seasonings, which can be awkward. Japan has dedicated seasoning vending machines, which generally sell soy sauce, vinegar, and also Japanese-style dashi stock. Japanese people, who love rice, have taken eating rice so seriously that they have introduced rice vending machines. Operating 24 hours a day, year-round, with direct delivery from production areas and fresh seasonal rice, are all features of Japanese rice vending machines.

[Image: Japanese seasoning vending machine. Source: picuki]

[Image: Rice vending machine. Source: kaeroom-toku]

-02- How can small vending machines achieve total annual sales of over $60 billion?

Japan has so many diverse vending machines that they add considerable convenience to people's lives. For Japanese companies, why do they all choose to increase their vending machine channels? Besides generating revenue, what other benefits do vending machines offer?

1. Increase traffic entry points and use digitalization to understand consumers' hearts

In 1888, the earliest vending machine used in Japan was born (the oldest existing vending machine in Japan is a 1904 stamp and letter paper vending machine). In 1962, when American large beverage manufacturers placed vending machines in Japan, the curtain officially rose on Japan's food and beverage vending machine market.

Japan is a country with a declining birthrate and an aging population. This social structure leads to labor shortages and high labor costs. Additionally, Japan has a small land area and a high population density, making land scarce and store rents expensive. Under these circumstances, vending machines, which minimize costs, naturally became a main retail channel in Japan.

On one hand, controlling costs; on the other, expanding revenue. The emergence of vending machines gave food and beverage companies an additional sales channel and increased traffic entry points. For example, Japan's DyDo DRINCO beverage company uses vending machines as its main sales channel. According to its official website, DyDo DRINCO has established a unique business model by outsourcing production and logistics to external partner companies under a “factory-less management” approach, concentrating management resources on product development and the development and operation of vending machines.

With this business model, DyDo DRINCO ranks third in the number of vending machines in Japan's vending machine industry. Sales from vending machines account for more than 80% of the company's total sales. According to DyDo DRINCO's survey, vending machine sales account for about 30% of the beverage industry's sales in Japan.

[Image: Comparison of vending machine sales share between DyDo DRINCO and the beverage industry. Source: DyDo DRINCO official website]

Vending machines increase traffic entry points and also increase the entry point for communication with consumers. A vending machine is a machine that can turn consumer purchasing behavior into data. For example, what time of day has the highest purchase frequency, which product has the highest sales, which location's vending machines are most popular—all of this can be converted into numbers, providing reference for product development and vending machine placement strategies.

For instance, DyDo DRINCO installs vending machines in train stations, offices, factories, and schools. The preferred products for each machine depend on the age and gender of customers. Therefore, based on sales data accumulated in vending machines, machines with similar sales trends are grouped, and products are displayed according to their characteristics.

[Image: DyDo DRINCO arranges vending machine products based on different consumer groups. Source: DyDo DRINCO official website]

2. Creative marketing and strengthening VI: vending machines are a billboard

According to a survey by the Japan Vending Machine Manufacturers Association, among the various functions of vending machines, advertising attributes account for 18%.

Coca-Cola, the master of advertising, also fully demonstrates creativity in vending machines. Last year, a Coca-Cola vending machine with buttons 3 meters high appeared at Tokyo Midtown Hibiya Square near Ginza, Tokyo—the highest beverage button was 3.48 meters, and the lowest was 3.09 meters.

This is a “volleyball vending machine” customized by Coca-Cola Japan based on the jumping height of volleyball players. 3.48 meters and 3.09 meters are the jumping heights of male and female volleyball players, respectively. It's almost impossible for an ordinary person to jump and press the vending machine button. These days, even drinking a Coke requires some brainpower.

[Image: Coca-Cola Japan “volleyball vending machine.” Source: Coca-Cola Japan official website]

Coca-Cola has introduced “quirky” vending machines in many countries, such as the hug vending machine, where you can get a drink by hugging the machine.

[Image: Coca-Cola Japan “hug vending machine.” Source: Coca-Cola Japan official website]

In a vending machine powerhouse like Japan, where you encounter a vending machine every few steps, creating a unique appearance for vending machines is very important. Coca-Cola uses red as the primary color with white as a secondary, while Kirin Beverage is exactly the opposite, using large areas of white, and Asahi Beverage uses blue. Vending machines undoubtedly strengthen consumers' perception of brand VI, leaving an impression through visual impact.

