SIC 3581 Automatic Vending Machines

SIC 3581

This industry consists of establishments primarily engaged in manufacturing automatic vending machines and coin-operated mechanisms for such machines.

NAICS CODE(S)

333311

Automatic Vending Machine Manufacturing

INDUSTRY SNAPSHOT

With significant advances in technology and innovation, the vending machine industry served numerous markets and in the mid-2000s was pushing into new venues and offering new vendible products. In 2002 shipments of coin-operated vending machines by manufacturers totaled $1.6 billion, up from $1.3 billion in 2001.

Traditionally, the industry has segmented itself by the kind of service provided by the vending operator, including the four C's: coffee, cola, candy, and cigarettes. Merchandisers also provide full-line vending, which includes hot food, canned soda, and dairy and frozen food; specialty vending, which encompasses such special products as pizza or french fries; office coffee service; bulk vending, focusing on such unpackaged items as gum or nuts; and street vending, which includes music machines, video games, and other vending machines used in public places. Although cigarette vending has come under strict regulatory code in an effort to curb underage smoking, in the mid-2000s the vending industry was successfully pushing into new areas, such as DVD rentals, cellular ring tones, and coin-to-cash operations.

ORGANIZATION AND STRUCTURE

Vending essentially is a three-step process involving three separate industries: manufacturing companies, distributors, and vending machine operators. This industry group (SIC 3581) primarily covers the manufacturing step in this multi-stage industrial sequence.

About 90 U.S. companies produced automatic vending machines or parts for them in the 1990s. Although a vast majority of vending machines were manufactured by large companies, the industry did sustain quite a few smaller firms. The merchandise vending industry essentially is part of the small business community.

According to the U.S. Department of Commerce, 108 U.S. companies were engaged in the manufacture of automatic vending machines or vending machine parts in 2002. The industry employed 8,361 workers, of which 63 percent were production workers.

The National Automatic Merchandising Association (NAMA) has been the most important trade organization in the vending industry in the 1990s. NAMA represents companies involved in every facet of vending, from machine manufacturers to suppliers of vended products. Founded in 1936, NAMA compiles a broad range of statistics and produces several periodicals, including a regular industry newsletter, a review of pertinent state legislation, and a labor issues bulletin.

The National Bulk Vendors Association (NBVA) concentrates specifically on the manufacture and operation of bulk vending equipment. The NBVA was founded in 1949 and is based in Chicago.

BACKGROUND AND DEVELOPMENT

The earliest recorded "vending machine" was in 215 B.C. when the mathematician Hero described and illustrated a number of inventions conceived by himself and his teacher, Tesibius, in a book called Pneumatika. Included in the book was the plan for a completely automatic, coin-operated machine that dispensed a small amount of sacrificial water when a five-drachma coin was deposited. It is unlikely that the machine was used on a large scale, and there is no evidence to suggest that anything was sold automatically again for centuries.

Coin-operated machines that sold snuff and tobacco appeared in English taverns around 1615. These machines were actually cruder than Hero's device and required the proprietor to shut the lid after each use. Usually made of brass, the machines were portable and were carried from customer to customer.

In the nineteenth century, vending machines began to appear in much greater variety and quantity. An early incarnation of the newspaper machine appeared in England in 1822. The device was the brainchild of Richard Carlile, a bookseller trying to avoid arrest for peddling copies of banned works such as Thomas Paine's The Age of Reason. While his machine worked, his plan to avoid arrest did not.

The first known patent for a vending machine was issued in 1857 to Simeon Denham for a penny postage stamp device. Over the next couple of decades, inventors began showing up at patent offices all over the world with coin-operated machines that sold candy, cigarettes, handkerchiefs, and other small items. In 1884 the first U.S. vending machine patent was issued to W.H. Fruen for a contraption remarkably similar to Hero's holy water machine.

The American vending machine industry was truly born in 1888, when Thomas Adams of the Adams Gum...

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