The $141M Impact of Vending Labeling Requirements

FDA issuing final rule for vending items to be labeled with calorie information

Part of the effort to promote transparency for consumers covered in the Patient Protection and Affordable Care Act calls for caloric value to be “clearly and predominately” displayed for all vending machine items sold by operators of more than 20 machines, “on or in the same field of vision as the food items in the machine.”

In addition to the calorie information labeling, the proposed rules will require that consumers are provided information like calories from fat, saturated fat, cholesterol, trans fat, sodium, carbs, sugars, dietary fiber, and protein – in written form – upon request.

FDA requires labeling

Who will be affected?

The proposals indicate all operators with more than 20 machines will be required to comply; and the U.S. Food and Drug Administration (FDA) concedes that “the proposed rule would have a significant economic impact on a substantial number of small

[businesses].”

According to documents from the FDA, “In the case of the proposed rule, FDA estimates that there would be approximately 10,800 operators under the proposed requirements, controlling between 4 million and 5.6 million machines that sell covered vending machine foods.”

What are the estimated costs of compliance? 

The FDA speculates that the estimated cost of compliance could be as much as $141.4 Million annualized over ten years at a 3% discount rate. Although their impact analysis says “[The] FDA estimates that average per machine costs are less than $10 annually,” my math (using an estimate of 4.8 million affected vending machines and those FDA cost estimates) shows a range of $5-$29.40 average per machine, depending on which of the proposed regulatory options for the Rule are employed.[quote style=”boxed” float=”right”]The money that would be spent to comply with this — there’s no return on the investment[/quote] Eric Dell, National Automatic Merchandising Association’s (NAMA’s) VP of government affairs claims that compliance could cost operators an initial investment of $2400 and another $2200 annually. “The money that would be spent to comply with this — there’s no return on the investment,” says Dell.

How long do I have?

The proposed rule calls for a one-year grace period once the FDA finalizes and publishes the rules for covered vending machines; NAMA is calling for two years for the vending industry to comply, as well as other flexibility within the rules.  Although many snack food and beverage operators consider vending operators a lower priority market segment, some brands have taken proactive steps to label the front of their single-serve packages with calorie counts, including SmartFries, Michael Seasons, GuS sodas, and YogaVive.

A late December AP article has brought a lot of attention to these proposed regulations, and the vending industry has been vocal. However, as of right now, the FDA is still in the midst of its rulemaking process and are reportedly still reviewing and responding to over 900 public comments on the proposed rules and effective dates. The public comment period is now closed, but we’d love to hear your feedback.

–Would knowing that a Snickers bar, a can of Coke, and a bag of Doritos is 539 calories deter you from buying them from a machine?

–Would you be more likely to buy something you’ve never tried before if it said it was only 80 calories?

–How do you think this will impact your vending business?

2017-05-25T16:08:21+00:00January 22nd, 2014|All, Blog|Comments Off on The $141M Impact of Vending Labeling Requirements