[Image: Kirin Beverage vending machine. Source: Kirin Holdings official website]

3. Disaster vending machines, small Wi-Fi spots, and interactive machines for foreign tourists: vending machines have many uses

Selling food and beverages is the primary use of vending machines, but due to their large number and high density, Japanese vending machines also play many other roles, especially in emergency rescue.

As mentioned at the beginning of the article, Japan is a disaster-prone country, so its people have a strong sense of disaster prevention. When an earthquake strikes, specially constructed disaster vending machines not only won't topple over but can also serve as temporary supply points. Many Japanese food and beverage companies cooperate with local governments and have “disaster response machines.” These machines are unlocked during disasters to provide free food and beverages to the public.

[Image: Coca-Cola Japan disaster relief vending machine. Source: Coca-Cola Japan official website]

During earthquakes and other disasters, information is also crucial. When an earthquake occurs, local government disaster prevention authorities set important disaster prevention information on vending machines equipped with electronic bulletin boards.

Vending machines can also serve as city information boards on a daily basis. When people encounter accidents or other emergencies in unfamiliar places and call 110 or 119, they may not be able to provide the exact address. Japan's vending machine industry cooperates with police and fire departments, and since 2005, address labels have been attached to vending machines.

In 2012, Asahi Beverage launched Japan's first vending machine equipped with Wi-Fi functionality, making the area around the vending machine a free Wi-Fi spot.

[Image: Asahi Beverage vending machine providing Wi-Fi. Source: Asahi Beverage official website]

Additionally, in January 2016, Asahi Beverage experimentally installed an interactive vending machine near Kaminarimon in Asakusa, Tokyo. This machine provides detailed product information in English, recommends products to foreign tourists, and introduces nearby attractions, giving a sense of everyday conversation.

[Image: Asahi Beverage vending machine providing guidance to foreign tourists. Source: Asahi Beverage official website]

These other uses of vending machines reflect corporate social responsibility and the effort to serve consumers. Although there is no direct feedback in sales figures in the short term, in the long run, they help improve corporate reputation and build a good corporate image.

-03- Vending machines are actually a subject of study; only by learning can you profit

In China, vending machines are not a new thing. In fact, in recent years, industry insiders have paid attention to them, and companies like Uni-President, Master Kong, and Nongfu Spring have already made arrangements. However, a Baidu search for “vending machines” yields many results like “vending machine losses” and “failed vending machine investments.” Nowadays, vending machines seem to be undervalued.

Yet neighboring Japan's vending machine annual sales can reach $60 billion. Although a vending machine is just an automated device, there is a great deal of knowledge involved; only by studying and thoroughly understanding it can you make money.

1. People, goods, and place: a vending machine that grasps these three elements is a good vending machine

When talking about new retail, the term “people, goods, and place” is often mentioned. For vending machines, people, goods, and place are even more critical to success. And in a sense, getting the people-goods-place right for vending machines is simpler than for other channels.

In examining people, goods, and place, because vending machines can be placed almost anywhere, there is no priority; instead, it requires comprehensive consideration. What kind of people are in a place, and what do these consumers like to buy—these are mutually reinforcing. For example, in schools, vending machines can be placed in teaching buildings and libraries, offering filling snacks like small breads to provide a simple breakfast for students who skipped it, or to satisfy cravings during evening self-study. Vending machines near the playground mainly sell beverages—water, sports drinks, or energy-providing foods like chocolate.

There are also details to note, such as providing cold and hot drinks appropriately in summer and winter. Japanese vending machines typically sell cold canned beverages cooled to about 5°C, and hot canned beverages at about 55°C. Another detail is the quantity and arrangement of products, which requires planning based on consumer feedback data after a period of operation, placing the best-selling products in prominent positions or displaying multiple units of the same product.

2. Not just good looks; the food itself is the reason consumers repurchase

Sometimes companies put effort into the appearance of vending machines, trying to attract consumers to buy through appearance. In fact, the food itself is what makes consumers repurchase.

