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Kirin Beverage initiatives for sales via vending machines

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Soft drink sales volume in Japan by sales channel (Source: Kirin estimate, in 2016 )

Vending machines constitute one of the important sales channels for the soft drink market in Japan. There are 2.2million vending machines in the country, approximately 40 times the number of convenience stores nationwide; they are important touchpoints with consumers. At the same time, sales via vending machines are unique in that fluctuations in price and sales volume are relatively small, also positioning the vending machine as an important sales channel for beverage manufacturers.

In July 2015, Kirin Beverage Company, Limited (hereafter “Kirin Beverage”) established Kirin Beverage Value Vendor Company, Limited, a company in charge of the overall vending machine business within the Kirin Beverage Group. Kirin Beverage has been expanding vending machine sales through the fine-tuned marketing and specialized sales activities undertaken by the newly established company. This article features some of Kirin Beverage’s initiatives for sales via vending machines.

1) More effective and efficient daily management:
Online vending machine management system

Before…

The route sales representative checked each vending machine for which they were responsible and replenished products according to a projection based on experience.

Now…

More vending machines are controlled online; data on unsold products in each vending machine are aggregated on a computer network.

What difference has the online control system made?

The vending machine locations (e.g. office buildings, outdoors) and the variations in consumption patterns across the four seasons are now captured as data, and are used for marketing activities such as product analyses to meet consumer demand. Moreover, replenishment is carried out by staff members effectively in just one visit, which has led to more efficient business activities and improved labor productivity as well as a reduction in out-of-stock situations.

【Before】The route sales representative decides which to go and restock.

【Now】The online system tells the staff member responsible which new stock to deliver to which vending machine.

2) Exciting vending machine services:
Roll out of new, unique vending machines

Kirin Beverage’s vending machine projects

Various kinds of vending machines have been launched to meet both consumer needs and the needs of customers installing our vending machines onsite. Our aim is to provide exciting, innovative services as well as to increase the number of touch points with our products for consumers.

Can you give me an example?

“Tappiness” vending machine

Tappiness, available at Kirin Beverage’s vending machines, is a unique, brand-new communication service tied up with the communication app LINE, one of Japan’s largest social network services. By tying up with LINE, contact points with consumers have increased while at the same time consumers gain benefits.
When the consumer taps or holds the app close to the scanner on the vending machine and purchases a product, the consumer is awarded 1 drink point on the LINE app system; upon collecting 15 drink points, the customer gets a voucher for one free drink in a Tappiness vending machine. The voucher is transferrable to friends who are LINE users. Tappiness vending machines also offer other LINE services such as buying products via smart phone using LINE Pay.*1

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The LINE Pay option is not available if the vending machine accepts other electronic payments.

「Tappiness vending machine services 「Tappiness vending machine services

Several Tappiness vending machine campaigns will be launched, such as limited offers of double drink points when purchasing particular products and novelty goods to make vending machines more attractive.

3) More opportunities to market Kirin’s soft drinks:
Business alignment with other beverage manufacturers

Before…

As far as sales via their own vending machines were concerned, companies sold only products they developed and manufactured.

Now…

Kirin Beverage has tied up with other beverage manufacturers and carries out “mutual product sales” with them. Under the scheme, Kirin beverage sells its core products via the other companies’ vending machines, while selling their core products through Kirin’s own vending machines.
The business alliance with Yakult Honsha Co., Ltd. has been in place for over 10 years, since 2003. From April 2016, another business alliance with DyDo DRINCO, INC. commenced. Our core products have been offered to many consumers through these alliances.

Why do you carry out mutual product sales?

Mutual product sales increase contact points for consumers with core products/brands both of Kirin Beverage and of our partner companies, making vending machines more appealing. The scheme also promotes the sustainable growth of the vending machine business through increased sales volumes and revenue.

(Example) Mutual product sales with DyDo DRINCO, INC.

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Products in this example came into the category of mutual product sales on March 21, 2017.

On top of such efforts to increase sales efficiency and consumer convenience in vending machine sales, Kirin Beverage has been taking actions to drive its profit structure reform, including strengthening the sales target control focused on the sale of cans and small-size PET bottles as well as reducing SCM*2-related costs via improved procurement and waste reduction.
Meanwhile, the company has been building a strong brand portfolio centering on its flagship brands Gogo-no-Kocha, Nama-cha, and FIRE in its ongoing efforts to realize sustainable profitable growth.

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SCM: An acronym for Supply Chain Management, whereby the chain of activities is structured and managed efficiently from procurement of raw materials, production in plants to the supply/demand/distribution of finished products.

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