Because food and beverages are placed in vending machines, they are in a closed environment, and conditions such as air and sunlight are very different from those in supermarkets. Therefore, food vending machines especially need to pay attention to product quality: they must not spoil, their appearance must not change, and their taste and texture must not change. Japan is worth learning from in this regard. As mentioned earlier, the packaged cut apples reportedly use a special method with vitamins to prevent browning, extending the shelf life to 11 days.

Another example is the bread from Japan's COMO Company, which has 2,500 bread vending machines. Its bread has a shelf life of 35 to 60 days without adding any preservatives. A Japanese TV program once revealed the secret of COMO bread's long shelf life. It turns out that COMO bread contains a strain called “panettone,” which naturally lives near Lake Como in Italy. Low moisture makes it difficult for mold to grow on the bread, thus making it hard to spoil. Because panettone can ferment with a small amount of water, the bread made can be preserved for a long time without using any preservatives.

[Image: COMO long-life bread. Source: TV Dogatch]

3. Don't overlook: after-sales service, electricity consumption, and waste recycling

Vending machines are typical of unattended retail, but this does not mean that all consumer actions are handled by machines. Many companies overlook the issue of after-sales service. What happens when a consumer pays but no product comes out? Or when they take a sip of coffee and find it tastes off? Good after-sales service reflects the human touch behind unattended retail. Companies can set up an after-sales system so consumers can contact after-sales directly via their mobile phones.

Many vending machines operate 24 hours a day, year-round, which is one of their advantages. So how can energy be saved?

[Image: Changes in energy consumption of Japanese beverage vending machines. Source: Japan Vending Machine Manufacturers Association]

The Japan Vending Machine Manufacturers Association has long been taking energy-saving measures and, through a plan to reduce energy consumption from 1991 to 2012, reduced the annual energy consumption of each can/bottle vending machine by more than 70%. Japanese companies mainly adopt the following methods to save energy.

(1) Zone cooling: Reduce power consumption by cooling only the products about to be sold, rather than cooling the entire interior of the refrigerator like a typical fridge.

(2) Sensor-adjusted brightness: Sensors installed outdoors control the lighting by sensing ambient brightness. Additionally, fluorescent lamps are dimmed by inverters, reducing electricity usage. Recently, LEDs with lower power consumption have been adopted.

(3) Computer intelligent temperature control: A microcomputer built into the vending machine can analyze sales data and other data up to that point and automatically activate energy-saving functions based on the results.

(4) Heat pump: Reuse the heat generated inside the refrigerator to heat hot beverages.

With the increase in beverage vending machines, the recycling of PET bottles and aluminum cans is also an issue. According to an agreement signed by the Japan Beverage Association and the Vending Machine Manufacturers Association, many beverage companies have set up recycling devices next to vending machines. Some vending machines even have incentive setups where you can exchange accumulated empty bottles for drinks.

4. Innovative gameplay: making vending machines not just cold machines

Companies can also innovate vending machine gameplay to increase interaction with consumers. For example, the currently popular blind box vending machines can also be applied to the food and beverage industry. Compared to trendy toys, food and beverages are much cheaper, so even if people buy a drink they don't like, they won't mind much, and it may even stimulate repeat purchases.

Japan's DyDo DRINCO has a vending machine where, after purchasing a drink, if the price display shows four identical digits, you get another drink for free.

[Image: DyDo DRINCO vending machine. Source: DyDo DRINCO official website]

Another example is Tappiness, a vending machine co-branded by Kirin Beverage and LINE FRIENDS. Every time you buy a drink, you earn a point; after collecting 15 points, you get a free drink, and these points can be sent to LINE friends.

[Image: Tappiness, a vending machine co-branded by Kirin and LINE FRIENDS. Source: Kirin Holdings official website]

In general, there is a method to operating vending machines. Although they don't require much manpower, they do require care.

In China, we see Nongfu Spring and Luckin Coffee making new moves in vending machines. It's time for China's vending machines to wake up. On the road to unattended retail, food companies might look to Japan ahead and perhaps gain a lot of inspiration.

Source: FBIF Food & Beverage Innovation (ID: FoodInnovation)